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Zong Fuli is rumored to have resigned from Wahaha

Cailianshe reported on July 18 that screenshots of Wahaha's senior personnel changes and Vice Chairman Zong Fuli's resignation were widely circulated on the Internet. The head of the relevant department of Shangcheng District, Hangzhou City, told reporters: "The relevant situation is still being further verified, and someone will contact the reporter for further feedback later."

Earlier reports:

Zong Fuli fired the "first shot": "A letter to all sales staff" circulated on the Internet

Young consumers have extended an olive branch to Zong Fuli. For her, now may be the best time to reconstruct offline channels.

Text｜Hu Nannan, reporter of "Chinese Entrepreneurs"

Recently, a letter signed by Wahaha "to all sales staff" has been circulating on the Internet.

The letter mentioned: Now is the time when Wahaha is receiving unprecedented attention; we must launch a terminal distribution assault, with the goal of "making Wahaha products visible and available to everyone."

Regarding the terminal distribution situation mentioned in the letter, "China Entrepreneur" asked Wahaha about the progress, but no reply was received as of press time.

A letter signed by Wahaha "to all sales staff" circulated on the Internet Source: Internet screenshot

However, all signs indicate that Zong Fuli, who officially took over after her father's death, is accelerating the reconstruction of offline channels.

Recently, a video circulated online showed that Wahaha is increasing its offline freezer deployment. Wan Rong, a Wahaha agent in Yancheng, Jiangsu, also confirmed to China Entrepreneur thatAt present, Wahaha is indeed putting freezers in offline terminals, "about dozens of units in a county."On social platforms, some netizens posted that Wahaha freezers have recently entered their school cafeterias.

The owner of a store in Hangzhou, Zhejiang, told reporters that on March 4 (the ninth day after Zong Qinghou's death), the Wahaha regional manager came to his store. This was the first time he had seen a Wahaha salesperson in all the years since he opened the store. He also revealed, "It is said thatNow (Wahaha) is recruiting a large number of salesmen。”

For the beverage industry, offline channels have become the key to success because many beverage purchase demands occur randomly and are timely. According to Frost & Sullivan data,In 2019, only 6% of the beverage industry's sales came from e-commerce channels, and 94% came from offline channels such as supermarkets, convenience stores and restaurants.

In the past few years, relying on the joint sales model founded by Zong Qinghou, Wahaha has established a firm foothold in the sinking market. The first- and second-tier markets that are closer to young people are mainly occupied by companies such as Coca-Cola, Nongfu Spring, and Master Kong.

Because of this, there is a misalignment between Wahaha's original channel system and the new products Wahaha has developed in recent years for young people. Zong Fuli, who understands young people better and wants to capture them more, has actually long been aware of this problem facing Wahaha's channels.

As early as 2019, in an interview with China Entrepreneur, Zong Fuli, then vice president of Wahaha Sales Company, said that now everyone (Wahaha) has the concept of entering first- and second-tier cities, "because I thinkA brand is a pyramid. You must occupy the top end and then radiate outwards.。”

When asked about her strategy for the first- and second-tier markets, Zong Fuli said, "I don't have any clear strategy." But she has one principle, which is to follow the consumers. "I must be there for what they (consumers) like."

Today, with the good reputation accumulated by her father and the olive branches extended to Zong Fuli by young consumers online, for Zong Fuli,Now may be the best time for Wahaha to restructure its offline channels and enter first- and second-tier cities. This is also the first major test she faces after officially taking charge of the company.

Offline, changes are happening quietly.

According to the observation of China Entrepreneur, the number of Wahaha purified water in offline stores in Beijing is increasing. In order to increase sales, many terminal supermarkets have also begun to increase the distribution of Wahaha products. In a Wumart store in Daxing District, Beijing, the reporter noticed that the three brands of water, Wahaha, Nongfu Spring, and Yibibao, were stacked together, which seemed to be a three-way split. Including in the refrigerator of a nearby spicy hot pot shop, Wahaha purified water was also placed in a prominent position.

Before this, Wahaha pure water was rarely seen in offline supermarkets in Beijing. Wahaha's products on the shelves were usually classic best-selling products such as AD calcium milk, Nutri-Express and Eight Treasure Porridge.

