"2 Yuan Water" battlefield lost! China Resources Beverage falls behind Nongfu Spring and Dongpeng

Why is CR Beverage declining against the industry growth trend?

Nongfu Spring is rising, while CR Beverage is falling; the performance trends of two companies that started by selling water are completely different, and the era of relying solely on flagship products to “milk the old” is over.

Recently, “Yibao” parent company CR Beverage (02460.HK) disclosed its 2025 performance. During the period, the company’s operating revenue was 11B yuan, down 18.63% year-on-year, selling 2.5 billion yuan less than the previous year; net profit attributable to the parent was 985 million yuan, down 39.8% year-on-year.

This is CR Beverage’s first full annual report since entering the capital market, and also the first time since 2021 that both revenue and net profit have declined. Due to underperformance, major banks such as Goldman Sachs and Credit Lyonnais have lowered CR Beverage’s target price and earnings guidance.

Water Lotus/Photo

In 2025, the overall soft drink industry achieved mid-to-high single-digit growth, outperforming categories like liquor and beer, with many beverage companies reaching new performance highs.

Nongfu Spring’s annual revenue increased by 22.5% year-on-year to 52.55B yuan, surpassing 50 billion yuan for the first time; Dongpeng Beverage, which previously was smaller than CR Beverage, exceeded 20 billion yuan in revenue, up 31.8% to 20.88B yuan.

CR Beverage’s “against the trend” decline was mainly influenced by reduced bottled water sales, increased marketing resource investment, and changes in product structure.

For many years, the 2-yuan bottled water market was mainly divided between Yibao and Nongfu Spring, with the former positioned as pure water and the latter as natural water.

Yibao’s bottled water segment is the main pillar of CR Beverage’s performance, accounting for nearly 90% of total revenue, but after Nongfu Spring launched pure water, Yibao’s sales were impacted, and last year’s “1 yuan water price war” intensified, with competitors like Wahaha and Jinmailang increasing channel promotion, leading to a sharp decline.

Financial reports show that last year, CR Beverage’s bottled water segment revenue was 9.5B yuan, down 21.6% year-on-year. In terms of specifications, small bottles, medium-large bottles, and barrel water all faced pressure, with the once most competitive small bottles suffering the biggest impact, revenue down 23% to 5.4B yuan.

When news of CR Beverage’s listing emerged, the market still expected it to further increase market share after entering the capital market. Now, with significant performance decline, the company’s “single-legged” operating risk has been fully exposed.

Currently, Nongfu Spring has five major business segments, with bottled water now the second-largest business, accounting for 35.6% of revenue; the tea beverage segment, including products like Oriental Leaf and Tea π, has grown from a “second growth curve” to the company’s largest business, accounting for 41% of revenue last year, making the business structure more diversified.

Compared to this, CR Beverage also has beverage product layouts, but the “second growth curve” has not yet formed, and its revenue share is low, insufficient to offset the sharp decline of core business.

The reporter noticed that last year, the company launched 23 new products including “Tea Companion” and “Benyou,” covering tea drinks, functional beverages, and more, and increased offline ice drink cabinet placements. Last year, its beverage segment revenue was 1.5B yuan, up 7.3%, but only accounted for 13.6%, still not forming effective support.

It takes time for new products to be accepted by consumers. The company’s sales and distribution expenses shrank to 3.78B yuan last year, but the sales expense ratio increased from 30% to 34.3%, reflecting low advertising efficiency and declining brand market competitiveness. Meanwhile, rising expense ratios continue to erode the company’s profitability.

Left Yu/Photo

At the beginning of this year, CR Beverage adjusted its management team. Former Chairman Zhang Weitong stepped down due to work adjustments, and the successor was Gao Li, a “veteran” from the CR system with a finance background.

Gao Li previously worked at CR Venture Ltd. and CR Power, served as CFO of CR Beverage from 2012 to 2020, and since January 2025 has been General Manager of the Finance Department of CR Group. Market analysts believe that having a finance background helps the new leadership optimize profit performance.

Regarding the business plan for 2026, CR Beverage stated it will continue to optimize its bottled water product matrix, strengthen the core competitiveness of the “Yibao” brand, increase investment in non-water beverages, diversify product categories, and reduce dependence on a single business; deepen channel reforms, improve efficiency and cost control, and ease performance pressure to return operations to a stable track.

In the highly complex international market environment, the main raw material for beverage bottles, PET, faces a significant risk of price increases this year, which will also test the company’s profit management capabilities.

Reporter Shui Fulong

Text Editor Zuo Yu