New standards for bottled water may affect Tingyi, Coca-Cola

New standards for bottled water may affect Tingyi, Coca-Cola
Staff Reporter
China’s National Health and Family Planning Commission is soliciting opinion regarding new standards for bottled drinking water, which may not be good news for companies that market their products under the guise of “mineral water,” Shanghai’s National Business Daily reports.The market for bottled water in China is worth about 120 billion yuan (US$19.3 billion) a year, growing around 15% annually. As of the end of March 2013, the top five players in the market were Tingyi, Nongfu Spring, Wahaha, C’estbon and Coca-Cola, with respective market share of 23%, 22%, 18%, 9% and 7%.
The market is also broken down into pure water, mineral water, natural water and spring water, with shares of 44%, 28%, 13% and 9%, respectively, with the remaining 6% occupied by “other.” Tingyi and Coca-Cola lead in sales of mineral water.
As early as in 2009, media outlets such as Guangzhou’s Southern Weekend had called into question some brands selling mineral water, including Tingyi, citing experts who asserted that what was being sold as mineral water simply contained some artificial food additives and that misleading marketing led consumers to believe they were purchasing natural spring water.
The media reports had a significant impact on Tingyi, with its market share falling from 19.1% in the first half of 2008 to 16.5% by the end of 2009. However, Tingyi managed to stage a comeback by introducing a new type of bottle in 2013, and it has returned to a leading market share to 24%.
Tingyi’s main strategy is to offer low prices to be competitive, gaining a gross margin of just RMB0.10 (US$0.016) from a bottle of water priced at 1 yuan (US$0.16).
Tingyi’s popular bottled tea drinks meanwhile have a 53.6% share as of September 2013, according to the statistics from global marketing research firm AC Nielsen.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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