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(Original title: Wahaha and its shareholders did not respond to rumors of Zong Fuli's resignation)

Wahaha Group Vice Chairman Zong Fuli is rumored to have resigned

Recently, a resignation letter from Zong Fuli, vice chairman of Wahaha Group, circulated on the Internet.

On July 18, China Business News asked Wahaha about this, but the company did not respond. Later, the reporter called Hangzhou Shangcheng District Cultural, Commercial and Tourism Investment Holding Group Co., Ltd., one of the shareholders of Wahaha Group. The company did not respond to the authenticity of the incident, but said, "Go ask Wahaha."

A person close to Wahaha revealed that several senior executives of Wahaha had left the company some time ago, but refused to disclose more information. A former Wahaha executive said that the resignation letter was true.

The resignation letter circulated on the Internet showed that it was sent on July 15. In the resignation letter, Zong Fuli said that recently, the People's Government of Shangcheng District, Hangzhou City and some shareholders of Hangzhou Wahaha Group Co., Ltd. ("Wahaha Group") questioned the rationality of my management of Wahaha Group since the death of Chairman Zong Qinghou, which made it impossible for me to continue to perform my management responsibilities for Wahaha Group and its holding companies. Therefore, I decided to resign from the positions of Vice Chairman and General Manager of Wahaha Group from now on and no longer participate in its management. Zong Fuli said that I have delivered the above-mentioned resignation letter to Hangzhou Wahaha Group Co., Ltd. and all its shareholders, and also urged the relevant parties to take a responsible attitude, re-elect the general manager in accordance with the procedures stipulated in the articles of association in a timely manner and have him perform management duties, ensure the normal operation of Wahaha Group, and safeguard the common interests of Wahaha Group, customers and all employees in accordance with the law. In recent years, Zong Fuli has gradually deepened the business of Wahaha Group. Zong Fuli has served as the head of the brand public relations department of Wahaha Group since April 2018, and has served as the deputy general manager of Wahaha Group Sales Company since March 2020. In April 2023, Hangzhou Wahaha Feichang Cola Beverage Co., Ltd. underwent industrial and commercial changes, and Zong Fuli was added as a director.

Earlier reports:

Zong Fuli took over for two months: Wahaha's sales once soared, but now the traffic has faded

“What does Wahaha minus Zong Qinghou equal?”

"It's zero."

Zong Fuli gave the above answer in an interview 13 years ago. At that time, she was working in Hongsheng Group and the issue of succession was still a long way off.

Now, Zong Fuli has taken over Wahaha for two months, and it is time to give a new answer.

In the past two months, under the leadership of Zong Fuli, Wahaha has been accelerating the installation of terminal freezers, recruiting salesmen, improving dealer efficiency, promoting new products, and doing marketing...

On April 25, Mr. Dong, a Wahaha salesman, told the Red Star Capital Bureau: "After 'Miss' (the name for Zong Fuli) came up, she paid great attention to details. In the past, the company asked salesmen to expand business, which was just urging, a bit like 'empty talk'. Now it is equivalent to setting a target, and it must be opened."

Wahaha is showing a new look, but it is still facing old problems.

With so much traffic, Wahaha's best-selling products are still pure water, AD calcium milk, and eight-treasure porridge. How to break the "aging" curse and create new cross-era products is an old problem. At the same time, traffic is rapidly receding, and how to seize the opportunity to retain customers is another difficult problem.

The picture shows Zong Fuli and her father Zong Qinghou

01

Two months of succession

On March 3, eight days after Zong Qinghou's death, Zong Fuli liked a blog post on her Weibo account. The post included a survey question, "Do you usually buy Wahaha products?" and also included details of the article "Zhong Shanshan: Two or Three Things Between Me and Mr. Zong" published on the Nongfu Spring public account that day.

On March 6, Zong Fuli made her first public appearance since her father's death, attending the annual meeting of the China Beverage Industry Association and delivering a speech, discussing the sugar control trend in the beverage industry and netizens' feelings towards Wahaha. "I am both a 'veteran' who has been exploring the industry for 20 years and a 'newcomer' who has taken over the baton of corporate management," Zong Fuli said.

On March 7, a "letter to all sales staff" sent by Wahaha on March 3 was circulated online. The letter mentioned: Now is the moment when "Wahaha" has received unprecedented attention, and consumers from all over the country are rushing to buy our products... In order to support this sales campaign, the company has introduced the most powerful deposit reward policy, launched the "Wahaha invites you to drink water" promotion, and mobilized the whole company to form a terminal distribution assault project team. All measures are aimed at achieving the goal of "letting everyone see and buy Wahaha products."

Wahaha did not respond to the Red Star Capital Bureau on whether the letter was true, but Wahaha sales staff confirmed the contents of the letter to the Red Star Capital Bureau, and its terminal sales performance was indeed as stated in the letter. The market believes that this letter is the "first shot" after Zong Fuli took over.

On March 18, Wahaha Group announced the launch of the 2024 Laboratory Water Support Plan, providing 596 tons of pure water free of charge to laboratories in research institutions, medical institutions, universities and other organizations and units across the country that need high-standard pure water, following the hot topic "Wahaha Laboratory Royal Water". In fact, Wahaha launched the laboratory water support plan as early as September 2021.

In early April, Wahaha distributors received a notice from the company: they needed to carry out detailed service work according to their own regions. The company required sales staff to not only check the neatness and warranty period of Wahaha products when patrolling the terminal stores, but also to conduct unified cleanliness inspections of other products in the store, so that terminal retail owners can save time and effort.

02

Traffic is fading

After the death of its founder Zong Qinghou, Wahaha became popular again because of its sentimentality.

