The encyclopedia · Product & Design · Product decision · 2013–2016
Evergrande lost ¥3.9bn on bottled water — then sold the brand for ¥1.8bn
Evergrande's bottled water lost ¥3.95bn in two years of marketing blitz; the property giant sold the brand for ¥1.8bn in Sept 2016.
Evergrande · 2016-09-28
What happened
China's largest property developer announced Evergrande Spring Water in November 2013 — premium bottled water backed by a national advertising blitz and celebrity endorsements, entering a category already dominated by Nongfu Spring and Wahaha.
The losses were brutal: net losses of ¥552m in 2013, ¥2.84bn in 2014 and ¥555m in January–May 2015 — about ¥3.95bn in just over two years.
On 28 September 2016 Evergrande announced it was selling the business: total consideration ¥2.7bn, of which the water brand went for ¥1.8bn to a Shenzhen car dealership and a Hong Kong company. Analysts blamed a crowded market, the absence of an experienced consumer-goods marketing leader, and an outdated promotional playbook.
Why it happened
- A property giant entered a commodity market where it had no edge, spending on ads what incumbents had spent decades building in distribution.
- The marketing playbook — heavy advertising and premium positioning — could not beat established rivals on price, taste and shelf space.
- Without an experienced FMCG leadership team, the line burned cash for two years before the parent pulled the plug.
The lesson
Evergrande spent its way into bottled water, lost ¥3.9bn in two years and sold the brand. Money and ads could not buy an edge in a commodity market.
Aftermath
Evergrande sold its food-and-drink businesses for ¥2.7bn in September 2016; the water brand went to Shenzhen car dealership Sanwei Dulin and Hong Kong's Lipu Limited for ¥1.8bn. The retreat closed a three-year, ¥3.9bn detour, and the water experiment became a footnote to Evergrande's real-estate empire.
Sources
- Sina Finance — Evergrande Spring Water lost ¥3.9bn in two years and was sold, 29 September 2016 (announced Nov 2013; net losses ¥552m in 2013, ¥2.84bn in 2014, ¥555m Jan–May 2015; ¥2.7bn disposal, water for ¥1.8bn; analyst views on why it failed)
- China Securities Journal — Evergrande sells consumer business for ¥2.7bn, 30 September 2016 (disposal price and structure)
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