Nongfu Spring Co., Ltd.: history, ownership, mission, how it works & makes money

From its founding in Hangzhou on September 26, 1996 by Zhong Shanshan to becoming a Hong Kong-listed powerhouse (stock code 9633.HK) in 2020, Nongfu Spring's rise-from its first bottled water sourced from Zhejiang Thousand-Island Lake in 1997 to product innovations like Victory Vitamin Water (2010) and the Whisked Milk Tea series (2012)-is grounded in scale, vertical integration and clear market positioning: in 2024 the group reported revenue of RMB 42.896 billion (up 0.5% year-on-year) while paying RMB 6,652 million in taxes (including RMB 3,665 million income tax), it now operates five business segments-Water, Ready-to-Drink Tea, Functional Drinks, Juice and Other Products-backs R&D and supply-chain capabilities, brought the Huangshan water source online and re-entered purified water in 2024, and benefits from concentrated ownership with Zhong holding 38.3% directly and another 25.9% via Yangshengtang (as of March 27, 2025), a stake structure that helped make his net worth an estimated $65.7 billion in July 2025 while Hong Kong-listed shares climbed 35.8% year-to-date (July 2025) amid expectations of tea-driven growth exceeding 20% and revenue projections for 2025 near RMB 48.7 billion as the Chinese packaged drinking water market heads toward over RMB 310 billion-details that matter for anyone tracking how Nongfu Spring captures value across brands, sources and channels.

Nongfu Spring Co., Ltd. (9633.HK): Intro

• Founder: Zhong Shanshan (established 1996)
• Headquarters: Hangzhou, Zhejiang, China
• IPO: Listed on the Hong Kong Stock Exchange (9633.HK) - primary listing in September 2020
• Core product launch milestones:
  • 1997 - First packaged drinking water from Thousand-Island Lake
  • 2001 - Converted to a joint-stock company
  • 2010 - Launched Victory Vitamin Water (functional beverages)
  • 2012 - Launched Whisked Milk Tea series (RTD tea expansion)

• Business model highlights:
  • Primary revenue driver: packaged drinking water (bulk of sales)
  • Supplementary segments: RTD tea, juice/functional beverages, milk tea, and other beverages
  • Distribution: national retail (supermarkets, convenience stores), e-commerce, vending and HORECA channels

• Largest shareholder and founder: Zhong Shanshan, controlling interest via his holding vehicles (majority control established since company expansion and IPO).
• Governance: Board of directors with executive management overseeing production, sourcing, marketing and nationwide distribution network.

• Source selection: proprietary water sources and regional sourcing (e.g., Thousand-Island Lake) provide product differentiation and labeling claims.
• Manufacturing: vertically integrated bottling plants distributed across China to optimize logistics and freshness.
• R&D & product development: new SKUs in functional drinks, RTD tea and flavored waters responding to consumer trends.
• Distribution & sales channels: national retail partnerships, large convenience-store footprint, rapid growth in e-commerce and O2O fulfillment.

• Core revenue - packaged drinking water (premium and mass SKUs) sold in high-volume, low-margin units and premium-priced bottled water segments.
• RTD beverages - higher-margin tea, milk tea and functional drinks; product differentiation through flavor innovation and branding.
• Channel mix - fixed retail contracts, spot retail sales, and direct-to-consumer/e-commerce sales affecting margins and inventory turnover.
• Scale economics - national manufacturing footprint and centralized procurement reduce per-unit costs and support distribution intensity.

• 2024 revenue: RMB 42.896 billion, up 0.5% year-over-year, indicating stable top-line performance amid competitive and cost pressures.
• Product concentration: approximately 80% of revenue historically from bottled water, with company efforts focused on expanding higher-margin RTD categories.
• Capital structure: publicly listed (HKEX: 9633) enabling access to equity capital markets since 2020 for expansion and working capital.

Nongfu Spring Co., Ltd. (9633.HK): History

• Founder & chairman: Zhong Shanshan - direct 38.3% stake (as of March 27, 2025).
• Additional control via Yangshengtang Co., Ltd.: 25.9% stake (consolidated influence).
• Combined effective control: Zhong's direct plus Yangshengtang holdings underpin strategic decision-making.

• How it works: centralized sourcing of spring water, national bottling and distribution network, strong retail and e-commerce channels, and brand-driven pricing.
• How it makes money: premium bottled water margins, high-volume tea and packaged-drink sales, seasonal/limited SKUs and channel-focused promotions.

Nongfu Spring Co., Ltd. (9633.HK): Ownership Structure

• Mission and values: deliver natural, healthy beverages with strict quality control, traceable sources and consumer trust.
• Product diversification: bottled water, tea beverages, juice beverages, functional beverages, and agricultural products to meet broad consumer preferences.
• Sustainability focus: investments in new water-source projects (e.g., Huangshan water source, operational in 2024) and environmental stewardship across the supply chain.
• Innovation track record: product launches such as 'Victory Vitamin Water' (2010) and 'Whisked Milk Tea' series (2012); re-entry into purified water market in 2024.

• Founder and largest individual shareholder: Zhong Shanshan - retains controlling influence through his stakes and founder-linked holding structures.
• Public shareholders: institutional and retail investors via Hong Kong listing (ticker 9633.HK) following the 2020 IPO.
• Management and employee shareholdings and strategic investors comprise the remaining ownership mix.

• Source selection and investment: acquisition and development of premium water sources (e.g., Huangshan) to ensure natural taste and traceability.
• R&D and product innovation: periodic launches of functional and flavored lines (Victory Vitamin Water, Whisked Milk Tea) to capture evolving demand.
• Sustainability and market responsiveness: re‑entry into purified water in 2024 and continued CAPEX in water sourcing and packaging efficiency.