According to FeiGua data, from March 2 to March 9, the number of fans of Wahaha’s official Douyin account soared from 1 million to 5 million.

Sales volume then surged. Wahaha brand product sales on Douyin e-commerce began to soar on February 25 and peaked on March 4, with sales reaching 5 million to 7.5 million yuan, an increase of more than 10 times compared to before February 25.

Wahaha's sales on Douyin e-commerce reached its peak on March 4. Screenshot from Feigua Data

Two months have passed, and traffic is receding. Wahaha’s official Douyin account has lost 140,000 followers in the past 30 days.

The sales of Wahaha brand products on the Douyin platform also showed a significant decline. According to Feigua data, on April 27, the sales of Wahaha products were 750,000 to 1 million, a decline of more than 80% compared with March 4.

The sales of Wahaha brand products on the Douyin platform also showed a significant decline. Screenshot from Feigua Data

The Red Star Capital Bureau asked Wahaha whether its online sales had declined and the reason for the decline, but the other party did not give an effective response.

For Wahaha, two months seems too short to achieve a real comeback.

03

"Ageing"Concerns remain

Wahaha has been facing slowing or even declining revenue growth for a decade, and there have been constant concerns in the market about its brand aging.

In 2013, Wahaha's revenue reached 78.28 billion yuan, and then began to decline.

Ten years later, according to the 2023 list of China's top 500 private enterprises, Wahaha's revenue in 2022 was 51.202 billion yuan, which is still about 27 billion yuan lower than in 2013.

In the past five years, Wahaha has been constantly questioned by the market about its "aging products" and "aging brands."

Wahaha AD calcium milk on the shelf

On the Taobao e-commerce platform, the top five products with the highest sales in the Wahaha official flagship store are AD calcium milk, eight-treasure porridge, purified water, lactic acid bacteria beverage, and Shuangwaiwai. The newest product is the lactic acid bacteria beverage launched ten years ago.

The recent sales also show that Wahaha's best products are still its old products. According to Feigua data, Wahaha's best-selling products in the past two months are AD calcium milk and eight-treasure porridge.

The products that Wahaha can play are basically old products screenshots from Feigua Data

In fact, in recent years, Wahaha has launched about ten new products every year, totaling more than 300 new products, but none of them have made much of a splash, and many products have even been taken off the production line at lightning speed after their launch.

Zong Qinghou said in an interview with CCTV Finance in 2023: "It was our mistake. We should have focused on two products instead of launching so many products at the same time."

04

Zong Fuli's answer

How can Wahaha regain its glory after the traffic ebbs? What Zong Fuli has done in the past two months seems to be answering this question.

Channel reform is what Wahaha has been doing in the past two years, because Zong Fuli has a new mission: to expand Wahaha products to higher-tier cities and attract a new generation of customers. Channel innovation is the capillary to accomplish the new mission.

Zong Fuli chose to strengthen control over the terminals through sufficient information feedback from the sales end on the one hand, and to expand new channels with fewer levels on the other hand.

For example, the "gun" of the internal letter is pointed at the sales terminal.

Wahaha sales staff told Red Star Capital that most places are currently recruiting salesmen: "Last winter, the task was to have one salesman for every area with a population of 150,000 to 200,000."

The salesperson believes that the working atmosphere has changed since Zong Fuli took over. "She pays more attention to details, especially electronicization. A lot of information is processed on the phone, and she has indeed made a lot of reforms." Before, the company was more about urging sales to quickly enter the terminal and develop blank spots, but now the company directly sets indicators and requires terminals to be rated.

Wahaha distributor Mr. Zhang told the Red Star Capital Bureau that he received a notice from the company in early April requiring him to carry out detailed service work based on his own region. When patrolling stores at the terminal, salesmen must not only check the neatness and warranty period of Wahaha products, but also conduct unified cleanliness inspections of other products in the store. They must also cover the "three neglected issues" of salesmen from other brands and friendly companies.

In addition to stricter management of sales staff and distributors, there are also reports online that Wahaha is making every effort to invest in offline freezers.

Red Star Capital Bureau learned that Wahaha started talking about the new freezers in March, and Mr. Dong's area ordered 30 freezers, which are expected to arrive in stores at the end of May. It is understood that freezers are helpful for the display of brand products and dynamic monitoring of quantity.

In addition to channels, Zong Fuli also adopted the big single product strategy to launch new products.

Wahaha is focusing on creating a new sugar-free tea product. At the 2024 National Sales Work Conference of Wahaha, it was proposed to launch more than ten new products this year, with sugar-free tea being the focus. On the Douyin e-commerce platform, which has seen an influx of traffic, Wahaha's official flagship store has only put on sale one or two new categories, including sugar-free tea.

Wahaha purified water on the shelf

Recently, Wahaha has combined sugar-free tea with purified water for promotion. In the past two months, the sugar-free tea has been among the top three Wahaha products in terms of sales on the Douyin e-commerce platform. Currently, sales have reached 60,000 pieces, with over 6,000 people repurchasing it.

However, this does not mean that Wahaha has found the golden key in new product development. This product is still a follower product. There are many players in the sugar-free tea market, including Oriental Leaves and Suntory, Master Kong, Nestle Tea Extract, Yuanqi Forest Burning Tea, Tea King and even Pengyou Tea of ​​Dongpeng Beverage. It may not be difficult to get a share of the pie, but it is not easy to stay until the end.

Zong Qinghou, 42, officially founded Wahaha that year. Zong Fuli, who is also 42 years old this year, and her team still need to find the next "AD calcium milk" to answer the question 13 years ago: What is Wahaha minus Zong Qinghou?