Wan Rong told reporters that Wahaha is currently focusing on promoting Wahaha purified water. The sales volume of purified water has also increased a lot recently and is already out of stock.After Wahaha became popular this time, many local supermarkets also provided samples and stocked Wahaha products for free.

Netizens' remembrance of Zong Qinghou also directly turned into a rush to buy Wahaha products. Wahaha AD calcium milk, Nutri-Express, etc. on many supermarket shelves were sold out, and many shelves only had one bottle of product on display, with a label saying "temporarily out of stock".

Netizens' remembrance of Zong Qinghou turned into a rush to buy Wahaha products. Photo by: Hu Nannan

At the same time, many consumers have been showing off on social media the Wahaha products they have bought that they have never seen before, such as Wahaha's sugar-free tea, coffee, and Nutri-Express bars of various flavors.

With Wahaha receiving unprecedented support, Zong Fuli believes that now is a good time for Wahaha to enter first- and second-tier markets. Making products that young people like and entering first- and second-tier cities have been her "dream" for many years.

As early as 2016, Zong Fuli launched the beverage brand "KellyOne" named after her English name Kelly, targeting the new generation of people in first- and second-tier cities. The brand includes fruit and vegetable juices, 0 sugar, 0 fat, 0 calorie high-end tea drinks, and sparkling water. In terms of sales channels, Kelly has entered offline convenience stores, supermarkets, trendy retail stores, etc.

It is understood that the Wahaha brand currently covers more than 200 products in more than ten categories, including packaged drinking water, protein drinks, carbonated drinks, tea drinks, fruit and vegetable juice drinks, coffee drinks, etc. Many of these products are aimed at young people. However, the new products developed do not match Wahaha's existing channel network.So far, Wahaha has never produced another hit product like AD calcium milk, which has led to the outside world mistakenly believing that Wahaha's products and brand are aging.

Although Zong Fuli has made many attempts to make the brand younger in recent years, such as replacing spokesperson Wang Leehom and launching more cross-border brand collaborations, these actions are more focused on the brand level and have never touched on the company's core issue - how to make Wahaha's products seen by more young people, which requires the cooperation of offline channels in first- and second-tier cities where young people gather.

In 1994, Zong Qinghou founded the joint sales model. By deeply binding the interests of distributors, Wahaha was able to gain a firm foothold in the sinking market. For a long time, Wahaha's sales have been particularly dependent on the joint sales model. "They (distributors) are very powerful in the channels below." Zong Fuli also admitted.

Wan Rong also said that he has been a Wahaha agent for 20 to 30 years, and the sales situation in the market has been relatively stable every year.In the Yancheng market in Jiangsu, Wahaha's annual sales are approximately 40 to 50 million yuan.

But the disadvantages of the joint sales model are also obvious.

It is understood that Wahaha's joint sales model consists of multiple links, namely: Wahaha headquarters - provincial and regional branches - first-level/special first-level wholesalers - second-level/special second-level wholesalers - third-level wholesalers - retail terminals. This also means that Wahaha's products have to go through five links from leaving the factory to the hands of consumers, which also leads to Wahaha's weak control over the terminals. At the same time, too many distribution levels also make it more difficult for Wahaha to promote new products. Due to the high operating costs of new products, if there is not enough profit, it is difficult for distributors to have the motivation to promote new products.

Under such circumstances, it becomes imperative to reform offline channels. In fact, in recent years, Wahaha has also been trying to open up more new consumption channels.

According to China Business Network, in 2023, in addition to the joint sales network, Wahaha also increased its cooperation with the convenience store system. A relevant person in charge of Wahaha said that Wahaha focused on developing new special consumption channels and group consumption businesses in various scenarios, and has reached business cooperation with restaurants, gyms, cinemas, and the West Lake Scenic Area. Currently, Wahaha is still continuing to expand various new consumption scenarios.

Zong Fuli was also deeply involved in this channel transformation. Since March 2020, Zong Fuli has served as deputy general manager of the group's sales company and has been deeply involved in the group's sales business. In December 2021, Zong Fuli officially became the vice chairman and general manager of Wahaha Group.

