Wahaha Charges Forward, Nongfu Spring Loses Momentum: China's "Water War" Landscape Shifts

(Article by Liu Yuanyuan, Edited by Zhou Yuanfang)

The landscape of China’s bottled drinking water market is experiencing a subtle shift.

Recently, China Resources Beverage (Yibao’s parent company) issued a profit warning, expecting the company’s attributable profit for 2025 to decrease by approximately 40% year-over-year. This beverage giant, listed for just one year, is projected to see net profit drop from 1.637 billion yuan in 2024 to about 980 million yuan.

Prior to this, its mid-year 2025 report already hinted at challenges: revenue of 6.206 billion yuan, down 18.52% year-over-year. Among its most dependent segments, bottled water revenue declined by 23.1% year-over-year.

According to the December 2025 Hurun Top 100 Food Companies list, China Resources Beverage saw a 28% drop in value, ranking first among the biggest losers and becoming one of the most disappointing beverage giants of the year.

In the public discourse, a common narrative attributes Yibao’s decline to the ongoing industry price wars. However, beneath the financial reports and retail monitoring data, a more nuanced industry picture emerges: the core threat to Yibao is actually coming from its direct competitor—Wahaha—caught in the eye of the storm.

This battle for the same price band, following similar channel logic, and vying for the same consumer base, is ultimately a fight over existing market share—an intense competition of stock.

Wahaha’s Direct Offensive

If we compare the bottled water market to a chess game, the contest between Yibao and Wahaha is shifting from “each guarding their territory” to “close combat.”

Since taking over Wahaha in 2024, Zong Fuli has quickly launched a strategy dubbed “stabilize the market + expand the network +抢占市场” (grab market share). While maintaining the core products like AD Calcium Milk and Nutrient Express, bottled water has been pushed to the front line strategically.

Data from multiple third-party retail monitoring agencies shows that in 2025, Wahaha’s distribution coverage in the bottled water segment increased by over 15 percentage points year-over-year, especially in traditional strongholds like South China and East China, where Wahaha’s freezer placement rate and shelf share have seen significant gains.

In March last year, Wahaha’s channel development head told media that Wahaha bottled water had entered channels like FamilyMart and Hema, and through over 10,000 stores of Meiyijia, it had entered the Guangdong market. In June, Shidai Caijing reported that several beverage wholesalers said Wahaha bottled water, which previously was rarely sold in Guangzhou before 2024, had become a regular stock item at major sales outlets since last year.

This expansion is most visibly reflected in price competition. Starting in Q2 2025, Wahaha launched phased promotions offering “12 bottles for 9.9 yuan” in multiple markets, directly lowering the unit price to around 0.8 yuan, clashing head-on with Yibao’s mainstream products.

In convenience stores and community supermarkets, the two brands are often displayed side by side, with price tags serving as the most direct “battlefield.”

Data shows that this offensive has already impacted Yibao’s financials. In the first half of 2025, Yibao’s bottled water revenue fell 23.1% year-over-year. Although Wahaha did not disclose specific data for its pure water segment, its overall beverage business achieved double-digit growth in 2025, with many industry analysts attributing the increase primarily to the pure water category.

Market share data further illustrates Wahaha’s gains. According to the FMCG monitoring platform “Ma Shang Ying,” Wahaha’s share in the pure water segment dropped from over 70% in January 2024 to about 45% in October 2025. Nielsen retail data shows that from December 2024 to December 2025, Yibao’s overall bottled water market share declined by 1.8% year-over-year.

Meanwhile, Wahaha’s market share surged. Ma Shang Ying data indicates Wahaha’s share increased from approximately 11% in January 2024 to about 33% in October 2025. Nielsen data confirms a 2.3% rise in Wahaha’s overall bottled water market share during the same period.

Yibao’s Passive Response

Faced with Wahaha’s aggressive push, Yibao, centered on pure water, has had no choice but to respond hastily.

The first move was on pricing. As early as April 2024, Yibao lowered the average price of small bottled water. In 2025, it introduced a “box拆箱补贴” (box unpacking subsidy) policy—manufacturers subsidized 2 yuan per box of Yibao water to stabilize channels and retail outlets.

However, this subsidy war quickly turned into a consumption battle. In some regions, 555ml bottles of Yibao water were sold at “cost price” of 1 yuan per bottle, with retail prices at 0.9 yuan, squeezing distributor margins.

A deeper chain reaction followed. According to a survey by Daily Economic News, in June 2025, Yibao still implemented a 2-yuan subsidy per box. Although the subsidy was reduced after July, distributors, aiming to meet annual sales targets and earn rebates, continued to “sell cheap to gain volume.” In regions like Sichuan and Guangxi, some distributors even withdrew from the market, reducing coverage by about 10%.

