52.5 billion in revenue, 15.8 billion in net profit! Nongfu Spring delivers the strongest annual report in history?

Produced by | China Visitor Network

Reviewed by | Li Xiaoyan

On the evening of March 24, Nongfu Spring (HK09633) released its 2025 annual financial report. The full-year revenue reached 52.553 billion yuan, a year-on-year increase of 22.5%, marking the first time surpassing 50 billion yuan; net profit attributable to shareholders was 15.868 billion yuan, up 30.9% year-on-year, reaching a new high in profitability. Boosted by strong performance, the company’s stock price surged over 10% in the early trading session the next day, with market capitalization stabilizing at HKD 529 billion. From the decline in water business caused by public opinion impacts in 2024 to a full recovery in 2025 driven by dual engines and margin improvements, Nongfu Spring has demonstrated a solid financial performance, confirming a “dawn” in the industry. Amid price wars and channel battles, the company has charted a path of high-quality growth, though it also faces potential challenges such as limited online growth and reliance on specific categories.

2024 was a dark period for Nongfu Spring. Due to ongoing online public opinion impacts, revenue from the core bottled water business declined by 21.3% year-on-year, and the brand and market share faced a temporary test. Chairman Zhong Shanshan openly stated at the time that he would wait for the dawn, and ultimately, the market responded positively. In 2025, the bottled water business rebounded strongly, achieving revenue of 18.709 billion yuan, up 17.3%, not only recovering lost ground but also consolidating its position as the industry’s market leader. Zhong Shanshan praised the new management team in the annual report, noting that they withstood public opinion challenges and became more mature, with corporate governance and crisis response capabilities undergoing a phased upgrade.

The stabilization and recovery of the bottled water business are rooted in Nongfu Spring’s nearly 30-year water source strategy. By 2025, the company had established 16 major water sources nationwide, adding three new sources during the year and planning to add one more in 2026. The Yunnan Jiaozi Snow Mountain factory, with a total investment of over 1 billion yuan, officially began operations. It features a high-altitude water source at 2,600 meters, a 41-kilometer water pipeline, and cliff-side laying projects, creating an supply chain barrier that is difficult to replicate. Despite significant upfront investments and a single factory’s transportation radius exceeding 500 kilometers, the scale network ensures long-term supply stability and cost control, making it a core competitive advantage amid industry price wars. As a ballast stone, water business provides stable cash flow and a solid foundation, while also deepening the brand recognition of “Nature’s transporter.”

Under industry pressure, Nongfu Spring did not fall into the trap of price competition for volume but instead achieved an opposite trend of rising gross profit margins. In 2025, the company’s gross margin reached 60.5%, up 2.4 percentage points from the previous year. This was partly due to the decline in raw material prices such as PET, cardboard, and sugar, significantly improving costs; partly due to the company’s restrained channel strategy, keeping e-commerce sales around 5%, actively avoiding online low-price competition, and stabilizing offline dealer pricing systems to prevent price anchors from falling and impacting terminal profits.

Currently, the e-commerce penetration rate in the beverage industry has reached 14.1%. Most companies rely on platform promotions to boost sales, which compresses profits. Nongfu Spring took a different approach, shifting sales focus to stable offline channels, ensuring dealer profits remain 1.5 to 2 times the industry average, and significantly improving channel loyalty and execution. This “prioritize stable prices and sacrifice short-term online growth” strategy may temporarily sacrifice some online gains but long-term it builds a price moat, balancing scale and profit, and providing a growth model that resists internal competition.

The “water + beverage” dual-engine pattern is a key support for Nongfu Spring to navigate cycles. In 2025, packaged water and tea beverages contributed a combined 76.7% of revenue, with tea beverages reaching 21.596 billion yuan, a 29% growth, surpassing water for the first time to become the largest revenue category, accounting for 41.1% of total revenue. Oriental Leaf tapped into the sugar-free health trend, with the sugar-free beverage market expanding from 2.26 billion yuan in 2015 to 40.16 billion yuan in 2023, seizing the opportunity and becoming the second growth curve after bottled water.

Meanwhile, functional beverages and other categories maintained steady growth of 16.8%. The multi-category matrix works synergistically to reduce risks associated with reliance on a single business. Compared to some industry peers under price wars experiencing performance pressure and slowing growth, Nongfu Spring relies on product structure optimization and precise positioning in the track to achieve countercyclical growth, validating the foresight of its long-term product layout.

From a management philosophy perspective, Zhong Shanshan’s “be steady, slow, and far-reaching” approach runs through the entire year’s decision-making. Facing fierce industry competition, the company refuses to engage in channel stockpiling and vicious price wars, instead pursuing steady expansion; continuously invests in supply chain assets, deepening water source and production network barriers; and manages channels by balancing the interests of manufacturers and distributors to build a mutually beneficial ecosystem. This long-term approach allows Nongfu Spring to maintain over 30% profit growth even with a revenue scale of 50 billion yuan, demonstrating the resilience of a leading consumer brand.

At the same time, Nongfu Spring actively fulfills social responsibilities, such as donating a tea factory in Yunnan, supporting Hong Kong’s Taipo fire relief efforts, and founder Zhong Shanshan donating 10 billion yuan to Qiantang University, balancing commercial value with social responsibility and enhancing brand reputation.

On the flip side, despite impressive results, some concerns remain. The company’s heavy reliance on offline channels and conservative online expansion may cause it to miss out on immediate retail and e-commerce traffic dividends, potentially facing challenges from emerging online brands in the long run. Although tea beverages have become the largest category with strong growth, category concentration increases risk of volatility. Industry price wars continue, and raw material price fluctuations introduce uncertainty; if costs rise or competition intensifies, maintaining gross margins could be challenging. Additionally, the water business, having just recovered, still faces ongoing brand reputation risks, and the stability of the management team over the long term remains to be tested.

Overall, Nongfu Spring’s 2025 financial report is a comprehensive achievement of scale, profit, and quality. From a full recovery from public opinion storms, strengthening water source barriers, driving growth through dual engines, to steady channel strategies, all contribute to elevating the company to a new level. In an era of stock-based competition in the beverage industry, Nongfu Spring’s anti-internal competition management philosophy and long-term strategic focus not only achieve high-quality growth but also provide a sustainable development reference for the industry.

Looking ahead, with the release of the 16 major water sources, continuous expansion of the sugar-free tea track, and ongoing optimization of the channel ecosystem, Nongfu Spring is expected to maintain steady growth. How to balance online and offline development, diversify category risks, and respond to ongoing industry competition will be key challenges for this 50-billion-yuan beverage leader to reach further into the future.