Core Insights - BrandFinance's report ranks Nongfu Spring as the 3rd most valuable non-alcoholic beverage brand globally, marking the first time a Chinese brand has entered the top three, following Coca-Cola and Pepsi [1][3] Brand Value and Growth - In 2025, Nongfu Spring's brand value reached $11.09 billion, reflecting a year-on-year growth of 33.6% [3] - The Brand Strength Index (BSI) increased by 3.5 points to 91.1, achieving the highest AAA+ rating, establishing Nongfu Spring as a benchmark in the Asian non-alcoholic beverage sector [3] Product Diversification and Market Strategy - Nongfu Spring has developed a diversified product matrix that includes bottled water, tea, juice, and functional beverages, creating a synergistic effect where consumers may purchase tea alongside water [3] - The brand's "0 sugar, 0 calories, 0 artificial flavors" label for its Oriental Leaf tea has led to continuous market share growth, with a compound annual growth rate exceeding 86% over the past three years [3] Competitive Advantages - Nongfu Spring's brand value growth is closely linked to its strong position in premium water sources, with 15 major water sources and ongoing projects for further development [4] - The company's commitment to a "natural and healthy" brand philosophy has established significant competitive barriers [4] Brand Image and Global Expansion - The diverse aesthetic design of Nongfu Spring's packaging caters to various consumer needs, combining high-end and localized strategies to enhance brand value [4] - The company aims to become a world-class international enterprise, actively exploring overseas market opportunities and leveraging China's biodiversity to introduce more health products globally [4] Brand Evaluation Standards - BrandFinance's evaluation system includes core dimensions such as brand strength index, financial performance, and market competitiveness, making the "Global Soft Drink Brand Value 50" list a gold standard for measuring brand value [5]

董 事 會 會 議 通 告 農夫 山 泉股 份 有限 公司（「 本公司」）董 事會（「董事會」）謹 此宣 佈，董事 會 會 議將 於 2025 年 8 月 26 日（星 期 二 ）舉 行，藉 以（ 其中 包 括 ）審議 及 批准 本 公 司及 其 附屬 公 司截 至 2025 年 6 月 30 日止 六 個月 的 未經 審核 中 期業 績 及其 發 佈， 並 考慮 建 議派 發 中 期 股息 （ 如有 ）。 代表 董 事會 農夫山泉股份有限公司 董事 長 鍾睒睒 香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對 其 準 確 性 或 完 整 性 亦 不 發 表 任 何 聲 明，並 明 確 表 示，概 不 對 因 本 公 告 全 部 或 任 何 部 分 內 容而產生或因倚賴該等內容而引致的任何損失承擔任何責任。 NONGFU SPRING CO., LTD. 農夫山泉股份有限公司 （於 中 華人 民 共和 國註 冊 成立 的 股份 有限 公 司） （股 份 代號 ： 9633） 香港， 2025年 8月 14日 於 本 公 告 日 期 ，本 公 司 董 事 會 包 括 執 行 董 事 鍾 ...

Core Viewpoint - The tea beverage market is experiencing a downturn, as evidenced by the significant revenue decline of Master Kong's tea drinks, which fell by 6.3% year-on-year in the first half of 2025, resulting in a revenue drop of 7.22 billion yuan [1] Company Performance - Master Kong's tea beverage revenue decreased to 10.67 billion yuan, contributing to an overall beverage revenue decline of 2.6% to 26.359 billion yuan [1] - The sales of bottled water and juice also saw declines, with bottled water down 6.0% to 2.377 billion yuan and juice down 13.0% to 2.956 billion yuan [1] - In contrast, carbonated and other beverages experienced a growth of 6.3%, reaching 10.256 billion yuan [1] Industry Trends - Despite Master Kong's decline, the tea beverage segment remains a growth driver for the industry, as demonstrated by Nongfu Spring's impressive revenue growth in tea beverages from 2021 to 2024, with a peak growth rate of 83% in 2023 [1] - Nongfu Spring's tea beverage revenue reached 16.7 billion yuan in 2024, surpassing packaged water to become its largest product category, accounting for 39% of total revenue [1] - The decline in Master Kong's tea beverage sales may not reflect a decrease in overall market demand, as evidenced by a 9.1% increase in revenue for Uni-President China’s tea beverages, which reached 5.068 billion yuan in the same period [1] - The shift in consumer preference towards sugar-free tea, dominated by Nongfu Spring's Dongfang Shuye brand, may indicate changing market dynamics affecting Master Kong's sugar tea segment [1]

