---
title: "Nongfu Spring: Bottled Water Slows, RTD Tea Sprints"
type: "Topics"
locale: "en"
url: "https://longbridge.com/en/dolphin/post/43598064.md"
description: "Tea beverages continued to surge, with margins hitting new highs. Packaged water was largely flat and saw profitability slip. Overall, a solid headline, but the mix was weak."
datetime: "2026-08-26T05:43:54.000Z"
locales:
  - [en](https://longbridge.com/en/dolphin/post/43598064.md)
  - [zh-CN](https://longbridge.com/zh-CN/dolphin/post/43598064.md)
  - [zh-HK](https://longbridge.com/zh-HK/dolphin/post/43598064.md)
author: "[Dolphin Research](https://longbridge.com/en/dolphin.md)"
generator: "portal-rs"
---

# Nongfu Spring: Bottled Water Slows, RTD Tea Sprints

**Nongfu Spring: Bottled Water Brakes, Tea Runs Ahead**

On the evening of Aug 25 Beijing time, Nongfu Spring (9633.HK) released its H1 2026 results. **Top line and earnings both grew double digits, but mix shifted: tea beverages kept surging with margins at a new high, while bottled water was flat with margin slippage — a set of results strong in aggregate but mixed in structure.**$NONGFU SPRING(09633.HK)

**Key takeaways:**

**1) Bottled water hit the brakes.** H1 bottled water revenue was RMB 9.64bn, up only 2.1% YoY, with growth decelerating QoQ. **The main drag was cooler, rainier weather across much of China in Q2, which suppressed core outdoor on-the-go consumption; third‑party data show industry sales down 7–9% YoY.** Nongfu still outgrew the market but faced pressure, **with segment margin down 1.7ppt YoY to 33.8% as PET costs jumped and the company held price to defend share while peers hiked.**

**2) Tea beverages sprinted ahead, setting a new margin high.** Tea revenue reached RMB 13.12bn, +30.1% YoY, **lifting its mix by 4.8ppt to 44.2% and widening the gap vs. bottled water.** Segment margin hit 49%, up 0.5ppt YoY to a record. The first low‑temp tea Cold Brew Longjing, launched at Sam's Club in Apr, has topped Sam's sugar‑free beverages bestseller list.

**3) Functional drinks traded near‑term margin for new product push.** Functional beverages delivered RMB 3.35bn revenue, +15.6% YoY, **but margin fell 2.4ppt YoY to 44.7%.** Nongfu launched a new 'Nongfu Spring' electrolyte drink line and invested heavily around the 2026 FIFA World Cup on CCTV, prioritizing share over short‑term profit.

**4) GPM edged up, but H2 cost pressure looms:** PET chip prices climbed from ~RMB 6,300/ton in Jan to ~RMB 9,000/ton by Apr (**+40% in three months**). **H1 GPM still rose 0.6ppt YoY to a record 60.9% thanks to low‑cost inventories locked in earlier,** implying higher cost headwinds in H2.

**5) Slightly higher marketing spend, core profitability intact:** The company boosted World Cup marketing and brand building for the new electrolyte line, lifting the sales expense ratio to 19.7% (+0.1ppt YoY). Management expenses remained disciplined, and Dolphin Research estimates **core OP margin rose 0.9ppt to 37.5%.**

**6)** For the earnings call, cf. '[Nongfu Spring (Trans): Tea Leads, Full‑Year Double‑Digit Growth Target Intact](https://longbridge.cn/en/dolphin/post/43598019?channel=SH000001&invite-code=UIFH4YD0&app_id=longbridge&utm_source=longbridge_app_share&locale=zh-CN&share_track_id=e418c26d-e583-4feb-a390-3cb48549cb10)'.

**7) Financial snapshot:**

**Dolphin Research view:**

For bottled water, the recent thesis had been: green bottle cements presence, red bottle takes over, and margins keep setting new highs. This time growth slowed to 2.1% with margin down, a clear miss vs. that trajectory.

**Beyond weaker Q2 category demand, channel checks show rivals like C'estbon, Ganten, Wahaha, and Jinmailang running aggressive case promotions.** Low‑priced purified water siphoned off mass consumers, signaling tougher competition as the category enters a zero‑sum phase.

**Tea beverages remain stellar,** and management had noted further share gains in sugar‑free tea are increasingly difficult. **Reaching a new margin high suggests growth is shifting from share gains toward higher ticket sizes and broader use cases, improving quality of growth.**

Also noteworthy, **Nongfu now uses Sam's Club as a new‑product incubator and premium springboard. Cold Brew Longjing and Lily Ophiopogon Decoction both debuted at Sam's, and the earlier 17.5° NFC broke into the in‑home occasion via Sam's.** **This approach sidesteps the toughest hurdle in beverage innovation — fighting for shelf space in mom‑and‑pop stores against dozens of SKUs, where success rates are low — as Sam's selection itself provides endorsement.** Whether this path can be replicated will be key to assessing Nongfu's 'third growth curve', and matters more than adding tens of thousands of coolers.

Valuation: **Dolphin trims full‑year growth for bottled water. Given a high base in H2 2025 and seasonality that typically leaves H2 revenue slightly below H1, we model a 3% decline in bottled water in H2 with other categories unchanged, implying full‑year revenue of RMB 58.6bn.** Using a 29% net margin (higher raw material costs, slightly below last year), net income would be ~RMB 17.0bn. At ~25x, that equates to ~8% full‑year growth, which we do not view as cheap.

Given Nongfu remains one of the highest‑quality names in the sector, from a trading perspective we would wait out the high H2 base and look to re‑enter once bottled water demand shows signs of recovery.

