Introduction: Recently, Wahaha has been thrust into the spotlight again, with claims that its 60-billion-yuan empire has fallen. The root of this controversy lies in Wahaha's failure to reach its 100-billion target and its less-than-ideal sales performance in recent years amid the industry downturn. But if 78 billion at its peak was a myth, is 60 billion now a fall?
1 Has Wahaha Really Fallen? Its 60-Billion Scale Remains!
In the industry downturn, Wahaha's development has indeed slowed. In 2015, it achieved sales of 67.7 billion yuan, and it still maintains a scale of 60 billion. But jumping to conclusions based solely on 60 billion and declaring the Wahaha empire fallen would be too superficial. Those in the food industry should know that companies with a scale of 10 billion or more are rare nationwide. How could a 60-billion empire easily fall? If you only talk about numbers, then you are not qualified to discuss Wahaha!
▲ Online circulation of Wahaha's sales in recent years (575 billion unverified)
Every company faces problems in its development. Wahaha will not collapse suddenly. Please understand and support the company's development. Not adding chaos or being extreme is a great virtue. If a company with 60 billion in annual sales is called fallen, how should companies with several billion or several hundred million survive?
2 Wahaha Created a Miracle of an Era
Zong Qinghou became famous overnight with Wahaha Children's Nutritional Drink, which created a billion-yuan sales myth, and won nationwide acclaim with a "national defense battle."
Wahaha cleverly leveraged the power of its "joint sales" model to form a tight sales network, driving the market at low cost. This joint sales model entered the market and even impressed the two cola giants. In China's beverage industry, Zong Qinghou achieved disruptive innovation. Wahaha's joint sales system has been widely praised by industry insiders and was cited by Harvard Business School as a case study of Chinese channel innovation. Wahaha's unique joint sales model became a symbol of the FMCG era.
▲ On April 28, 1992, Zong Qinghou cried when he received a 100,000-yuan bonus from the Shangcheng District Committee (award for economic pioneers)
In the 1990s, cola was popular worldwide, and China's soft drink market witnessed the tragedy of "seven armies drowned" as Sichuan's Tianfu Cola and Shanghai's Zhengguanghe fell under Coca-Cola and Pepsi.
It was precisely with the strong joint sales model that Zong Qinghou launched Future Cola, with the slogan "Chinese people's own cola," avoiding the central cities of the two cola giants and shifting the battlefield to towns. Within four years, it captured 12% of the national carbonated beverage market, forming a tripartite balance with Coca-Cola and Pepsi.
In the domestic dairy market, Wahaha's Nutri-Express single product exceeded 10 billion yuan in sales, spanning both dairy and beverage industries. For over a decade, it has stood out, creating an insurmountable myth. In 2011, Nutri-Express sales exceeded 15 billion yuan, and in 2013, they exceeded 20 billion, repeatedly setting records for single-product sales in the domestic beverage industry.
3 Do Post-90s and Post-00s Think Wahaha Is Too Outdated? We Don't Accept That!
Some say Wahaha is too outdated and not keeping up with the times. But many post-90s netizens say: We don't accept that! As long as it tastes good, there's no such thing as outdated. For national enterprises, don't just talk them down; give them room to grow!
▲ Image source: Sina Zhejiang
But if you've been in the food industry for a long time, or are a seasoned foodie, you'll notice a phenomenon many don't understand: big brands' product packaging designs remain unchanged for over a decade, clearly behind the times, yet they sell well for over a decade. Wahaha with its old logo,旺旺 with its shouting ads, JDB herbal tea with its red can dispute, White Rabbit with its unchanged design... Growing brands are becoming younger and ahead of the times, but their sales aren't obvious, yet people think these big brands are too outdated.
Remember, Wahaha was born in the 1990s, when China was still in the early stages of a market economy, and brand packaging was relatively ugly. Wahaha's green bottle was already quite attractive at that time. The kids who drank Wahaha in the early 1990s might still be drinking it now, or giving it to their own children. Keeping the old packaging is a marketing strategy to build customer loyalty. Wahaha doesn't dare to change, nor is it willing to take that risk. This is an advantage, a rare one. Look at Moutai's ugly packaging—has it changed?
In the changing times, Wahaha hasn't rested on the nostalgic advantage of AD Calcium Milk. Instead, it upgraded from AD Calcium Milk to launch Nutri-Express and Woway, which are more suitable for young consumers. In extending to adult beverages, Wahaha has been working hard. In 2017, Wahaha's distributor conference was grandly held, launching 18 new products across 7 series, with much more fashionable packaging.
4 Wahaha Encounters Bottlenecks, but Zong Qinghou Hasn't Given Up!
In recent years, Wahaha has also faced transformation bottlenecks: an objective fact is that after years of development, the top five beverage companies occupy 60% of the national market share, making it difficult for any company to achieve rapid growth.
Wahaha's ability to maintain growth over the years is due to its continuous launch of new products, but the resulting problem is a lack of long-term products. As China's second-largest private non-listed company, the lack of long-term products and difficulties in diversified businesses are serious problems Wahaha currently faces.
As for consumption upgrades, Zong Qinghou has a clear understanding and is making improvements.
Zong Qinghou admitted that Wahaha's innovation capability has been declining in recent years. Apart from Nutri-Express, which accounts for nearly a quarter of revenue, it lacks more "blockbuster" products and hasn't kept up with consumers' increasing demands. At the same time, the beverage industry still has huge innovation potential to tap. How to tap it is exactly what Wahaha's diversified transformation needs to consider.