In her opinion, with the changes in the main consumer groups and channels,The joint sales marketing system that Wahaha once prided itself on is obviously not enough for Wahaha, which wants to become younger.

At the Wahaha Group's 2024 Sales Work Conference, Zong Fuli once again emphasized that in 2024, Wahaha must seize the strong market while targeting special channels and exploring new markets.

Channel reconstruction has become the primary challenge for Zong Fuli after she took over. But Zong Fuli's challenges are far more than these - for example, the brand aging problem that has plagued Wahaha for many years.

A distributor who has worked in the beverage industry for more than 20 years believes that Wahaha is too outdated in terms of both products and marketing ideas. Earlier, Zong Qinghou also admitted in an interview with CCTV's "Dialogue": "The lack of new big single products is extremely important."

up to now,Wahaha’s classic best-selling items are still the same ones from more than ten years ago.

Wan Rong said that in the Yancheng market, the best-selling products are AD calcium milk, Nutri-Express, eight-treasure porridge, iced black tea, and Activate. The manager of a supermarket in Zhejiang also told reporters,Wahaha sales in stores have indeed been increasing recently, but this is limited to Nutri-Express, Shuangwaiwai, purified water and AD calcium milk.

After this wave of popularity has passed, Wan Rong also admitted that what Wahaha should do next is to enhance its brand image and the brand's pulling power on its products.

The picture shows Wahaha AD calcium milk placed next to Nongfu Spring bottled water in a supermarket. Photo by: Hu Nannan

In fact, Zong Fuli is also aware of these problems. Not long ago, Zong Fuli sent an internal letter saying, "We must continue to carry out systematic innovation in the corporate system structure, product research and development system, and channel network."

The problem has long been in front of us, and it is crucial to seize the current opportunity to change the situation. As Zong Fuli said at the Wahaha 2023 Annual Summary and Commendation Conference in January this year, 2024 is a very challenging and hopeful year, and it is also a key year for Wahaha to surpass itself and develop again.

In addition to the above issues,For Zong Fuli, as a new official, her every move and every word are under great scrutiny. After losing her father's support, she has another important task: to successfully pass the test period of taking the helm of Wahaha.——That is, to satisfy shareholders and consumers while also consolidating one's own position in the company.

According to Tianyancha, in the equity structure of Wahaha Group, Hangzhou Shangcheng District Cultural, Commercial and Tourism Investment Holding Group Co., Ltd. holds 46% of the shares, which is backed by the Hangzhou Shangcheng District State-owned Assets Supervision and Administration Commission. Zong Qinghou himself holds 29.4% of the shares, making him the second largest shareholder, and the remaining 24.6% of the shares are held by the Wahaha Employee Stock Ownership Association. Zong Fuli may inherit all of Zong Qinghou's 29.4% stake.

On the 23rd, two days before Zong Qinghou's death, according to the National Enterprise Credit Information Publicity System, Zong Qinghou resigned from his positions as the legal representative, executive director, and manager of Hangzhou Wahaha E-Commerce Co., Ltd., and these positions were taken over by Zong Fuli. Currently, Zong Fuli has hundreds of companies under her name, 91 of which are still in existence, most of which are Wahaha-related companies.

also,Whether Wahaha can grasp this wave of consumer enthusiasm is also a difficult problem.Previously, there were many companies like Wahaha that became popular again due to consumers' patriotic feelings, such as Hongxing Erke and Baixiang. In July 2021, Hongxing Erke became popular for donating 50 million yuan, and its sales increased by more than 52 times. But a month later, sales fell to one-tenth of the peak. After the heat fades, the company's product and channel capabilities will be tested more.

In the view of Chen Ji, co-president of Piggy Consulting, such "emotional value" of consumers is a force that can be easily ignited. However, he believes that emotional value cannot be the basis for business growth. The core of a business is to make good products, maintain product iteration, and provide good customer service. This is the foundation for a business to be long-lasting.

what is interesting is,Zong Qinghou officially founded Wahaha at the age of 42, and Zong Fuli also took over Wahaha at the age of 42. This may be a coincidence of fate. One of the father and daughter started the business, and the other maintained it.Today, the story of starting a business has come to an end, but the story of maintaining the business has just begun.