Luhua’s New Game Plan: Can the Old Oil Giant Win Big in the Water Business?
In late October 2025, the Hurun Rich List once again crowned Nongfu Spring’s founder Zhong Shanshan as China’s richest man for the fourth time. With a personal fortune of 530 billion yuan, Zhong built his empire on something as simple as bottled water. His success proves one thing unmistakably clear — the water business can be incredibly lucrative.
Around the same time, another household name in China quietly made a move that stirred the market. Shandong Luhua Group, one of the most trusted names in China’s grain and oil industry, officially announced a strategic partnership with Guangxi-based Shizun Marketing Group and Zhenlin Group’s Shangshuiyuan. The trio aims to build a “Good Oil + Good Water” dual-category strategy in Guangxi, signaling Luhua’s official entry into the large-scale bottled water market.
Luhua’s foray into bottled water isn’t a solo act. The company teamed up with two experienced local players in Guangxi, each bringing something crucial to the table. Luhua contributes brand reputation and nationwide sales channels. Zhenlin provides premium water resources and production capabilities. Shizun, with decades of experience in Guangxi’s fast-moving consumer goods market, handles local sales and distribution. Together, they’ve effectively covered all key elements of the water business — from sourcing to selling.
Luhua’s strength lies in its brand credibility and deep-rooted distribution network. After over 40 years in the grain and oil industry, Luhua has become synonymous with quality — especially its signature peanut oil. In 2023, Luhua reported 18.6 billion yuan in revenue and 2.7 billion yuan in net profit, outperforming many competitors despite a sluggish market. With 400 branch offices and over 3,000 distributors nationwide, its extensive sales infrastructure gives Luhua a major advantage in rolling out bottled water products rapidly.
Zhenlin Group’s Shangshuiyuan, on the other hand, solves the most fundamental problem — water sourcing. The company holds long-term extraction rights to the premium Longtoufeng spring in Guangxi and operates advanced purification and transport facilities to ensure stable, high-quality supply. As for Shizun, it’s the key to local execution. With nearly 30 years in the Guangxi FMCG scene — and as Luhua’s existing regional distributor — it already understands the local market’s rhythms. Its multichannel distribution system spanning supermarkets, wholesalers, fleet sales, major clients, and e-commerce platforms enables Luhua’s bottled water to quickly reach consumers across the province.
Even more strategically, Shizun can integrate water delivery into Luhua’s existing oil logistics — using the same vehicles and storage routes — significantly cutting costs and boosting efficiency.
Luhua’s decision to “sell water instead of more oil” reflects a bigger issue — slowing growth in its core business. While Luhua remains profitable, its long-dependence on peanut oil has reached a saturation point. Rising raw material costs are squeezing margins, and the overall grain and oil sector is struggling with “revenue without profit” — a common theme across major players in 2025.
Meanwhile, the bottled water industry is booming. According to the China Industry Research Institute, the domestic bottled water market exceeded 200 billion yuan in 2021 and is projected to surpass 300 billion yuan by 2025, with annual growth rates between 8% and 9% — far outpacing the grain and oil sector. Profitability is another major draw. Nongfu Spring’s 2025 mid-year report revealed a gross margin nearing 60%, an enviable figure compared to the single-digit margins typical in edible oil. For Luhua, stepping into bottled water is a logical move to secure a second growth curve in a high-margin market.
To evaluate Luhua’s odds, it’s essential to understand the industry it’s entering. China’s bottled water market has long been an oligopoly dominated by a few giants. Nongfu Spring and C’estbon together control around 50% of the market, while Wahaha and Baisui Mountain take most of the rest. New entrants face an uphill battle for meaningful share.
Luhua’s biggest weapon is its distribution muscle. Both edible oil and bottled water share similar consumption scenes — primarily household and kitchen use. This overlap allows Luhua to repurpose its existing channels with minimal adjustments. Additionally, decades of brand trust give Luhua an invaluable head start. Consumers already associate the name with purity and safety — values that align perfectly with bottled water. As one industry insider put it, “If you’re selling water for the kitchen, that trust only multiplies.”
However, Luhua also faces the problem of brand perception. To most consumers, Luhua means peanut oil — not water. Its previous attempts at diversifying into condiments often left customers viewing them as “add-ons” rather than standalone products. Changing that mindset will take sustained marketing, consumer education, and consistent proof of quality.
Equally important is differentiation. Today’s bottled water market is saturated with similar “natural” and “healthy” claims. Without a unique angle — be it in source story, functional benefits, or lifestyle branding — Luhua risks being dragged into low-margin price wars.
Luhua’s bold move into water underscores an interesting truth about diversification. Oil companies can make water because they can outsource much of what they lack — water sourcing, bottling, even branding partnerships. But water companies can’t easily make oil, which demands years of R&D, supply chain integration, and agricultural know-how.
Luhua’s 5S physical pressing technology, for instance, took six years of research and engineering to perfect, while its high-oleic peanut breeding program was a decade-long collaboration with scientific institutions. Those deep capabilities can’t be replicated overnight.
In that light, Luhua’s “Good Oil + Good Water” strategy appears less like reckless expansion and more like a carefully calculated evolution — leveraging its core strengths, partnering where needed, and moving into a market that complements its existing ecosystem.
But make no mistake — the water business is no longer a playground for easy profit. To truly stand firm, Luhua must do what it does best: build long-term trust through quality, consistency, and a brand story that flows naturally from its legacy. Because in the world of consumer goods, the purest success — like water — comes only from depth, patience, and clarity.
