Nongfu Spring Sees Slowest Growth Since 2020 Listing as PR Hit Lingers

(Bloomberg) -- Shares of Chinese bottled water giant Nongfu Spring Co. tanked on Wednesday after months of negative publicity contributed to a sharp slowdown in earnings growth last year.

Net income grew 0.4% to 12.1 billion yuan ($1.7 billion) in 2024, compared to double-digit growth seen in the preceding three years. Revenue rose a meager 0.5%, the lowest since 2020, the beverage company run by China’s richest man Zhong Shanshan said in an exchange filing on Tuesday.

The weaker-than-expected earnings sent shares of Nongfu tumbling as much as 11.3%, before closing 8.3% lower on Wednesday. Consequently, Zhong Shanshan’s wealth took a knock by $3.7 billion to touch $54.1 billion, the lowest since Nov. 27.

The company has been dealing with a series of public relations crisis, including calls for its boycott by nationalist consumers over some of the brand’s elements being reminiscent of Japan and its impact on a domestic rival. In July, Hong Kong’s Consumer Council also questioned the quality of Nongfu’s water, an assertion it later walked back on after push-back from the company.

Sales from its water products fell 21% amid the controversy, though the segment’s proportion of total revenue rose slightly to 42.9 billion yuan, from about 42.7 billion yuan a year earlier.

Nongfu had faced a “historical test” from the online backlash but its packaged water products held onto their leading share of the market, Zhong said in the filing. The firm will also continue to push into overseas markets, he said.

The beverages giant also disrupted the Chinese bottled market last year by selling its purified water products at significantly lower prices than rivals. It launched a 380ml bottle of mineral water at 18 yuan for 15 bottles, or just under 1.2 yuan each.

(Updates with dent to founder’s wealth in the third paragraph.)

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