Core Insights - The beverage industry is witnessing a shift back to sugary tea drinks as the market for sugar-free tea slows down and consumer preferences evolve towards sweeter options [1][4][10] Market Trends - The sugary tea market, valued at nearly 100 billion, is experiencing renewed interest with new and established brands entering the space [1][10] - Major players like Nongfu Spring and Yuanqi Forest are launching new products, indicating a competitive landscape in the sugary tea segment [6][11] Consumer Preferences - There is a growing demand among younger consumers, particularly Gen Z and post-2000s, for sweeter beverages, which is driving the resurgence of sugary tea [4][10] - Despite health concerns, the demand for sugary tea remains, suggesting that consumer preferences are shifting rather than disappearing [11] Competitive Landscape - The sugary tea market has traditionally been dominated by brands like Master Kong and Uni-President, which hold significant market shares [9][10] - Recent statistics show that the market concentration has slightly decreased, indicating potential opportunities for new entrants [11] Product Innovation - Companies are focusing on product differentiation, with brands like Dongpeng Beverage combining tea with juice and Yuanqi Forest emphasizing real tea and reduced sugar [11][16] - Innovations in flavors and product types are being introduced to attract consumers, although many remain in niche markets [16] Market Dynamics - The sugary tea segment is characterized by a long-standing presence of products like iced black tea, which has been a staple since the 1990s [7][14] - The market is also seeing a shift towards lower-tier cities, where there is a higher acceptance of sugary beverages [16][17]

Core Insights - The tea beverage market is witnessing a resurgence in sugary tea products as the market for sugar-free tea slows down and consumer preferences shift towards sweeter options [1][3][12] Market Trends - The sugary tea market, previously overshadowed by the rapid rise of sugar-free tea, is now experiencing renewed interest with major brands re-entering the segment [4][5] - The sugary tea market is valued at nearly 100 billion, with significant competition emerging as brands like Nongfu Spring and Yuanqi Forest launch new products [5][11] Consumer Preferences - A new generation of consumers, particularly Gen Z and younger demographics, is increasingly seeking sweeter beverage options, indicating a shift in taste preferences [3][15] - Despite health concerns, the demand for sugary tea remains, suggesting that the market has room for growth and innovation [15][20] Competitive Landscape - Major players in the sugary tea market include Master Kong and Uni-President, which dominate the market share, with Master Kong projected to generate 21.7 billion in revenue from tea beverages in 2024 [10][16] - The market concentration has slightly decreased, with the top three companies' market share dropping from 73.38% to 72.67% between 2023 and 2024, indicating potential opportunities for new entrants [15] Product Innovation - Brands are focusing on product differentiation to revitalize the sugary tea segment, with innovations such as low-sugar options and unique flavor combinations [16][18] - The introduction of new product lines, such as carbonated sugary tea, reflects an effort to attract consumers looking for novel beverage experiences [16][18] Market Dynamics - The sugary tea market is expected to grow, particularly in lower-tier cities where consumer acceptance of sweetened beverages is higher [20] - The competitive landscape is evolving as brands adapt to changing consumer preferences and seek to capture market share through innovative offerings and strategic marketing [15][20]

Investment Rating - The industry is rated positively, expecting an overall return exceeding 5% above the CSI 300 index in the next six months [19]. Core Insights - The report highlights a rebound in high-growth sectors driven by capital flow, with the food and beverage sector rising by 0.6% this week, ranking 26th among 31 sub-industries [11]. - The report emphasizes the importance of focusing on high-growth and undervalued recovery opportunities within the food and beverage sector [7]. Summary by Sections Sub-industry Ratings - No specific ratings for liquor, beverages, and food sub-industries, but several companies are recommended for investment: - Guizhou Moutai: Buy - Luzhou Laojiao: Buy - Shanxi Fenjiu: Hold - Jiansi Yuan: Hold - Yingjia Gongjiu: Hold - Dongpeng Beverage: Buy - Nongfu Spring: Buy - Mixue Group: Hold - Lihigh Food: Buy - Angel Yeast: Buy [3][18]. White Wine Sector - The white wine index increased by 0.38%, indicating a bottoming phase, with expectations for a local rebound despite ongoing policy and demand pressures [15]. - Guizhou Moutai's limited edition product sold out quickly, generating approximately 1.79 billion yuan in sales [5]. - The report suggests capitalizing on low valuation recovery opportunities in the white wine sector, recommending Guizhou Moutai, Luzhou Laojiao, Shanxi Fenjiu, and Jiansi Yuan [15]. Consumer Goods Sector - The snack and soft drink sectors have shown significant rebounds, attributed to previous valuation pressures and adjustments in mid-year expectations [16]. - Unified Enterprises reported a 10.6% revenue increase and a 33.2% net profit increase in H1 2025, exceeding market expectations [17]. - The report recommends focusing on high-growth snack and beverage companies, particularly Dongpeng Beverage, Mixue Group, and Nongfu Spring, while also considering undervalued stocks like Angel Yeast and Lihigh Food [16][17].

