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Zong Fuli, who has been at the helm of Wahaha for less than half a year, has resigned?

On July 18, Zong Fuli's "resignation letter to Wahaha Group" was widely circulated online. Distributors, former executives and others believed that the news was true, while the major shareholder, Hangzhou Shangcheng District Cultural, Commercial and Tourism Investment Holding Group, said it would "further verify". In response to the rumors of Zong Fuli's resignation, a reporter from Nandu.com called the Wahaha company's switchboard and beverage service hotline, but both showed that the lines were busy and could not be connected; the reporter then called Wahaha's bottled water consultation hotline, and the customer service said that they were in charge of the business sector and could not answer the reporter's questions. A staff member of Wahaha Commercial Co., Ltd., a subsidiary of Wahaha Group, said that the source of the above news is still uncertain internally.

According to a reporter from Nanduwan Finance, since the death of Zong Qinghou, Zong Fuli, who took over Wahaha, has carried out corresponding transformation of the company, including market expansion and change of management style. However, the news of the above resignation also means that Wahaha's transformation may encounter obstacles.

Zong Fuli (Photo source: Wahaha Company website)

Strive for transformation and leverage the "water war" to expand new channels

After joining Wahaha, Zong Fuli brought many changes to the beverage giant in the "mid-life crisis", especially more and more youthful elements. After becoming the director of the company's public relations department in 2018, Zong Fuli made "personalization" and "IPization" changes to Wahaha's brands. Among them, the old brand Wahaha AD calcium milk has achieved double-digit growth for three consecutive years since 2018 under the new marketing means. Subsequently, under the promotion of Zong Fuli, Wahaha launched new products including coffee, electrolyte water, zero sugar and zero calorie products in 2022 and 2023.

Zong Qinghou passed away in February this year. Zong Fuli, who is regarded as the "official successor", continues to promote the transformation of the company as the vice chairman and general manager of Wahaha. In her plan, Wahaha said that this year it will be both "comprehensive" and "focused", that is, it will comprehensively layout the market channels and expand new markets.

Subsequently, the opportunity to "expand new markets" followed. The death of Zong Qinghou also drew people's attention to the past "grudges" between Nongfu Spring and Wahaha. Nongfu Spring products were also "criticized" by many parties. Although Wahaha did not make any public statements during the incident, in actual actions, Wahaha began to deploy in the first- and second-tier cities that it had "ignored".

For a long time in the past, Wahaha relied on the "joint sales" system founded by Zong Qinghou to quickly open up the market. This system required dealers to pay a deposit before they could get the goods, and Wahaha paid dealers higher interest. Under this kind of manufacturer interest community, Wahaha products quickly entered the market, especially in the third and fourth tier markets, but this system also made it difficult for Wahaha to penetrate the first and second tier market terminals.

During this year's "water war" storm, Wahaha also took advantage of the situation to increase its "offensive" in the first- and second-tier markets, among which leveraging public opinion to distribute products was the most common method. According to a reporter from Nanduwan Finance, when some stores and distributors "announced" their support for Wahaha or gave up Nongfu Spring, Wahaha's front-line sales staff quickly followed up and connected. This method allowed Wahaha products to smoothly enter the terminals such as kiosks and small supermarkets in first- and second-tier cities. Nanduwan Finance reporters found that not only purified water, but also new products such as sugar-free tea also successfully entered the "shelves" of first- and second-tier markets.

Is transformation hindered by differences in management? Growth is still driven by old products

Nanduwan Finance reporter noted that Zong Fuli's resignation may be related to the obstruction of her transformation of Wahaha. Although she has led Wahaha to open up new channels, in contrast to the impression of Zong Qinghou's "charity" and "loyalty" as defined by the outside world, Zong Fuli gives people more impressions of "vigorous and resolute" and "radical".

A market rumor circulating in the early years showed that after Zong Fuli took charge of Hongsheng Beverage Group in her early years, Wahaha split off some food and beverage companies and put them into Hongsheng. Because the ideas of Wahaha's old employees were inconsistent with Zong Fuli's, she fired more than 20 people at once.

For Zong Fuli, who was pushed to the forefront after her father's death, "suddenly" taking over the business left by Zong Qinghou, how to implement her own management philosophy became her biggest challenge in steering Wahaha, and this also forced her to take a tough attitude in leading the company's transformation.

A reporter from Nanduwan Financial News Agency noticed that Zong Fuli's "toughness" was confirmed by indirect information. When the news of Zong Fuli's resignation came out, people close to the senior management of Wahaha told the media that several senior executives of Wahaha had resigned one after another some time ago for unknown reasons.

However, in contrast to Zong Fuli's vigorous promotion of transformation, Wahaha's transformation may come from market resistance. Relying on old channels and old products is still a prominent feature of Wahaha's current development.

When searching on some online e-commerce platforms, Nanduwan Financial reporter found that compared with the sales of more than 2 million of pure water and AD calcium milk, the sales of Wahaha's sugar-free tea were about 10,000+; and when visiting offline channels, Nanduwan Financial reporter also found that except for old products such as pure water and AD calcium milk, other new products of Wahaha are hard to find.

In terms of channels, the newly developed channels in first- and second-tier cities do not seem to have shown any effect yet. Kantar Worldpanel’s official microblog released news that data as of May 17 this year showed that Wahaha’s sales growth rate in the national market was 54% year-on-year, of which the growth rate in the town-level market reached 32%. This data also means that the third- and fourth-tier markets are still the main contributors to Wahaha’s data growth.

Regarding the online rumor that Zong Fuli has submitted her resignation, is there any progress, and how will Wahaha develop in the future? Nanduwan Financial News will continue to pay attention.

Nanduwan Finance reporter Beibei Wang Jingjuan