1997, Nongfu Spring became an instant hit with "A Little Sweet". However, at the time of fame, the construction of farmers' channels was backward, which buried hidden dangers. Today, it has become the inherent defect of farmers' "congenital deficiency".
When the farmer debuted, he was a local crocodile Wahaha and a foreign giant such as Coca-Cola and Pepsi.
Also entering the water market, Wahaha is obviously the most direct opponent of Nongfu Spring. Wahaha, a joint venture with Danone in France at that time, not only owned the largest pure water production plant in China, but also owned dozens of products of the same brand, such as milk, ad calcium milk, carbonated drinks, tea drinks and nutritious eight-treasure porridge. , has obvious scale advantages, which makes Wahaha firmly control the channels that have been established for nearly 10 years. According to the data, Wahaha has more than 3,000 dealers in China, and there are thousands of secondary and tertiary dealers. Zong Houqing, the head of Wahaha, is known as the "master of web weaving". Through this network, Wahaha products can reach the most remote rural areas.
Farmers adopt the same dealer system as Wahaha, but they are not as good as Wahaha in scale, popularity and credibility.
According to an insider of Nongfu Spring, at that time, farmers were eager to set up first-class distributors in the whole country, and they had no time to take care of the deeper and more subdivided market, leaving future troubles for farmers with wide channels but not deep channels.
Wahaha dealers must pay in advance to get the goods, and Wahaha pays interest first. After the sale, Wahaha will return the mortgage and give the dealer a rebate. People familiar with the matter said that it was almost impossible for Nongfu Spring to get the payment first.
The purchase volume of dealers around farmers is not the same as that of Wahaha dealers. According to the recollection of the sales staff of Farmer 1, compared with Wahaha, the "water king" at that time, the sales volume of Nongfu Spring water never exceeded 1: 10.
However, farmers also have their strong sales areas. "Shanghai, Beijing and Shenzhen, these three cities are the places where farmers do best." A veteran who has been observing Nongfu Spring for a long time told the reporter, "Because Nongfu Spring's products are higher-end than similar products on the market, they take nature as a selling point and are more in line with the needs of consumers in big cities. "
Another fact that can't be ignored is that Nongfu Spring debuted 1997, when supermarkets such as Carrefour raced around China's first tier cities, farmers seized this opportunity. Today, in supermarkets in big cities such as Shanghai, farmers are still rivals of other aquatic products.
The price of natural water
In 2000, Nongfu Spring launched a debate on "natural water and pure water", which became famous. Farmers have become synonymous with high-quality and healthy water, and their old enemy, Wahaha in the same city, can't get any cheap.
However, the farmer did not expect that this "nature" has also become a restrictive factor for farmers to expand nationwide in the future. Because of nature, farmers have many restrictions when choosing water sources and bottling plants: bottling plants should be close to water sources, and water sources must conform to farmers' propaganda slogan "pollution-free, from nature".
Today, farmers have only four production plants in the country. "These four production plants are close to the four major water sources of Nongfu Spring, Jilin, Heyuan, Danjiangkou and Qiandao Lake." Insiders of farmers revealed to reporters.
The limitation of production capacity not only affects the output of farmers' series of beverage products, but also leads to the high logistics cost of farmers.
As there are only four production plants, most farmers' products have to be transported over long distances. All farmers' production factories are located in areas with railway terminals. However, the high cost of railway transportation makes it impossible to reach many sales outlets directly.
Hu Bin, the former brand manager of Nongfu Spring, once said that this logistics model has increased the operating cost of farmers' dealers, which is three times or more than the cost of Wahaha automobile logistics model. Dealers around the country have to bear certain transportation costs.
Wahaha, a "modern production", has 15 production plants covering the whole country. You can choose the mode of automobile transportation to send the products directly to the terminal shelves and the warehouses of the second batch of suppliers, which is efficient and greatly saves the funds of dealers.
Another advantage of automobile transportation is faster response to the market, shorter processing time for orders and shorter confirmation time for payment.
This is manifested in the fact that the customer's sales terminal is "terminal agents and consumers can contact products more conveniently and quickly". A veteran who has been observing farmers for a long time said: "Because in most markets in China, consumers will not set the products they buy in advance, but choose products within the optional range."
"This is also the reason why Yangshengtang adopts a high-priced product strategy. On the one hand, we must take a differentiated route. On the other hand, we must also use high-priced products to make up for the lack of profits of ourselves and channel customers, and use product and planning advantages to make up for channel disadvantages. " Hu Bin once said this.
