25 September 2018

Evergrande fields winning team to test new waters

First it was property but now developer Evergrande (03333.HK) hopes the winning ways of its soccer club will help it make a big splash in the bottled water market.

Guangzhou Evergrande capped its on-field success on Saturday by defeating South Korea’s FC Seoul to become the first Chinese team to win the Asian Football Confederation’s Champions League.

As the team celebrated in their hometown, the players stepped out in uniforms featuring a new logo — the Evergrande ice fountain {恆大冰泉}. The new look was a prelude to the developer’s announcement the next day that it will invest 10 billion yuan (US$1.64 billion) in the potable water business over the next three to five years, its biggest outlay for a non-core business.

The company has plenty of promotional talent to tap, including coach Marcello Lippi, former Portuguese international Luís Figo and Lang Ping {郎平}, head coach of Evergrande’s women’s volleyball team.

Evergrande may be able to get the new venture off to a good start with the support of its growing army of soccer fans, some of whom created slogans for the product soon after it was launched.

But there is also the company’s total lack of experience in producing and selling bottled water. Evergrande has come up with the interesting idea of distributing the water at its properties but that is a reasonably limited neighborhood.

If the company wants to be serious player, it will face stiff competition for slots in mainstream channels like supermarkets and convenience stores.

Tibet 5100 Water Resources (01115.HK) and Kunlun Mountains Natural Mineral Water are some of the largest players in the high-end bottled water market. In the low-to-mid-range market, Master Kong and Wahaha are the dominant brands.

Evergrande’s football fans love the bottled water idea, but it’s doubtful that the developer’s shareholders share the feeling.

– Contact the writer at [email protected]



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