**Detailed read‑through:**

As Nongfu reports by four categories — bottled water, tea, functional beverages, and juice — we analyze them in that order below.

**I. Overall: solid totals, imbalanced mix**

H1 2026 revenue was RMB 29.72bn (+16.0% YoY) and net income RMB 8.89bn (+16.6% YoY). **Growth slowed QoQ, but 16% remains strong within beverages.**

**The structural shift is the story: Nongfu is transitioning from a 'water company' to a 'tea company', confirmed this period.** Net margin was 29.9%, roughly flat YoY.

**II. Bottled water: sharp slowdown with margin compression**

**H1 bottled water revenue was RMB 9.64bn (+2.1% YoY). Segment margin was 33.9% (‑1.7ppt YoY), and OP was RMB 3.26bn (‑2.7% YoY), the only category with declining profit.**

Dolphin Research sees two drivers:

**a) Weaker demand on a high base:** Last H2, the '10‑thousand‑case display' campaign drove revenue to +25%, an intensity that was unsustainable. Combined with softer Q2 category demand, bottled water took a hit.

**b) Raw material spike:** PET chips rose from ~RMB 6,300/ton in Jan to ~RMB 9,000/ton by mid‑Apr, +40% in three months. Among the four categories, bottled water has the lowest ASP and highest PET mix, further eroding margins.

**III. Tea: the brightest growth engine**

H1 tea revenue was RMB 13.12bn (+30.1% YoY) with OP of RMB 6.41bn (+31.3% YoY), making it the core profit driver.

Management earlier stated that Oriental Leaf already holds a high share in sugar‑free tea and incremental share gains are harder, shifting focus to category expansion and converting sugared‑tea users. **Thus, share‑grab contributes little to the +30%, with growth mainly from category enlargement, pack size extensions, and new occasions.** Actions included new 335ml and 900ml SKUs for White Tea (portable vs. in‑home), and 'Longjing New Tea' as a spring limited each of the past five years.

Cold Brew Longjing is Oriental Leaf's first low‑temperature tea, launched at Sam's on Apr 25 with cold‑brew processing and end‑to‑end cold chain. It has ranked among Sam's top water & beverage sellers for months and leads sugar‑free beverages. Given Lily Ophiopogon Decoction also debuted at Sam's and 17.5° NFC earlier penetrated in‑home via Sam's, **the playbook is clear: validate product strength and premium pricing in membership clubs, then expand omni‑channel.**

**IV. Functional beverages & juice: one prioritizes launch over margin, the other drives efficiency**

These two lag in first‑mover advantage and resource allocation, yet diverged this period.

Functional beverages posted RMB 3.35bn revenue (+15.6% YoY), but OP grew only 9.7%. **Profit growth lagged revenue materially.**

The reason is clear: the company launched a new 'Nongfu Spring' electrolyte line (lemon and grapefruit, 550ml and 950ml SKUs, positioned as low sugar and light burden) and advertised on authoritative media such as CCTV around the 2026 World Cup. **Notably, it used the main 'Nongfu Spring' brand rather than 'Powerade‑like Liliangdi', signaling strategic‑level investment.**

Juice revenue was RMB 2.92bn (+14.0% YoY) with a clear revenue slowdown, but profit rose 31% YoY — more than twice revenue growth. **This suggests a shift from distribution‑led growth to mix‑led margin, with 17.5° and NFC expanding family sizes and C100 reinforcing vitamin C positioning.**

**V. Higher Olympic‑cycle marketing, yet profitability still improved**

H1 GPM rose 0.6ppt YoY to 60.9%, a record high.

Per management, PET is procured via a mix of stockpiling, fixed‑price contracts, and spot purchases. H1 impact was limited by inventory and fixed prices, but the drag will be larger in H2, meaning the 60.9% was supported by low‑cost stock and the true impact comes later.

On opex, **Nongfu ramped World Cup marketing for the electrolyte line and invested in new‑category branding, lifting the sales expense ratio to 19.7% (+0.1ppt YoY). With G&A still restrained, Dolphin Research estimates core OP margin rose 0.9ppt to 37.5%.**

**Longbridge Dolphin Research on 'Nongfu Spring' — prior pieces:**

**Earnings season**

Mar 25, 2026 earnings take '[**Nongfu Spring: From Defense to Offense, 'Water Moutai' in Full Rally**](https://longbridge.cn/en/dolphin/post/39499753?channel=SH000001&invite-code=UIFH4YD0&app_id=longbridge&utm_source=longbridge_app_share&locale=zh-CN&share_track_id=23b18562-703e-48f4-8006-fc9194eda038)'

Aug 26, 2025 earnings take '[Nongfu Spring: Green Bottle Fades, Red Bottle Ascends, 'Water Moutai' Strikes Back](https://longbridge.cn/en/topics/33345434?channel=SH000001&invite-code=7XHHT4&app_id=longbridge&utm_source=longbridge_app_share&locale=zh-CN&share_track_id=567c1657-920c-4199-8626-636ddf4ab014)'

Mar 25, 2025 earnings take '[Nongfu Spring: Has the 'Porter of Nature' Lost Steam](https://longportapp.cn/en/topics/28355726?channel=t28355726&invite-code=7XHHT4&app_id=longbridge&utm_source=longbridge_app_share&locale=zh-CN)'

Risk disclosure and disclaimer: [Dolphin Research Disclaimer and General Disclosure](https://support.longbridge.global/topics/misc/dolphin-disclaimer)

### Related Stocks

- [09633.HK](https://longbridge.com/en/quote/09633.HK.md)

## Comments (1)

- **晴也 (Zhou Ai) · 2026-08-26T08:05:55.000Z**: Forward to my space


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> **Disclaimer: This article is for reference only and does not constitute any investment advice.**