Nestle, one of the world largest food and beverage companies, agreed to sell its China water business to Tsingtao Brewery Group on Friday, to focus on its high-end water business in China while allowing Tsingtao to diversify its portfolio.

The recent transaction comprises of the transfer of the local brand Dashan Yunnan Shan Quan and three factories located in Kunming of Yunnan province, Shanghai and Tianjin.

Tsingtao Brewery group will also produce and market the Nestlé Pure Life brand in China pursuant to a licensing agreement between the parties.

Nestlé will transfer its water operations in China to Tsingtao Brewery group, through the transfer of all its shares in Nestlé Sources Shanghai Limited, Nestlé Sources Tianjin Limited and Yunnan Dashan Drinks Co Ltd to Tsingtao Brewery Group.

The move is in line with Nestle’s new strategic direction for its waters business that has prioritized its iconic international water brands, especially its leading premium mineral water brands and functional water products.

Mark Schneider, Nestle CEO, said in June, “This strategy offers the best opportunity for long-term profitable growth in the category, while appealing to environmentally and health-conscious consumers.”

Nestlé’s water business in China includes the global brand Nestlé Pure Life and the local brand Dashan Yunnan Shan Quan.

The company will maintain and continue to sell its iconic international brands including Perrier, S. Pellegrino and Acqua Panna to Chinese consumers.

The two companies stated that this strategic cooperation will achieve complementary advantages and resource sharing.

Jason Yu, general manager of Kantar Worldpanel China, said in recent years, the beer market in China is experiencing stagnant growth and Tsingtao clearly wants to diversify its business portfolio.

“Expansion to the nonalcoholic drink sector is clearly a route to growth,” he said.

Yu added that packaged water is one of the large sectors within the soft drink market and the per capita consumption in China is still relatively low compared with other developed markets, so it has more potential to grow.

Euromonitor International said bottled water in China will have a market value of 219.5 billion yuan by 2022. The figure for 2019 was 169.4 billion yuan.

The top bottled water brand in China’s domestic market is local player Nongfu Spring, taking up 9.8 percent of the domestic market.

Next is C’est Bon of China Resources Holdings Co Ltd at 8.6 percent and Ganten of Shenzhen Ganten Industry Co Ltd at 8.3 percent.

Danone’s Mizone is fourth at 4.6 percent and Master Kong of Ting Hsin International Group at 3.4 percent.

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

Spending on AI, 5G to boost economic growth, CPPCC member says

The construction of new infrastructure including artificial intelligence and 5G will help fuel China’s economic growth, said Liu Wei, a member of the 13th National Committee of the Chinese People’s Political Consultative Conference, on Thursday. Liu, who is also chairman…

Chinese vice-premier stresses solid preparation for import expo

BEIJING — Chinese Vice-Premier Hu Chunhua on Tuesday stressed finishing final preparations for the third China International Import Expo (CIIE) with high quality while carrying out effective COVID-19 prevention and control measures. Hu, also head of the expo’s organizing committee,…

China working to stabilize foreign trade

China will spare no effort to stabilize foreign trade by increasing financial, insurance and fiscal support and strengthening cooperation with regional trade partners, especially Japan and South Korea, as the novel coronavirus pneumonia epidemic spreads worldwide, the Ministry of Commerce…

Werner Eichhorn to take helm of Audi operation in largest market

Volkswagen Group veteran Werner Eichhorn is scheduled to take over as president of Audi China starting April 1, becoming the third top executive in 20 months to take the helm of the marque’s operations in its largest market. He is…