Nongfu Spring Co., Ltd. (9633.HK): Mission and Values

• Water Products - packaged natural mineral and purified bottled water (flagship category).
• Ready-To-Drink Tea Products - value and premium tea beverages, refined tea processing and branding.
• Functional Drinks Products - vitamins, amino-acid beverages, and other enhanced hydrating formulas.
• Juice Beverage Products - fruit juices, nectar and blended fruit drinks.
• Other Products - soda, sparkling-flavored drinks, lemon juice, coffee beverages, plant-based protein drinks and seasonal SKUs.

• Integrated production model - Nongfu Spring owns and contracts manufacturing facilities across China, including dedicated lines for water bottling, tea extraction/refinement and cold-chain aware processing for juice products.
• Supply chain & distribution - centralized procurement of packaging (bottles, caps), control of water sources and regional distribution hubs enable margin preservation and fast replenishment to thousands of retail outlets and e-commerce channels.
• R&D and refinement activities - ongoing IT R&D and refined tea-processing capabilities enhance product quality, shelf-life and launch cadence for premium tea and functional beverages.
• Channel diversification - modern trade, grocery, convenience stores, HORECA and online marketplaces (Tmall, JD, Douyin & others) create multi-channel demand capture and promotional flexibility.
• Branding & marketing - national brand campaigns and localized SKUs allow price-tier segmentation from mass-water to premium tea lines.

• Water Products: ~55-65% of revenue - high-volume core business driven by bottled water SKUs and pricing mix.
• Ready-to-Drink Tea Products: ~20-30% - premiumization, refined tea processing and seasonal launches lift ASPs.
• Juice Beverage Products: ~5-10% - lower share but strategic for portfolio breadth and margin improvement in premium juice segments.
• Functional Drinks: ~3-7% - growth category supported by health trends and product innovation.
• Other Products: ~1-5% - new categories (coffee, plant-based protein, sparkling drinks) for diversification.

• Control of raw water sources and proprietary sourcing agreements reduce input volatility for core water products.
• In-house and partnered production lines for tea extraction and aseptic filling increase product differentiation and cost control.
• Centralized logistics hubs and nationwide cold-chain coverage improve fill-rate and reduce spoilage for juice and functional lines.
• IT R&D investments - data analytics for SKU rationalization, demand forecasting and digital marketing to improve inventory turns and promotional ROI.

• SKU & price-tier expansion - launching premium tea and functional SKUs to increase average selling prices and overall margin.
• Channel optimization - shifting sales mix toward higher-margin modern trade and direct-to-consumer e-commerce channels.
• Manufacturing efficiency - continuous CapEx to modernize filling lines and reduce per-unit production cost.
• Marketing & brand equity - national campaigns to maintain pricing power in bottled water while cross-selling new categories to existing distribution.

• Diversified product portfolio that mitigates reliance on single SKU volatility.
• Vertical integration across sourcing, production and distribution for quality control and margin stability.
• R&D focus on refined tea processes and digital capability builds to accelerate product launches and reduce time-to-market.
• Adaptive go-to-market strategy that aligns SKUs and pack sizes to regional consumption patterns.

Nongfu Spring Co., Ltd. (9633.HK): How It Works

• Primary revenue engine: bottled water (core brand and value/sub-brands) sold through modern trade, traditional trade, e-commerce and HORECA channels.
• Growth engines: ready-to-drink tea portfolio (expected >20% revenue growth) and emerging juice beverages as a third major growth pillar.
• Vertical integration: control of high-quality water sources, regional factories, in-house bottling and logistics partnerships to protect margins and quality.

• Input: investment in premium water sources (e.g., Huangshan) and new factories (e.g., Jiande City) to increase capacity and reduce unit production costs.
• Manufacturing: automated bottling lines and regional plants shorten supply chains and lower distribution distances, improving freshness and lowering logistics expense.
• Distribution & sales: multi-channel placement (supermarkets, convenience stores, online marketplaces, vending and catering) maximizes reach and frequency.
• Product portfolio strategy: higher-margin tea and juice SKUs offset slower growth in staple water, diversifying revenue and improving blended margins.
• Pricing & promotions: mix of premium and value SKUs preserves market share while extracting higher ASPs on specialty offerings.

• Stable top-line: RMB 42.896 billion in 2024 with slight growth (+0.5%) demonstrates resilience of core bottled-water segment.
• Revenue mix shifting: expected >20% growth in tea will materially increase contribution of non-water categories to overall sales.
• New growth vector: juice beverages emerging as a third driver reduces reliance on single-product risk and taps growing consumer preference for diversified functional drinks.
• Market tailwinds: packaged drinking water industry >RMB 310 billion provides headroom for share gains and organic growth.
• Capacity & margin upside: Huangshan and Jiande investments likely to improve production capacity and operational efficiency, supporting margin expansion as higher-margin categories scale.

Nongfu Spring Co., Ltd. (9633.HK): How It Makes Money

• Core revenue streams: packaged drinking water, tea beverages, juice beverages, functional beverages, and agricultural products.
• Channels: traditional retail (supermarkets, convenience stores), modern trade, e-commerce, foodservice and institutional sales.
• Monetization levers: premiumization, SKU expansion, seasonal promotions, exports and value-added functional products.

• Nongfu Spring's diversified product matrix broadens addressable market and supports margin improvement through higher-value SKUs and functional/tea segments.
• Strategic investments in production capacity, logistics and brand marketing sustain distribution depth and market share in China's fast-moving beverage market.
• Commitment to natural, healthy positioning and sustainability enhances consumer trust and regulatory alignment-key for long-term resilience.
• Growth drivers: premium bottled water, expanding ready-to-drink tea and functional beverage penetration, e-commerce share growth, and selective M&A/partnerships.