Nongfu Spring taps skin care sector with crossover products

China's bottled water conglomerate, Nongfu Spring, is tapping into the skin care market, the Hangzhou-based company announced on Sunday night.

But instead of using aqua, which tops many skin care product ingredients, the company said "there isn't a single drop of water" in three of its newly launched products, which are facial masks and two types of toners.

Instead, the company has sourced 400 metric tons of natural birch sap from Finland as the base of its products, which are marketed mainly as strong moisturizers and branded as Yoseido.

"It may sound like a crossover for Nongfu Spring, but (it is) actually a back-to-basics approach for my business," said Zhong Shanshan, founder and chairman of Nongfu Spirng.

The 63-year-old journalist-turned-businessman made his first bucket of gold by producing nutritional supplements processed from turtle shells around 1993. Three years later, after discovering a reservoir near his hometown in Zhejiang province, he started the bottled water business and steadily expanded the group, Yang Sheng Tang Group Ltd, into a 10-billion-yuan ($1.51 billion) empire with portfolios in beverage, foods, health products and biopharmacy.

The venture in the skin care category, which kicked off three years ago for research and development, will be a new arm under the YST Group. Its facial masks have been put on the Tmall store of YST for trial sales, at the price of 168 yuan per pack, containing five pieces, close to the offerings of US brand Olay under P&G.

The official time for all of the three products to be put on shelf at departments stores and e-commerce platforms has yet to be decided, according to Zhong.

But he confirmed that the products are likely to be exported to Japan, one of the most competitive markets in the world for beauty industry.

More than that, he is making no bones about his ambition to turn the brand into the top five sellers in domestic skin care category within five years.

"There is no such thing as brand loyalty. It took a little time for all the once die-hard Nokia followers to shift to iPhones when (Steve) Jobs created it," he said, addressing the question of competition against many well-established brands home and abroad.

While China's beauty industry is still dominated by foreign brands, there has been a rising interest among young people to try domestic brands. Statistics from Tmall showed that during the latest Singles Day shopping extravaganza, eight out of the 18 brands that consolidated sales over 10 billion yuan within 24 hours are domestic ones.

Pechoin and Chando are the two bestsellers followed by Western brands such as Lancôme and Estée Lauder.

According to consultancy firm Mintel, China's facial skin care and cosmetics industry is likely to exceed $20.5 billion in 2017, up by 12 percent year on year, and far above the 8 percent annual growth rate enjoyed by the general beauty and personal care category.