Industry Overview - The juice industry in China is defined as the production of juice products made from fresh or refrigerated fruits, with a minimum juice content of 10% [1] - The industry is categorized under beverage manufacturing, specifically soft drink manufacturing [1] Industry Chain Analysis - The juice industry chain consists of upstream (raw materials and equipment suppliers), midstream (juice processing companies), and downstream (distribution and sales channels) [2][5] - Upstream includes fruit planting bases and packaging material suppliers, while midstream focuses on juice processing and product manufacturing [2][5] Industry Development History - The juice industry in China has evolved over 30 years, shifting from an export-oriented model to a domestic demand-driven and technology-led market [8] - Key milestones include the establishment of Huiyuan in 1992, the rise of low-concentration juice in 2001, and the emergence of NFC juice post-2008 [8][11] Policy Background - Multiple policies have been introduced to regulate and support the juice industry, focusing on food safety, resource conservation, and market standardization [12] - Policies aim to enhance the competitiveness of the juice industry and promote healthy product development [12] Current Market Status - The juice market in China is steadily growing, with sales increasing from 120 billion to 156 billion yuan from 2019 to 2024 [13] - High-end juice products, particularly those produced using NFC and HPP technologies, are driving market growth, with their sales share rising from 12% in 2019 to 23% in 2024 [13] Competitive Landscape - The juice market features a tiered competitive structure, with leading companies like Coca-Cola, Master Kong, and Nongfu Spring dominating the market [17][21] - Emerging brands are also gaining traction, particularly in the high-end segment, with significant growth rates [15][21] Regional Competition - The juice industry exhibits regional competition, with Shandong leading in the number of listed companies, followed by Hebei, Zhejiang, and Guangdong [19] - Each region has its unique focus, such as concentrated juice production or high-end juice products [19] Future Trends and Predictions - The demand for high-end, health-oriented juice products is expected to continue driving innovation and market upgrades [23] - The market is diversifying, with younger consumers and new consumption scenarios emerging, leading to new growth opportunities [23]

Summary of Nongfu Spring Conference Call Company Overview - **Company**: Nongfu Spring - **Industry**: Bottled Water and Soft Drinks Key Points Financial Performance and Valuation - Nongfu Spring has demonstrated strong performance, with a valuation range of 40-50 times earnings from 2021 to 2023, despite a dip to 20 times in 2024 due to pandemic impacts and declining bottled water revenue. The valuation has since recovered to around 32 times, indicating resilience and recovery capability [2][3][17]. Market Position and Revenue Breakdown - The company leads the bottled water market and has a comprehensive presence in the soft drink sector. Tea beverage revenue reached 16.7 billion, juice revenue was 4.1 billion, and other beverage revenue was 1.2 billion, ranking first, second, and fourth in their respective categories [2][6]. Growth Drivers in Bottled Water Market - The bottled water market has shown high growth potential over the past 20-30 years, driven by pollution events, health trends, and increasing consumer demand for low-sugar and no-sugar products. This trend suggests continued growth opportunities in the future [2][8]. Unique Market Characteristics in China - The Chinese bottled water market features unique channel characteristics, with extensive coverage in rural areas. Although emerging retail channels are promoting private labels, online penetration remains low due to the low price and high weight of bottled water, leading to inefficiencies in online sales [2][11]. Strategic Management and Shareholding Structure - Nongfu Spring is controlled by Zhong Boss and Yangshengtang, holding 85% of the shares. The company has attracted long-term institutional investors, and its experienced management team, with many executives having over a decade of experience, ensures stable development [2][7]. Expansion Strategies - In South China, Nongfu Spring allocates 14% of its gross margin to terminal sales, enhancing profitability for distributors. The company also increases distributor profits through higher-margin beverage products, improving overall channel efficiency [5][14][15]. Product Selection and Competitive Advantage - The company focuses on long lifecycle, high repurchase rate, and functional beverage categories, such as energy drinks and coffee, to meet consumer needs. This strategy has led to increased profitability across various product lines [5][16][19]. Future Outlook - Short-term expectations include accelerated growth in terminal operating data and a potential return to a 40 times valuation if performance in iced tea or NFC products improves. Long-term projections suggest a revenue growth of 10%-15% over the next three years, with the possibility of becoming a Chinese equivalent of Coca-Cola [17][18]. International Expansion Potential - Products like sugar-free tea have potential for international markets, particularly in Europe and the United States, indicating a strategic direction for future growth [18]. Additional Insights - The company’s ability to maintain a competitive edge in the soft drink industry is attributed to its strong channel competitiveness, brand leadership, and new product development capabilities, positioning it as a unique platform company in the fast-moving consumer goods sector [19].

