---
title: "CR Beverage's net profit is expected to drop by 20%-30% in the first half of the year. Is selling water no longer attractive?"
type: "Topics"
locale: "en"
url: "https://longbridge.com/en/topics/32387347.md"
description: "The consumer sector of the Hong Kong stock market was not calm in July. On July 28, the "parent company of C'estbon"—China Resources Beverage (HK2460), which went public on the Hong Kong Stock Exchange in October last year, plummeted by 13.08% in a single day, bringing its cumulative decline to 22% from the IPO price of HKD 14.5, with its market value shrinking significantly. The direct trigger for this plunge was the semi-year profit warning issued by China Resources Beverage on July 25: it is expected that the net profit for the first half of 2025 will decline by 20% to 30% year-on-year. In contrast, institutions are generally optimistic about Nongfu Spring's expected profit growth during the same period..."
datetime: "2025-07-30T08:56:10.000Z"
locales:
  - [en](https://longbridge.com/en/topics/32387347.md)
  - [zh-CN](https://longbridge.com/zh-CN/topics/32387347.md)
  - [zh-HK](https://longbridge.com/zh-HK/topics/32387347.md)
author: "[港股研究社](https://longbridge.com/en/profiles/3199113.md)"
---

# CR Beverage's net profit is expected to drop by 20%-30% in the first half of the year. Is selling water no longer attractive?

The consumer sector of Hong Kong stocks in July was not calm.

On July 28, China Resources Beverage (HK2460), the "parent company of Yibao" which landed on the Hong Kong Stock Exchange last October, plummeted 13.08% in a single day. As a result, its stock price has fallen by 22% from the issue price of 14.5 Hong Kong dollars, with a significant shrinkage in market value.

The direct trigger for this plunge was the profit warning released by China Resources Beverage on July 25: it is expected that the net profit for the first half of 2025 will decline by 20% to 30% year-on-year.

Compared to the current situation where institutions are generally optimistic about the performance growth of Nongfu Spring, China Resources' short-term performance pressure is obvious, bringing a certain panic to the market; the deeper anxiety lies in the effectiveness of industry competition patterns and corporate strategic transformation.

**Behind the pressure on net profit: China Resources Beverage's "proactive adjustment" and the industry's "passive involution"**

In this performance forecast, China Resources Beverage explained that the decline in profit was due to an increase in sales expenses—based on medium- and long-term development plans, the company increased marketing resource investment, adjusted product mix, and gradually promoted channel adjustments in the first half of 2025, which had a phased impact on profit performance.

However, dissecting its previous financial report details and industry background, the boundary between "proactive" and "passive" has blurred—the so-called "proactive adjustment" is essentially a reactive response to the industry's "passive involution."

From an industry perspective, the intensification of track competition is forcing "water sellers" to burn money for space.

The Chinese packaged water market has long entered the "stock game" stage. According to Euromonitor International, the domestic packaged water market size in 2024 is about 246 billion yuan, but the industry growth rate has dropped from double digits in 2019 to 4.2%, long past the period of rapid growth.

In the stock market, the head camp occupied by several major leaders has also begun to stir up a battle again, with price wars becoming the most direct means of competition: in 2024, Nongfu Spring launched green bottle purified water priced below 1 yuan, with some channel unit prices dropping to 0.83 yuan per bottle, directly impacting Yibao's core price range; Wahaha and Master Kong followed suit with "low-price strategies," with terminal prices in some regional markets dropping to 1 yuan; Baisuishan uses "natural mineral water" as a differentiated selling point, trying to share the high-end market.

China Resources Beverage's packaged water business is clearly affected. In 2024, its packaged water retail sales grew by 4.5% year-on-year, outperforming the 2.5% growth rate of the packaged water market, but its corresponding packaged water revenue fell by 2.6%, marking the first negative growth since 2018, mainly due to a year-on-year decrease of 8.9% in revenue from small-sized bottled water (capacity <1L) to 7.028 billion yuan. It is worth noting that the revenue from medium and large-sized bottled water (1L-15L) grew against the trend by 8.6% to 4.607 billion yuan, partially offsetting the decline in small-sized products.

To cope with the loss of market share, China Resources Beverage "increased marketing resource investment" in the first half of 2025—from launching the "Drink Yibao for New Year" advertisement in collaboration with the Chinese national team during the Spring Festival, to frequent exposure on Guangdong TV, and promotional subsidies in offline channels, marketing expenses visibly increased.

Secondly, the adjustment of product structure temporarily dragged down profit margins.

China Resources Beverage is not sitting idly by. While increasing marketing, the company is promoting the growth of the "non-water beverage" business, attempting to create a second growth curve. But the cultivation of new business requires time and cost: in the first half of 2025, it intensively launched new products such as Zhiben Qingrun stewed pear flavor, light honey green grape flavor, instant drink products co-branded with Little Yellow Duck, and upgraded sugar-free tea brand "Zowei Tea" and new coffee brand "Yanbei."

These new products require upfront investment from research and development, production to channel distribution; and due to the "channel is king" nature of the beverage industry, the terminal penetration of new products relies on a large amount of ground promotion and sales, further pushing up sales expenses.

In addition, the pain of channel reform also affects efficiency in the short term.

