Nongfu Spring, Flagship Of China’s Richest Man, Posts ’21 Profit Gain, Sees Rising Costs From Ukraine War

Nongfu Spring, the flagship beverage business of China’s richest man Zhong Shanshan, reported gains in sales and profit for the 2021 calendar year on Monday. It also noted pressure on costs in connection with the Russia’s invasion of Ukraine.

Sales at the Hangzhou-headquartered company increased by 29.8% to 29.6 billion yuan, or about $4.1 billion; net profit rose by 35.7% to 7.2 billion yuan.

Zhong, Nongfu Spring’s chairman, said in statement China’s pandemic policies and economic development strategies “continued to promote the stability and development of the consumption order” last year.

The company, best known for its bottled water, increased the share of tea beverages in its revenue mix to 15.4% from 13.5% in 2020; bottled water’s fell to 57.4% from 61.0%.

“In the future, we will continue to implement the strategy of dual growth engines with packaged drinking water and beverages, achieve breakthroughs in innovation, and launch more high-quality products,” said Zhong, who has a fortune worth $67.4 billion on the Forbes Real-Time Billionaires List today.

Nongfu Spring, which went public at the Hong Kong Stock Exchange in 2020, competes in China’s beverage industry against the likes of Coca Cola, Wahaha, Tingyi and Uni-President.

In a statement on the business outlook, Nongfu Spring said the Russia-Ukraine war was leading to higher input prices.

“The outbreak of the Russian-Ukrainian war has made the international political and economic situation more complicated, reflected by the significant increase in the purchase price of raw materials such as PET, which is linked to the international oil price, and the rising prices of packaging materials and energy,” Nongfu Spring said. “All the above has exerted pressure of increasing costs on the manufacturer of packaged drinking water and beverages. We will continue to adopt a prudent approach, pay close attention to the impact of and changes in all aspects, dynamically adjust the company’s operations and take proactive responses.”

Hangzhou-born Zhong dropped out of elementary school during China’s chaotic Cultural Revolution. He later had jobs as a construction worker, a newspaper reporter and a beverage sales agent before starting his own business. Zhong also controls Beijing Wantai Biological Pharmacy.

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