An employee carries out a quality check at Nongfu Spring’s plant in Huangshan City, Anhui Province.
Shi Yalei/VCG via Getty Images
Zhong Shanshan, founder and chairman of beverage giant Nongfu Spring, has reclaimed his crown as China’s richest person amid a turnaround of his business and family travails at top rival Hangzhou Wahaha Group.
Zhong, 70, has a net worth of $65.7 billion largely based on a Nongfu Spring stake, according to Forbes estimates. He is No. 1 in China on The Real-Time Billionaires List, a tad ahead of ByteDance cofounder Zhang Yiming, who has a fortune of $65.5 billion based on his stake in the parent of the TikTok short video platform.
The beverage tycoon’s comeback is a result of Nongfu Spring’s Hong Kong-listed shares surging 35.8% this year to date. Underpinning that rally is a brighter outlook for the company’s core bottled water business, which suffered last year as brands including itself used aggressive discounts to compete for frugal shoppers.
This year, discounting pressure is expected to ease as Beijing attempts to rein in price wars in various industries to help an economy facing deflationary pressures, Kenny Ng, a Hong Kong-based securities strategist at Everbright Securities International, says by WeChat.
As an industry leader, Nongfu Spring is also expected to benefit from consumers stockpiling bottled water during the summer, especially as Chinese e-commerce platforms hand out subsidies to grow their food-delivery platforms, Jacky Tsang, a Hong Kong-based analyst at research firm Morningstar, says by email.
In a July research note, Tsang estimated that sales at Nongfu Spring will grow 13.6% year-on-year to 48.7 billion yuan ($6.8 billion) in 2025, also reflecting buoyant sales from the company’s tea business.
Last year, revenue was flattish at 42.9 billion yuan as Nongfu Spring experienced “unprecedented assault and trial,” the company wrote in its annual report.
Chairman Zhong was once accused of amassing his massive wealth by undermining former business partner Zong Qinghou, the late founder of fellow Hangzhou-based beverage giant Wahaha Group, who passed away last year at the age of 79. Zhong has denied such allegations, but soon faced criticism on another front, as some nationalist customers criticized the packaging of certain Nongfu Spring products as being “pro-Japan” because of what they claimed to be Japanese-style artwork.
The company’s shares tanked because of that P.R. problem and the price war, causing Zhong to lose his position as China’s richest person. But the competitive landscape shifted this year and may further tilt in Nongfu Spring’s favor as Wahaha management navigates an escalating family feud, says Everbright Securities International’s Ng.
The feud is hurting Wahaha’s brand image. The privately held company has long been portrayed as a national brand led by the late Zong, a frugal tycoon who was devoted to his family, particularly his daughter Zong Fuli. Fuli, known by her English name Kelly, was thought to be the tycoon’s only child. She succeeded him as chairman last year and is also the company’s CEO.
But a court case has claimed that Zong had other offspring. Three plaintiffs who claim to be Kelly Zong’s half-siblings are asking her to set up $700 million worth of trusts for each of them. A related hearing has been scheduled on August 1 in the High Court of Hong Kong, according to the court’s website.
A Wahaha spokesperson didn’t respond to messages seeking comment.
Hu Xijin, former editor-in-chief of the state-run Global Times, said last week via China’s Weibo platform that the public’s rosy view of the late Zong had been spattered. Everbright’s Ng says the lawsuit might divert management’s attention from business matters—just as competition heats up in the summer season.
“A lawsuit involving top management will hurt a company’s brand image,” he says. “They may also affect management’s focus on business strategies.”
Wahaha’s corporate structure remains intact. Kelly Zong is still the owner of a 29.4% company stake inherited from her father, according to local corporate database Qichacha. The company’s largest shareholder is an investment arm of the Hangzhou government, which owns 46%. The remaining 24.6% is owned by Wahaha employees, Qichacha filing shows. Shen Meng, Beijing-based managing director of boutique investment bank Chanson&Co. says there is a chance that the government-affiliated shareholders might step in to prevent the feud from escalating further.