China Resources Beverage's channel structure has long been dominated by traditional distributors (accounting for over 70%), but as consumer shopping habits shift to convenience stores and e-commerce, the company launched "channel refinement reform" in 2025—reducing the number of inefficient distributors and increasing the proportion of direct sales and e-commerce channels. This process inevitably accompanies short-term pain: distributor adjustments lead to unstable supply in some regions, upfront investment in direct sales channels (such as cold chain logistics and online operations) raises costs, and the price transparency of e-commerce channels compresses profit margins.

But how long will this "phased" situation last? Previously, China Resources Beverage stated at the performance meeting that in January-February 2025, packaging competition eased compared to last year, sales achieved growth, and the company will strengthen operations in the northern market and expand offline markets with more cost-effective new products, expecting steady expansion throughout the year.

But obviously, this is a question that requires more time to test, and capital is the least patient to wait for such uncertain issues.

Goldman Sachs downgraded China Resources Beverage's rating from "buy" to "neutral," and lowered its sales and profit forecasts for the next three years; although Lyon maintained "outperform," it also admitted that China Resources Beverage's performance forecast was below market expectations, "industry competition may affect marketing expenses in the second half of the year."

**The breakthrough path of non-water beverages is long and arduous**

When selling water seems to be no longer so profitable, China Resources Beverage places its hopes on the second growth curve of "non-water beverages." But this path is far more difficult than imagined.

The scale of the Chinese bottled beverage industry exceeds 530 billion yuan, nearly twice the size of the packaged water market; among them, sugar-free tea, functional beverages, and Chinese-style health water are currently the hottest sub-tracks in the beverage consumption market, with sales in 2024 growing by 20%, 12.1%, and 182% year-on-year, respectively, far exceeding the 3.2% of packaged water.

China Resources Beverage clearly targets this trend—since 2011, it has been laying out beverage products, currently having 4 tea beverage products, 3 fruit juice beverage brands, and 2 coffee and sports drink items.

During the three years from 2022 to 2024, China Resources Beverage's beverage business actually developed quite well, contributing a lot of performance increments, with annual revenue growth of 37.3%, 49.0%, and 30.8%, respectively, with the core hit Zhiben Qingrun series focusing on health and differentiation.

As of 2023, its sales point ratio with both water and beverages was only 67%, an increase of 16.5 percentage points from 50.6% in 2021, with a significant improvement in network coverage.

However, China Resources Beverage is not the only one seeing the huge potential of the "big beverage" market; on the contrary, this track is already crowded with players, with the sugar-free tea market gathering many beverage giants such as Nongfu Spring, Suntory, Uni-President, and Master Kong; the Chinese-style health water field is dominated by emerging brands like Genki Forest Zizai Water and Haowang Water.

As for China Resources Beverage, as of 2024, its beverage segment still only accounts for 10% of revenue. Therefore, in the layout of the second growth curve, China Resources Beverage needs to overcome many limitations.

Firstly, the channel shortcoming. The advantage of packaged water lies in "deep distribution"—China Resources Beverage has over 3 million terminal outlets, covering all levels of markets from first-tier to county-level. But the main battlefield for new beverage products (especially ready-to-drink coffee and sugar-free tea) is in convenience stores and boutique supermarkets in first- and second-tier cities, where the entry threshold is high and has been occupied by brands like Nongfu Spring (Tea π, NFC), Master Kong (Jasmine Green Tea), and Suntory (Sugar-free Oolong Tea). If China Resources Beverage wants to share the market, it needs to invest additional resources to expand high-end scenarios on the existing channel basis, increasing cost pressure.

Secondly, the limitation of brand recognition. The label "Yibao = purified water" is deeply rooted in people's minds, but consumer recognition of "China Resources Beverage = beverage brand" is still accelerating. Taking "Zowei Tea" as an example, its product positioning was vague before the upgrade, and market response was mediocre; after the upgrade, although it emphasizes "0 sugar 0 calories," consumers are more inclined to choose Nongfu Spring's "Oriental Leaves" or Three Meals Half's "Ultra Instant" and other leading brands. To break this cognitive barrier, China Resources Beverage needs to continuously invest in brand marketing, and the effect is uncertain.

Finally, the challenge of supply chain coordination. The production processes of packaged water and beverages are quite different: packaged water relies on high-quality water sources, while beverages require raw materials such as fruit juice, tea concentrate, and coffee powder, making supply chain management more complex. China Resources Beverage's current factory layout is mainly focused on packaged water, and to support the expansion of the beverage business, it needs to continue building or renovating production lines, which may affect capacity utilization and cost control in the short term.

Facing these situations, after entering 2025, China Resources Beverage intensively launched new products on the product side. It can be said that the first half of 2025 was the half-year with the most new products from China Resources Beverage.

Specifically covering multiple categories such as packaged water, sports drinks, herbal tea, ready-to-drink coffee, and sugar-free tea. According to industry media reports, the number of new products reached "more than a dozen," with over 60% belonging to the beverage category, among which "Yanbei" coffee and "Zowei Tea" sugar-free tea are considered core tracks.

For example, in the sports drink segment, this year, its brand Magic launched new products positioned as professional sports supplements, focusing on the selling points of quickly replenishing electrolytes and energy, including sports caps and large packaging specifications, suitable for various sports scenarios; at the same time, to follow the "consumer substitution" trend, it also launched five new 1-liter products in one go, covering Zhiben Qingrun, Honey Water series, and Zowei Tea, all of which are relatively mild and soft in taste.

These inevitably bring short-term profit pressure to China Resources Beverage, and the long-term performance of new products still awaits continuous market testing.

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