Isolated case? No! This is a sweeping industry-wide circulation integration**** Recently, Wahaha's move to cut distributors with annual sales below 3 million yuan has quickly become a hot topic in the industry. Public opinion always seizes on the most emotion-stirring details: the sudden exit of veteran distributors, inventory piled to the ceiling in warehouses, unresolved payment disputes... Zong Fuli's "iron fist" ruthlessness and the helplessness of those eliminated are the most eye-catching in the spread, but people generally overlook a key issue behind this event—the closure, merger, and transformation of channel links. Wahaha is by no means an isolated case, but an inevitable trend of accelerated integration in China's FMCG distribution. To judge a business event, one must not stay at surface emotions but enter the underlying logic. Emotions belong to individuals; logic belongs to the era. Individual cases will end, but trends will not stop. The blade of Wahaha's reform points to small-scale distributors, against a huge era backdrop: the FMCG market has completely shifted from an era of "scarcity" to an era of "surplus." In the torrent of "supply surplus," efficiency is the only lifebuoy. Any inefficiency in the circulation link will be mercilessly eliminated by the market. Business should uphold morality, but business is not morality. Integration and elimination are bound to be painful, but in the coming period, the vast majority of manufacturers will have to face this pain head-on.
Surplus Era Efficiency Revolution is the Only Pass**** At the end of the 19th century, the U.S. steel industry underwent a drastic integration—from hundreds of small steel mills to a few giants, because new technology and mass production left no room for small factories to survive. Today's Chinese FMCG market is at a similar juncture. In the era driven by expansion, the winning formula for FMCG was "build more factories, distribute more goods, occupy more points." Today, production capacity far exceeds demand, and inventory pressure spreads to every warehouse and every shelf. Supply surplus has changed everything:**** Consumers have so many choices that brand loyalty declines; Channel profits are squeezed layer by layer, and any inefficient link becomes the bullseye of competition; The retail end takes the lead in launching an efficiency revolution, from discount retail to instant retail, pushing cost and speed to the limit. Once the retail end completes its efficiency upgrade, inefficiency in the circulation end becomes like the short board of a barrel, destined to be dealt with first. Brand owners cannot and will not pay for outdated channel structures, and distributors cannot remain immune under the pressure from the retail end.
The Efficiency Fire at the Retail End Will Surely Spread to Circulation and Production**** It's not just Wahaha that is eliminating small-scale distributors; many first-tier brands have taken similar actions in recent years. Some are more brutal, some gentler. If one correctly understands "efficiency," they may have more understanding of the channel reforms by Wahaha and others. Efficiency is never an abstract concept but a capability built on scale.
Without scale, it's impossible to form a unified price system, market order, and professional market operations;
Without scale, the data loop cannot be closed, and digitalization to improve efficiency is just a castle in the air;
Without scale, professional teams cannot be cultivated, and service quality and market execution cannot be guaranteed. This may be the logical basis for Wahaha's elimination of distributors below 3 million yuan—not a moral judgment, but a preliminary action of the efficiency revolution. We can easily recall that the retail industry has already undergone a similar process: Walmart eliminated countless mom-and-pop stores with unified procurement and centralized distribution; Alibaba and JD.com compressed circulation links with platform-based transactions. Every wave of scaling triggers "emotional protests," but protests have never been able to stop the wave's advance. In the FMCG distribution field, scattered small distributors were once a sharp tool for market expansion—flexible, familiar with local conditions, and good at relationship networks. But today, these advantages are reversing: fragmentation means high management costs, price chaos, and frequent cross-regional selling, and it also makes digital upgrades difficult or even impossible. Scale integration is the only path for brand efficiency revolution in the "surplus era" and to secure future survival qualifications. The efficiency revolution at the retail end has already scripted the future direction of the circulation end. The efficiency fire ignited at the retail end will inevitably spread to circulation and production: Discount retail has changed the pattern of gross profit distribution; Instant retail has pulled inventory prepositioning and fulfillment speed to the minute level; Community group buying and live-streaming e-commerce further compress intermediate links. The efficiency revolution at the retail end is like a forest fire, starting from dry underbrush and then spreading to tall trees. Today, this flame has already spread from the retail end to the circulation end, and the production end is also swaying in the wind. From this perspective, Wahaha is just one of the first brands to proactively ignite at the circulation end. In the future, this fire will burn across more categories and more enterprises—this is not a multiple-choice question but a mandatory one.
In the Efficiency Torrent Four Choices That Determine Life and Death**** Facing this efficiency revolution, distributors should not be blindly pessimistic, but they certainly cannot wait passively. Only by making choices based on reality can they survive the restructuring.
Correct Cognition and Orderly Retreat**** Calmly assess your market share, team capabilities, and the boss's age and mindset. If you find that things are not feasible, you should retreat in an orderly manner, preserving capital and accumulation. When victory is hopeless, giving up is the only correct choice. Retreat is not failure but a strategic withdrawal of resources.
Actively Embrace Efficiency Reform**** If you judge it feasible, put down the historical baggage and proactively initiate reform—shorten the supply chain, reduce inventory, introduce digital tools, and deeply collaborate with new retail models. In an era of abundance, all rules revolve around consumers and retail innovation. Defending the market rules of the "scarcity era" with a closed mind will not lead to victory.
Keep the "Eye of Opportunity" Always Open**** Every industry reshuffle in history has given birth to new models, new business opportunities, and new giants. One must admit a fact: the success of the distributor group has never been determined by effort but by opportunity. Therefore, distributors must hunt like hunters for potential brands, research new channels, and test new sales methods. Test with small investments, wait for big opportunities, but never bet everything; a healthy cash flow is the lifeline during turbulent times.
Establish an Open Learning Mindset**** The spread of the spinning jenny in the 18th century caused the collapse of the hand-weaving industry overnight. The history of the industrial revolution tells us: when efficiency becomes the core proposition, no link can lag behind for long. Wahaha's move is not the end of the story but the first shot of circulation reform. More integration, elimination, and restructuring are on the way. For distributors, the only thing they can truly rely on is not the brand, not the retailer, but themselves—their judgment, adaptability, and execution. The current period is a chaotic phase for the FMCG industry. What is happening to the market and what should we do are the most urgent questions for distributors. At this moment, the most terrible thing is not falling behind but closing oneself off. Closure is the breeding ground for decline. During the chaotic period of FMCG, distributor bosses need to go out more to exchange and learn, to seek and collide. From August 19-21, the 7th China FMCG Conference will be held in Shanghai, themed "New Demand, New Supply," with three days of conference, three thematic forums, over ten sub-forums, multiple special private sharing sessions, gathering 2500+ industry professionals and 100+ heavyweight guests. The market will not wait for hesitators, and the "distant cries" of the eliminated will not be remembered by the times. The torrent of the efficiency revolution has arrived. Are you willing to be destroyed by the torrent, or do you have the courage to self-reconstruct and be reborn in the torrent of efficiency? ************🔺