What in coffee matters when a bottled water standard becomes a stock story?

The Hong Kong Consumer Council tested 30 bottled waters and said bromate levels in Nongfu Spring and Ganten samples sat at the upper limit of EU standards. Both companies pushed back, Nongfu Spring sent a legal letter demanding an apology, and the council later reclassified the sample as natural drinking water and re-scored it.

Nongfu Spring's Hong Kong-listed shares fell to their lowest since September 2020, erasing market value within two days, after which an executive director traveled to Hong Kong for face-to-face talks. The company says its products meet standards and are safe to drink, and the stock rose once the clarification was posted.

The Hong Kong Consumer Council previously published an article on bottled water testing that pointed to the bromate levels in samples of Nongfu Spring and Ganten as reaching the upper limit of EU standards, which immediately triggered a public opinion storm. Nongfu Spring quickly commissioned a lawyer to send a letter demanding clarification and an apology, and Ganten also issued a statement in response, saying the test results had been misinterpreted. Under public pressure, Nongfu Spring's stock price continued to decline, and its market value shrank sharply within two days, after which the company sent an executive director to Hong Kong for face-to-face negotiations. Today, the Consumer Council published a clarification on its official website, reclassifying the sample as "natural drinking water" and re-scoring it, while also expressing regret. Nongfu Spring replied that its products fully comply with the standards and are safe to drink, and the stock price rose accordingly.

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On the 15th, the Hong Kong Consumer Council published the article "When You Drink Water, Remember the Source: Taste, Mineral, and Safety Tests of 30 Bottled Waters," which mentioned that the bromate levels in bottled water samples from Nongfu Spring and Ganten reached the upper limit of EU standards, sparking widespread attention and discussion across society.

On the morning of the 16th, Nongfu Spring commissioned a lawyer to issue a legal letter demanding that the Consumer Council apologize for the negative impact the article brought to the company and issue a written clarification. In the evening, Ganten, which had also become caught up in the public opinion storm, issued a statement saying that "some reports misinterpreted the test results, misled consumers, and seriously damaged the company's lawful rights and interests."

After the two companies successively expressed their positions through a legal letter and a solemn statement, the Hong Kong Consumer Council said it had confirmed receipt of the legal letter and would study and follow up on it. If there was further information, it would also be announced in due course.

However, the public opinion over those two days caused the stock price of Hong Kong-listed Nongfu Spring to fall continuously, hitting its lowest level since September 2020, with its market value evaporating about HK$13.1 billion over two days. Based on the huge economic losses the public opinion caused the company, Nongfu Spring was quite dissatisfied with the Hong Kong Consumer Council's reply on the evening of the 16th, so it sent people to Hong Kong yesterday afternoon for negotiations.

According to Ming Pao Finance Network, yesterday afternoon Nongfu Spring executive director Han Linyou and a lawyer went to the Hong Kong Consumer Council headquarters, asking to meet with the person in charge, and said that if the Consumer Council did not apologize, the company would definitely pursue the matter to the end.

During a meeting and discussion with relevant personnel from the Consumer Council, Nongfu Spring mentioned that the article published by the Consumer Council had caused the company to suffer extremely high losses. It therefore believed that if the Consumer Council confirmed it had used the wrong standard, it should immediately apologize and clarify, and hoped the other party would not delay, "because the losses every day are enormous, and the Consumer Council cannot disregard shareholders' interests."

(Image source: Ming Pao Finance Network)

This morning, the Hong Kong Consumer Council published on its official website the "Consumer Council's Clarification on the Test Sample Results of 'Nongfu Spring'." The clarification statement pointed out that it had learned that Nongfu Spring's test sample was not "distilled water," "natural mineral water," "purified water," or the like, but "natural drinking water." Accordingly, the Hong Kong Consumer Council reclassified the sample into an independent category, "natural drinking water," and re-scored it.

The Consumer Council said, "The Council apologizes for the misunderstanding caused by the discrepancy in sample classification in this test." The full text of the clarification statement is as follows.

Nongfu Spring subsequently posted on major platforms that it had "received" the statement, replying: "The test results fully show that Nongfu Spring's products fully comply with the relevant standards and are safe to drink," and said Nongfu Spring would continue to provide safe, high-quality products and services to the Hong Kong market.

It is worth mentioning that, according to Guandian Network, after today's clarification statement was released, Nongfu Spring's stock price rose, with the gain widening to 8%, and its total market value returning to above HK$400 billion.

Image source: Internet

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The above content is compiled by CoffeeHunters, a coffee news website.