Open Source Securities: Seize the structural opportunities in the packaged water industry and focus on high-quality leading targets.

Open Source Securities released a research report stating that under the support of healthy consumption demand, the packaged water industry is expected to continue a steady expansion trend until 2026. The industry concentration will continue to increase, and under the top-tier differentiation pattern, structural opportunities are expected to emerge. The core focus is on selecting high-quality targets with outstanding competitive advantages, solid growth foundations, or improving fundamentals. Beneficiary targets: NONGFU SPRING (09633), CR BEVERAGE (02460), Jilin Quanyangquan (600189.SH). The main points of Open Source Securities are as follows: Upgrade of health awareness drives the steady expansion of the packaged water industry The upgrade of consumer health awareness is the core driving force for the growth of packaged water demand. In recent years, as residents' health awareness has deepened, consumer preferences are accelerating the transition from sugary drinks to healthier hydration choices. Due to its natural health ingredients and diverse consumption scenarios, packaged water has become a simple and healthy way for the general public to hydrate and is favored by consumers. According to Zhi Shi Consulting data, the market size of packaged water has increased from 152.6 billion yuan in 2018 to 215 billion yuan in 2023, with a compound annual growth rate of 7.1%. In the medium to long term, the industry size is expected to continue to expand at a high single-digit rate, and is expected to exceed 300 billion yuan by 2028. The industry presents multidimensional competitive games, concentration will continue to increase, and top companies are expected to benefit The packaged water industry has entered a stage of multidimensional competitive games in terms of price, channels, brands, and water sources. The industry concentration is relatively high, and the advantages of top companies are relatively stable. By 2023, the market share of the top 5 companies in the industry has approached 60%. It is expected that the industry competition will gradually transition from price wars to value wars in the future. Top companies are expected to continue to increase their market share with the advantages of resources, channels, brands, and production capacity, while small and medium-sized brands face pressure to be phased out and gradually exit the market. The industry concentration will further increase, and the top companies in the packaged water industry are expected to benefit. Product innovation and scene segmentation accelerate, and the continuous deepening of value upgrading With the diversification and refinement of consumer demand, product innovation and scene segmentation in the packaged water industry have become important drivers of growth. On the product side, there are two main lines: one is quality improvement, where top companies are accelerating their layout in the mineral water and natural mineral water tracks, relying on high-quality water source resources to create high-quality products, and capturing consumers' minds with core selling points such as naturalness and health. The second line is innovation in form and packaging, with small portable packaging suitable for outdoor, office, and other instant scenarios, and large family packaging becoming the mainstream of home consumption due to high cost performance. On the scene side, continuous segmentation development is taking place, with precise scene products such as maternal and child water, sports water, and tea-matched water rapidly rising, further tapping into the potential of segmented consumption and promoting the continuous improvement of industry value. Risk warning: Economic downturn, food safety, fluctuations in raw material prices, lower-than-expected recovery of consumer demand, etc.