Channel turbulence is also linked to Yibao’s recent channel reforms. To address low distributor efficiency, China Resources Beverage launched large-scale channel adjustments starting in 2023, aiming to eliminate low-performing distributors with annual sales below one million yuan. But the reform moved too quickly—by mid-2024, about 20% of old distributors had exited.

Confronted with the dual challenges of “price wars that can’t be won” and “channels that can’t be held,” China Resources Beverage began seeking differentiation. In 2025, the company unusually launched 1-2 new products each month, covering sports drinks, ready-to-drink teas, fruit juices, and more.

Among these, Yibao introduced sports cap bottles for sports scenarios; 210ml “pocket-sized” Yibao pure water for commuting and short trips; and 5L bottles of Benu Tea drinking water for household use. By year-end, Yibao further experimented with eco-friendly packaging, launching 330ml plant-based paper carton bottled water with an 18% lower carbon footprint.

However, these innovations are unlikely to immediately offset the decline in bottled water sales. Financial data shows that in the first half of 2025, Yibao’s small bottle water revenue fell 26.2% year-over-year, mainly dragging down overall bottled water performance. Although the beverage segment continues to grow, it has yet to form a “second growth curve.”

For Yibao, a bigger challenge is that this “stock competition” shows no end in sight. Wahaha has already set a goal for 2026 to achieve “industry-leading terminal performance” in bottled water, planning to expand channels through high display fees and promotional giveaways. This means Yibao must not only defend its existing positions but also find a new balance between product innovation and channel recovery.

** Nongfu Spring’s “Unfulfilled”**

It’s worth noting that in this fierce pure water battle between Yibao and Wahaha, Nongfu Spring’s role is quite subtle. It is a notable player in the industry but has not become the biggest beneficiary.

In April 2024, Nongfu Spring launched its green bottle pure water, aggressively entering the segment with a retail price as low as 1 yuan per bottle, directly challenging Yibao and Wahaha’s core markets. At that time, many believed Nongfu Spring would reshape the industry landscape. But a year and a half later, the situation turned out differently.

Performance-wise, Nongfu Spring has indeed rebounded. In the first half of 2025, its bottled water revenue reached 9.44 billion yuan, accounting for 36.9% of total revenue, up 10.7% year-over-year. After two consecutive quarters of decline, it returned to positive growth.

This turnaround was driven by strategic adjustments: as public opinion waned, Nongfu Spring reduced subsidies on green bottles and increased promotion of its red bottle natural water.

Market research from Haitun Research showed that Nongfu Spring cut subsidies on green bottles from 2 yuan per case in 2024 to just 1 yuan in the first half of 2025. Although green bottles still had higher margins than red bottles, the gap had narrowed significantly.

The effect was immediate. The proportion of revenue from red bottles increased from about 75% in late 2024 to over 78% in mid-2025, and profit margins in the bottled water segment rebounded to 35%, roughly returning to pre-publicity levels.

Market share data also shows Nongfu Spring maintaining its position. As of September 2025, it held a 33% share, according to Zhongtai Securities, with Wahaha’s share up 2% and Yibao’s down 3%.

However, in terms of market share growth, Nongfu Spring did not gain much. Nielsen data indicates that from December 2024 to December 2025, its overall bottled water market share increased by only 0.2%, while Wahaha’s share grew by 2.3%.

This phenomenon reflects Nongfu Spring’s strategic shift. With the rise of high-margin tea drinks, the company has reduced its investment in price wars for bottled water. After fulfilling its mission to increase market share in lower-tier markets, green bottles are gradually retreating from the core battlefield.

For Yibao, this may be a warning sign: competitors are no longer competing on the same level, while it remains stuck in the same place.

Conclusion:

Looking back at this over-a-year-long pure water war, it’s clear that Yibao’s decline is not accidental but a result of “internal and external troubles.”

Externally, competitors’ stock battles at similar price points, channels, and consumer groups have caught Yibao, which relies heavily on a single category, off guard. Internally, structural weaknesses have been exposed under price war pressures: over-reliance on bottled water, underdeveloped new beverage categories, overly rapid channel reforms—creating a vicious cycle of “more losses the more they fight.”

For China Resources Beverage, the 2025 profit warning is a wake-up call. The company needs to consider how to develop a “second growth curve” to support future growth amid core business pressures, and how to rebuild distributor confidence and loyalty after channel upheavals.

For each brand, the outlook for 2026 remains challenging. The “1 yuan water” norm in the bottled water market may not disappear but could evolve into a prolonged terminal battlefield. Only players with genuine product strength, channel capability, and brand resilience will be able to stay in the game.