Investment Rating - The report maintains an "Increase" rating for the food and beverage industry, indicating a positive outlook for the sector [4]. Core Insights - The report highlights that the liquor industry is gradually releasing pressure from distribution channels, indicating a potential for future growth. It suggests focusing on three main lines: leading brands, high-certainty regional liquors, and elastic stocks benefiting from recovery and increased risk appetite [1][2]. - The snack sector shows significant growth potential, with companies like Yanjing Beer and Zhujiang Beer being highlighted for their strong performance. The report emphasizes the importance of channel leadership and growth potential in selecting stocks [3][6]. Summary by Sections Liquor Industry - The report notes that the liquor industry is experiencing a deep adjustment, shifting from scale growth to high-quality development. It emphasizes the importance of brand strength and strategic initiatives to capture new consumer trends [2]. - The expected revenue for Zhenjiu Lidong in H1 2025 is projected to be between 2.4 billion to 2.55 billion yuan, reflecting a year-on-year decline of 38.3% to 41.9% due to economic uncertainties and policy impacts [2]. Beer and Beverage Sector - The beer segment shows promising results, with Huiquan Brewery reporting a revenue of 351 million yuan in H1 2025, a year-on-year increase of 1.03%, and a net profit of 40 million yuan, up 25.52% [3]. - Unified Enterprises China achieved a revenue of 17.087 billion yuan in H1 2025, representing a 10.6% year-on-year growth, with a net profit of 1.287 billion yuan, up 33.2% [3]. Snack Sector - The snack sector is highlighted for its recovery in stock prices, with expectations for continued high growth due to new product launches and channel transformations. The report notes a narrowing decline in raw milk prices, which may positively impact the dairy segment [6].

Core Viewpoint - The entry of Nongfu Spring into the iced tea market with its new product "Ice Tea" is expected to intensify competition in the beverage industry, particularly targeting the existing player Yuanqi Forest, which has seen significant sales growth in its iced tea segment [6][7]. Group 1: Market Dynamics - Nongfu Spring plans to invest 2 billion yuan in research and promotion for its iced tea product, emphasizing its "100% real tea extraction" process and "0 additives" approach [7]. - Yuanqi Forest's iced tea sales reached 200 million yuan in 2023 and are projected to exceed 1 billion yuan in 2024, marking a 500% year-on-year growth [19]. - The iced tea market is characterized by fierce competition, with Yuanqi Forest's sugary iced tea challenging established brands like Master Kong and Uni-President, while Nongfu Spring's no-sugar iced tea aims to capture market share [7][20]. Group 2: Historical Context - The iced tea category in China was pioneered by the local brand "Xuri Sheng," which launched its iced tea product in 1994 and achieved significant market success, capturing over 70% market share at its peak [9][12]. - Following Xuri Sheng's success, competitors like Uni-President and Master Kong entered the market, leading to intense competition and the eventual decline of Xuri Sheng by 2002 [13][15]. Group 3: Current Competitive Landscape - As of 2024, Master Kong's iced tea revenue approached 18 billion yuan, maintaining a dominant position in the market, while Xuri Sheng has ceased operations [15][20]. - Uni-President has also adapted its strategy by launching low-sugar versions of its products and increasing marketing efforts, resulting in an 8.2% revenue growth in its beverage segment [21]. - Yuanqi Forest has adjusted its product sizes and introduced new flavors to enhance its market presence, achieving a 460% year-on-year sales growth in 2024 [22]. Group 4: Future Trends - The global iced tea market is projected to reach 53.3 billion USD in 2023, with a compound annual growth rate of 6.7%, indicating strong growth potential [24]. - Consumer preferences are shifting towards reduced-sugar or no-sugar options, with 71.4% of consumers considering "sugar reduction" as a key factor in their purchasing decisions [24].