The high-priced strategy is not strong enough.
Every product of Yangshengtang takes high quality as its selling point, whether it is healthier natural water, a farmer's orchard leading the market, or a new gas tea this year. However, this high-priced strategy is often not firm.
In 2003, Yangshengtang launched a farm orchard, which set the retail price between 3.5 yuan and 4.0 yuan, leaving ample profit space for sellers.
But in 2005, the price system of farmers' orchards lost its guiding significance to the terminal. According to public information, from March to May and June this year, the delivery terminal price of farmer's orchard dropped again and again, from the initial 70 yuan/case to 62 yuan/case, far below the guidance price of 65~66 yuan/case. This situation has caused many terminal stores to lose trust in farmer salesmen, and some salesmen are even regarded as liars.
The price of Nongfu Spring in the supermarket has also experienced a decline of 1.5 yuan per bottle, to 1.2 yuan, and now to 1 yuan.
On the other hand, the products of Yangshengtang still have the phenomenon of channel pressure. In addition, the reporter found in the supermarket that the farmer orchard in the promotion period has no obvious promotion signs or cooperative activities.
"The root cause is that farmers have problems in management." An insider of Nongfu Spring told the reporter, "The sales director of the enterprise changes frequently. It only takes two to three years from the last one to the next. Everyone knows that they can't do it for a long time, and there is no systematic development idea. " And "every sales director takes office, our regional manager will be replaced."
Moreover, all the top executives of the company are "almost all relatives of General Zhong or his wife's family."
With the frequent turnover of sales directors, the loyalty of dealers was greatly reduced at first. Due to the lack of stability, dealers are reluctant to take the initiative to expand the market. "The management system is opaque, and almost every manager can profit from the terminal price and the seller's price first." This person said.
Zhong Wei knew this very well, of course, but he couldn't control it. Therefore, more and more "family members" are appointed to prevent "fat water outflow", but the more so, the more enterprises lack an effective management system, the more they "can't keep people", and the more they need to rely on their own strength and ability.
Capital test
"A calm company helm should spend half his time on the use of funds," Zhong Yao said in an interview with CCTV's Dialogue column not long ago.
At the beginning of 2004, he spent 60 million yuan on the channel process reengineering of ERP management system. According to industry evaluation, this is a harbinger of Zhong Yong's attack on the internal management of enterprises.
"In fact, our entrepreneurs all know how to do it. The problem is that capital is a big constraint. " The above-mentioned senior person told the reporter, "The biggest difference between Farmer and Wahaha is the development of Wahaha 10. With Danone's support and abundant funds, even if some series of products fail to develop, it will not have much impact."
However, Nongfu Spring is far from so rich. "In 2003, when Zhong Wei developed the farmer's orchard, almost all the funds were invested. At that time, it was a gamble. If you lose, it's all gone. " Farmer insiders told reporters this way.
Farmers' series products with higher positioning have higher costs than competitors. According to the purchasing staff of Nongfu Spring, the cost of wide-mouth bottle caps used by Nongfu Spring alone is five times that of Wahaha. The raw materials used in farm orchards are not sweeteners used by most enterprises, but sugar with higher cost.
The competition in the beverage industry is fierce, and the profits of farmers' products are very meager. "We all rely on running." The farmer's internal staff told reporters this way.
Small profits need to expand sales, and it is necessary to increase investment in water sources, factories, logistics and channels. Money is the primary issue.
In 2004, Nongfu Spring invested 654.38+0.2 billion yuan to build a waterworks. Except for the waterworks in Qiandao Lake, most of them come from bank loans.
The investment of 1 100 million yuan required for the construction of the new base in Heyuan, Guangdong Province in 2004 is undoubtedly equivalent to hollowing out the company's purse again.
Listing has become the most urgent task for Zhong Yong.
In 2002, Nongfu Spring began to prepare for listing. The listed entity is Nongfu Spring Co., Ltd., which was restructured from Zhejiang Qiandaohu Yangshengtang Drinking Water Co., Ltd., and Yangshengtang holds 60% of the shares. Nongfu Spring Co., Ltd. actively prepared for listing financing as soon as it was established, and then ended the listing counseling period in August 2008.
However, the IPO did not go as expected, and today, the listing of farmers is still in the operational stage.