"I admit that with the continuous development of the beverage industry and the great enrichment of product categories, companies need to find new ways suitable for their own development. Innovation is the soul of an enterprise and the most effective way to remain invincible in fierce market competition. Large enterprises have strong strength and strong risk resistance, can withstand failure, and should bear the responsibility of being the main force in innovation, development, transformation, and upgrading. For Wahaha, the beverage industry will remain the main business in the future, and diversification is a supplement. Wahaha will focus on developing healthy and health foods," said Zong Qinghou.
In addition, the negative impact of online rumors has not only adversely affected the entire industry but also caused incalculable losses to Wahaha. Under consumption upgrades, consumer attitudes have changed dramatically, and the main consumer group is shifting. Packaging and brands are being tested by the market.
However, Zong Qinghou has also optimistically stated that although performance has declined, a rebound is not a big problem. "I have a good mentality. When encountering difficulties and setbacks, I just get through them."
5 Zong Qinghou Is Not an Old Stick-in-the-Mud; He Has Always Been Seeking Innovation
Zong Qinghou admits that the real economy is facing a downturn and that Wahaha has encountered some difficulties, but the prospects are very optimistic. In 2017, Wahaha's distributor conference was grandly held, launching 18 new products across 7 series to compete in the beverage market. In addition, using OAO to disrupt the internet, crystal diamond water supporting the G20 summit, targeting the trend by increasing vending machines, putting ads on 30 billion bottle bodies, and exploring robot manufacturing technology...
This is an industry leader that no one can shake, challenging itself. This is a giant enterprise that adheres to its main business and moves forward with small steps. Founded in 1987, this company has now gone through 29 years. When Wahaha faces a new generation of consumers and the wave of brand rejuvenation, it is gradually changing!
Vending machines have been around for years, and many beverage giants have introduced and applied vending machine systems. But few, like Zong Qinghou, have seen the market opportunity and established a company to seize the market first. This requires the boldness of an entrepreneur, daring to be the first in China's beverage industry.
In April 2016, Zong Qinghou, the head of Wahaha Group, made a bold attempt by quietly establishing an online company—Wahaha Fuli. Through this company, Zong Qinghou intends to turn Wahaha's 30 billion beverage bottles into "mobile billboards," achieving the integration of offline traffic to online, and revitalizing its massive offline traffic resources. Within a year, the number of users on the Fuli platform reached 5 million. Behind this leapfrog growth is the expectation of "e-commerce" companies for the Fuli platform, and the huge commercial value hidden in the integration of "store commerce" and "e-commerce."
Currently, it's the winter of traditional industries, but he believes Wahaha is engaged in a sunrise industry because eating and drinking are inherent needs of people, rigid demands. What Wahaha needs to do is how to better adapt to the new generation of consumers, rather than providing products with old concepts.
Moreover, if you look at the path of Wahaha's intelligent manufacturing development, you'll know how hard Zong Qinghou is working!
Extending an arm, grabbing, lifting, placing... A big guy with a prominent Wahaha logo on its body, looking like a giraffe, flexibly extends its arms back and forth, easily and accurately stacking boxes of Woway drinks neatly.
2000: Established a mold factory to produce new bottle and cap molds for bottle-making and cap-making machines.
2003: Began implementing ERP system for enterprise information management.
2008: Participated in the national 863 program project "Key Technologies and Demonstration Applications of Robot High-Speed Packaging Workstations."
2011: Undertook the Ministry of Industry and Information Technology's "12th Five-Year" major science and technology special project "Research on Key Technologies and Demonstration Applications of High-Speed Handling Robots and Their Logistics Production Lines."
2012: Participated in the national 863 project "Development of High-Precision and High-Efficiency Industrial Robot Reducers."
2015: Completed the development of serial robots, parallel robots, and planar robots, and applied them in the group's beverage production lines for product boxing, palletizing, production material feeding, and boxing.
6 This 70-Year-Old Man Still Adheres to Industry and Stays Close to the Market
"Wahaha has adhered to industry for so many years, believing that industry truly creates wealth," Zong Qinghou said. Wahaha will continue to focus on its main business and persist in developing the real economy. Zong Qinghou said, "Now is the opportunity to develop high-end manufacturing." He firmly believes that the new round of reform dividends will bring new opportunities for enterprise development.
As a man in his 70s, Zong Qinghou is gradually adapting to Chinese consumers. Zong Qinghou measures the market with his footsteps. For 29 years, he has worked 16 hours a day, spending more than 200 days a year on the front lines of the market, with footprints covering every corner of China's urban and rural areas.
Even now, his way of understanding the market still mainly relies on walking. He insists on going to various places to chat with distributors and vendors; this is his characteristic. Recently, it was natural for Zong Qinghou to appear alone in the waiting room.
Reality is cruel, and the market is always unpredictable. Wahaha may face even greater challenges in the future.
Therefore, we should give Zong Qinghou more understanding, not let the "botulinum toxin" rumor incident repeat. For the revival of China's industry and Wahaha, we need some time.
2017 marks Wahaha's 30th anniversary. As a leading enterprise in the beverage industry, it's time for Wahaha to make new explorations and set an example for the upgrade and leap of Chinese brands. Today, Wahaha is still one of the overlords in China's FMCG industry, and its operational level and strength remain at the forefront. Let's look forward to this giant moving forward with small steps.
Source: Food Entrepreneur, Business Leader, Zhejiang E-commerce has made modifications and compiled the editing and release -END-