Summary of Key Points
Huaren Beverage, which once held a dominant position in the domestic purified water market with its 2-yuan Yibao brand, has seen a sharp decline in performance over the past two years: revenue in the first half of 2026 fell by 12.1% year-on-year, and profits plummeted by 26.4%, resulting in a loss of 2.1 billion yuan—almost one-third of its total earnings. The market share of its flagship product, Yibao, has dropped from 23.8% to 18.8%, reducing its once substantial 40-point lead over its competitor, Wahaha. Cornered, Huaren Beverage has resorted to a "second entrepreneurial effort," sending its sales teams to remote areas such as Beihai in Guangxi to distribute products in every possible location, including homestays, restaurants, and fishing boats. The company has adopted a aggressive marketing strategy, but core issues such as price wars, channel conflicts, and the struggling beverage business remain unresolved, putting immense pressure on its growth.
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Simplified Explanation of Key Points
1. How severe is the performance decline?
- In 2024, Huaren Beverage generated 7.5 billion yuan in revenue; in 2026, this figure dropped to 5.4 billion yuan. This means that 2.1 billion yuan worth of products are now unsold.
- In the purified water market, Yibao once accounted for 6.4 out of every 10 bottles sold, but now this figure has dropped to 3.9 bottles. Wahaha's market share has increased to 3.7 bottles, with just a slight gap separating the two leaders.
- The decline is accelerating: while Yibao's sales only decreased by 1.6% in early 2024, they plummeted by 18.6% in the second quarter of 2026. For example, a small convenience store used to sell 100 boxes of Yibao per month, but now can only sell just over 80 boxes.
2. Yibao's 2-yuan price point has been undercut by cheaper alternatives
- Yibao once had a monopoly in the 2-yuan price segment, but in 2024, Nongfu Mountain Spring introduced a green bottle of purified water for just 1 yuan, driving down the average price across the market by 11%. As a result, the price of a 550ml bottle has dropped from 1.25 yuan to just over 1 yuan.
- This has put Yibao in a dilemma: if it lowers prices, its suppliers will lose money (since they were contracted to sell at 2 yuan), and if it doesn't, consumers will switch to cheaper alternatives, further eroding its market share.
3. Huaren Beverage's once-dominant channel network is under threat
- Huaren Beverage's strength once lay in its extensive distribution network, available even in remote areas. However, channel adjustments have left gaps in distribution, allowing competitors to gain market share. Consumers' purchasing habits have also changed; they now prefer to buy large quantities from discount stores or order products to be delivered to their homes. This has disrupted traditional sales channels.
4. The beverage business is becoming a drag on growth
- Huaren Beverage hoped to diversify into tea drinks, juices, and sports drinks to boost revenue. Although the beverage business grew by 21% in the first half of 2025, it plummeted by 35% in 2026, contributing more than a third of the company's overall revenue decline. The beverage business now accounts for only one-eighth of the company's total revenue but is responsible for nearly half of the decline.
5. Can aggressive marketing strategies save Huaren Beverage?
- Huaren Beverage has taken drastic measures, such as cutting staff by 40% and delegating more authority to regional offices. While new channels have shown some improvement, these efforts are not enough to make up for the losses in traditional channels. The company faces challenges in balancing price stability and maintaining relationships with long-term suppliers, as well as in finding a new direction for its beverage business.
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Conclusion
Huaren Beverage's once-solid position in the domestic purified water market has been severely shaken in recent years, due to competitive pressures, changing consumer habits, and internal management issues. While the company's efforts to diversify and revitalize its business are noteworthy, it still faces significant obstacles on its path to recovery. The road ahead is tough, and it will require careful balancing of various factors to avoid further losses.