Nongfu Spring's revenue surged by 28.4%, with gross profit increasing to 60%. China's richest person made a net profit of 10.1 billion yuan.

Nongfu Spring primarily uses packaging materials including PET bottles, bottle caps, labels, cardboard boxes, and shrink film, among others. PET plastic accounts for approximately 31.6% of the total sales cost. Cardboard boxes and shrink film together represent about 14.0% of the total cost. Including bottle caps and labels, the total packaging material cost is expected to account for 48% of total sales revenue. In 2023, due to the decrease in packaging material prices, Nongfu Spring's gross profit increased by 2.1 percentage points, indicating an overall decrease of 4-5% in purchasing prices compared to the previous year.

With the reduction in costs for cardboard, labels, and some raw materials, Nongfu Spring's performance soared in 2023, with gross profit reaching 59.5%. Such a significant gross profit margin has left packaging printers envious!

On the evening of March 26, Nongfu Spring Co., Ltd. (hereinafter referred to as Nongfu Spring) released its annual performance report for 2023. Nongfu Spring's total revenue in 2023 was 42.667 billion yuan, a year-on-year increase of 28.4%; net profit was 12.079 billion yuan, a year-on-year increase of 42.2%. Considering the controlling shareholder, Zhong Yi Yi, who holds an impressive 84% stake, China's richest person made a net profit of 10.1 billion yuan solely from Nongfu Spring in 2023.

In 2023, Nongfu Spring's revenue from its tea beverage segment reached 12.659 billion yuan, a substantial increase of 83.30% compared to the previous year, accounting for 29.7% of total revenue. Meanwhile, revenue from packaged drinking water business amounted to 20.262 billion yuan, a year-on-year increase of 10.95%, with its revenue share further decreasing to 47.5%. The revenue gap between tea beverages and packaged drinking water narrowed.

Additionally, functional beverage products generated annual revenue of 4.902 billion yuan, marking a 27.7% increase from 2022, while fruit juice beverage products recorded annual revenue of 3.533 billion yuan, up by 22.7% from 2022.

In 2023, not only did Nongfu Spring experience significant revenue growth, but its gross profit also surged. Data indicates that Nongfu Spring's gross profit in 2023 amounted to 25.407 billion yuan, a 33.1% increase from 2022's 19.095 billion yuan. The gross profit margin reached 59.5%, an increase of 2.1 percentage points compared to the same period last year. Nongfu Spring attributed this mainly to the decrease in purchasing costs for cardboard, labels, and some raw materials compared to the previous year.

Nongfu Spring primarily uses packaging materials such as PET bottles, bottle caps, labels, cardboard boxes, and shrink film, with PET plastic accounting for approximately 31.6% of total sales costs. Cardboard boxes and shrink film account for about 14.0% of total costs. Including bottle caps and labels, the total packaging material cost is estimated to represent 48% of total sales revenue.

However, in 2023, the entire packaging material sector, including paper and plastic products, witnessed a continuous trend of price reduction. Therefore, the 2-percentage-point increase in Nongfu Spring's gross profit should not come as a surprise.

It's said that gaining entry into Nongfu Spring's supply chain system is not easy, as only major factories with significant bargaining power such as Wankai, Hexing, and Xiangheng are capable of doing so.

Moreover, Nongfu Spring typically offers a payment period of three months to its suppliers, indicating that the enterprises within its supply chain system are financially robust.

It's worth mentioning that Nongfu Spring's annual revenue of 42.7 billion yuan is approaching Wahaha's 2020 revenue of 43.9 billion yuan. With a growth rate of 28%, it is expected to surpass Wahaha officially in 2024. However, in terms of profitability, Nongfu Spring's net profit of 10.1 billion yuan has already outstripped Wahaha.

However, the recent online backlash incident may introduce some variables. It remains to be seen whether it will slow down or even halt Nongfu Spring's overtaking of Wahaha. We'll have to wait and see.