Tibet 5100 Water Resources Holdings Ltd. has come a long way since it was founded in 2006. Chief Executive Fu Lin helped guide the company's meteoric rise to be the top-ranked premium water seller in China, and just last year he succeeded in getting the company listed on the Hong Kong Stock Exchange (SEHK).
Tibet 5100's climb to the proverbial summit is not without precedent: Zong Qinghou, the wealthiest man in China, heads privately held bottled water company Hangzhou Wahaha Group. While Hangzhou Wahaha's 2011 sales of 68 billion yuan ($10.8 billion) dwarf the 633.2 million ($100.7 million) yuan racked up by Tibet 5100, the Chinese market for bottled water has barely been tapped.
Rated annually per capita, Chinese spend less than $6 on bottled water while Americans spend $121. As Chinese incomes rise, so should their spending on bottled water... and with water pollution a serious problem in China that looks to get worse before it gets better, bottled water business appears more and more like a liquid goldmine every day.
Tibet 5100, however, doesn't seek to compete directly with industry giants like Hangzhou Wahaha. Instead, the company is pinning its hopes on Tibet's enduring image as one of the planet's last pristine sources of pure, fresh water – splashing a Himalayan vista across their product's labels is no accident. Will customers pay extra for Himalayan water as opposed to water sourced from an anonymous Chinese spring, river or well? Wouldn't you?
The name “Tibet 5100” is derived from the source of its water: a company-owned reservoir situated 5,100 feet above sea level in the Nianqing Donggula Mountains south of Lhasa, “one of the world's most remote and pristine locations.” By the time it's bottled, shipped and distributed to retailers in 48 Chinese cities, a 330 ml recyclable bottle of “Tibet Spring” mineral water is priced at 7.5 yuan ($1.20). Non-premium water sold in larger 550 ml bottles costs just a fifth as much.
Tibet 5100 has established itself in China using a two-pronged strategy. On the low end, a deal with China Railway Express Co. sees bottles of Tibet Spring given out to train passengers for free – Tibet 5100 received approximately 81% of its 2010 revenue through bulk sales to the government-owned railway.
The company has established itself at the high end by ensuring bottles of Tibet Spring are on the tables at China's annual parliamentary meetings. The association with China's Rolex-wearing governmental elite has helped Tibet 5100 burnish its luxury credentials on the one hand and on the other, top premium bottled water competitors like Perrier and Evian in the marketplace.
The next step for Tibet 5100 is to take on those competitors in their home markets. Does the company stand a chance? Fu Lin thinks so and his confidence stems from the fact that “We’ve already faced them at home.” In addition, Tibet's clean, pure & healthy image is held internationally. So-called “water snobs” delight in quaffing water sourced from French subterranean springs and sultry South Pacific islands so why not from the world's highest glaciers?
Like every high mountain, however, the concept of Tibet Spring water has its downside. Supporters of the Free Tibet movement will see the oppressive hand of Chinese corporatism profiting off the birthright of poverty-stricken and politically disenfranchised Tibetans.
Moreover, the glaciers of the Himalayas are shrinking due to the effects of global warming and their meltwater flows into the headwaters of mighty rivers depended upon by well over a billion people. The thought of wealthy one-percenters guzzling the livelihoods of the world's poorest people, so to speak, is disturbing on a number of levels.
Should Tibet 5100's Tibet Spring water make the jump from China's store shelves to those in your country, potential buyers might take a moment to consider these issues before succumbing to temptation. (via WSJ, X-Ray China, Circle of Blue, and Earth Island Journal)