China Consumer

Spring time

Local brands want to lure richer consumers away from drinking Evian

Evian w

Evian’s “Roller Babies” campaign – which featured roller-skating infants – holds the Guinness World Record as the most-viewed online advertisement. In case you’re wondring, it has more than 65 million views to date. But it was just the latest in a long line of Evian ads featuring babies, says Michael Aidan, head of marketing at Danone Waters, Evian’s owner (the first was ran in 1935). Why the linkage? The message is that drinking Evian makes “you feel young”, Aidan replies.

Whether Evian really helps you feel more youthful is hard to prove, but the brand is much admired by Chinese shoppers, that’s for sure. It costs about Rmb6.5 ($1.04) a bottle in most supermarkets, while many more generic water brands sell for no more than Rmb1 each. But the price hasn’t deterred better-off consumers: Evian controls over 25% of China’s premium bottled water market. Demand for premium water is growing 40% a year too, or three times the rate of the mass market, says Time Weekly.

One reason for the rise is public concern about water pollution. “You don’t dare drink the tap water in China,” says Hope Lee, a Euromonitor analyst.

Moreover, brands have become savvier at courting consumers. One of the best examples is 5100 Tibet Glacier Spring Water, the domestic bestseller among premium waters, which grew its sales 15% in 2013 by signing major deals with China Railways, the operator of high-speed trains, and Air China, the country’s flagship airline (5100 gets its name from the altitude of its source, a Tibetan glacier – see WiC97).

Another high-end water brand is Kunlun Mountains. It is owned by beverage giant JDB, and says it collects its water from even higher up (6,000 metres) in mountains in Qinghai province.

Over the last seven years, China’s share of the global bottled water market has doubled. But in per capita terms it is still some way below the international average. Consumption per head of the population is about a fifth of that in the US so there’s still plenty of room for growth, predicts Forbes China.

That explains why even property developers are getting into the water business. As WiC reported in issue 233, Evergrande began bottling its own spring water last November. Dalian Wanda, too, has teamed up with Legend Holdings (the parent company of Lenovo), China Oceanwide and Dalian Yifang to invest Rmb11 billion in a premium water label.

Other developers have taken heed, including Beijing Baihuan, a mid-sized property firm, which has also diversified into the water business. Since 2009, it has invested more than Rmb200 million in a water facility in Mohe, Heilongjiang, much to the dismay of environmentalists. They are objecting to the plant’s location in an idyllic spot near the border with Russia, one of the increasingly rare places where the sky is still clear enough for a decent view of the Northern Lights.

Currently, most of China’s spring water is drawn from Tibet and Qinghai. But glaciers in Changbai Mountain (in Jilin province) and Tian Shan (in Xinjiang) are also being tapped as more companies look for new supplies. Time Weekly says that other property developers are scrambling for exclusive rights to other glaciers. Local governments are keen on the revenues too, including the Jilin government, which has even stated in its provincial work report that promoting local spring water will be one of its biggest initiatives this year.

One upshot: the interest from developers is driving up prices for land with access to springs.

“Natural spring water is on the verge of extinction, so of course we have to rush to hoard as much land as possible,” says Liu Wei, the sales manager of Arctic Spring,which is owned by Beijing Baihuan.

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