Wahaha plans to stop using Wang Leehom as its spokesperson. In interviews with media such as Xinmin Weekly and Chongqing Business Daily, Zong Qinghou's daughter Zong Fuli explained, "Because he is too old. " Wang Leehom's fans are somewhat indignant. According to their posts on social media, to repay Zong Qinghou's kindness in discovering him 20 years ago, Wang Leehom had not raised his endorsement fee since he began endorsing Wahaha in 1998. As of now, related Weibo posts have garnered over 100 million reads. But from the perspective of the entire beverage industry, this is undeniably a sign of era anxiety. Wahaha's brand aging has been rumored for a long time, new brand Hengda Ice Spring was short-lived, the older generation Huiyuan Juice was sold off miserably, and Red Bull in the functional drink sector is embroiled in lawsuits... This market, estimated by China Commercial Industry Research Institute to be over 2 trillion yuan, is filled with smoke and fire.

-01- Beverages are consumed on impulse When Chongqing Tianfu Cola was revived a few years ago, its head said: Planned consumption, where you buy online in advance and take it out of the fridge when thirsty, exists but is not common. This requires beverage distribution to have sufficient offline terminal density. When consumers are thirsty, they can easily buy your product. Therefore, channel disputes in beverages are fierce, even down to whether a product is placed in the middle or upper part of the shelf. Facing different brands of mineral water on the shelf, few consumers think about which brand to choose. Consumers, known for being "lazy," "will take the bottle closest to their hand." Of course, such purchase decisions are based on water of similar "value." Therefore, creating higher added value has become a common goal for these water sellers, such as hiring a popular celebrity spokesperson, designing nicer bottles, or offering more quantity for the same price. When business reaches the shelf level, influencing purchase decisions becomes key. In 1998, Wahaha invited celebrity Wang Leehom to endorse its products. At that time, Wang Leehom was a newcomer just starting his career and had his first opportunity to endorse a mainland brand, so the price was not too high. But the following year, he won the 10th Golden Melody Award for Best Mandarin Male Singer and Best Record Producer for his album "Revolution." As his popularity soared, Wahaha also sold well. Earlier, a friend told Wang Leehom that when traveling to the Qinghai-Tibet Plateau, the grassland was endless, and he could only see two things: cow dung and Wahaha purified water with Wang Leehom's portrait. Wang Leehom is also grateful to Wahaha, as many mainland fans got to know him through Wahaha. So over the past 20 years, even after becoming a superstar, Wang Leehom has not raised his endorsement fee much. Wahaha's marketing was not the earliest. Before him, functional drink Red Bull entered China and used CCTV marketing like Qinchì and Sanzhu, advertising during the Spring Festival Gala. Two years later, Hainan Coconut Palm Coconut Juice also appeared in Spring Festival Gala ads, with the slogan "One cup a day, fair and tender" being as marketable as today's "Drinking it since childhood." Such superficial endorsements and marketing are easily copied. Achieving differentiated value is not so easy.

-02- In 1999, Zhong Shanshan, an early Wahaha distributor, had also been producing purified water for three years. But at that time, besides Wahaha, there were He Boquan's Robust and Yibao's predecessor Longhuan. How to stand out among these purified waters? Zhong Shanshan came up with an idea: stop making purified water. In April of that year, Zhong Shanshan publicly advocated stopping production of purified water, citing experiments showing it was not beneficial to health. At that time, playing the "health card" was a differentiation that led the industry by at least 10 years. Since then, Zhong Shanshan said his company only acts as a "porter of nature," establishing water source bases in Qiandao Lake, Changbai Mountain, and launching the slogan "Nongfu Spring is a little sweet." This differentiation advantage of Nongfu Spring has persisted to this day. In the market statistics of China Commercial Industry Research Institute in April 2019, Nongfu Spring continued to top the beverage industry with a market share of 34.3%. The second place, Yibao, had only 8.4%. During this period, Nongfu Spring was not without threats. At the end of 2013, real estate giant Evergrande Group launched its first cross-border FMCG product, Evergrande Ice Spring, planning to sell 10 billion yuan in 2014 and reach 30 billion by 2016. The wealthy Evergrande had just stepped into the industry and launched a series of marketing attacks. According to later estimates, Evergrande hired four international celebrities including Jackie Chan and Fan Bingbing, heavily promoted water source bases like Changbai Mountain, and spent 6 billion yuan on advertising and promotion. For a time, industry rumors said Evergrande Ice Spring's sales directly surpassed Nongfu Spring. But at this time, Nongfu Spring still did not hire celebrities; instead, it had employees film a short video of the company's water source in Changbai Mountain, ending with the line "We don't produce water; we are just porters of nature." Marketing geniuses often use other companies' money to advertise their own company. In the end, Evergrande Ice Spring lost 4 billion yuan and fizzled out. Nongfu Spring, on the other hand, has repeatedly been rumored to go public. On November 26 this year, Bloomberg News, the world's largest financial information company, also reported that Nongfu Spring would go public in Hong Kong as early as the first half of 2020, raising no less than $1 billion.

-03- Regarding the news of the industry giant, Nongfu Spring's response was ambiguous. Initially, the head of the media department firmly denied the news; but before newspapers could spread the response, they changed their wording to "no comment." Economic Daily later received information from industry insiders that Nongfu Spring was in talks with financial advisory teams to consult on listing matters. Why does Nongfu Spring's listing attract so much attention? First, the company has been rumored to go public since 2000. In 2008, it accepted listing guidance from CITIC Securities, but in 2018, it terminated this decade-long guidance. Second, China's food industry is slowing down from its high-speed growth in the 1980s. According to Qingshan Capital, the industry growth rate fell from over 20% in 2012 to 10%; by 2015, it had dropped to single digits. The entire industry is watching this giant. But from the limited data, Nongfu Spring is also anxious like the rest of the industry. According to the "2019 Top 100 Private Enterprises in Zhejiang" list, Nongfu Spring's 2018 operating revenue was 20.911 billion yuan, with net profit (unaudited) of 3.616 billion yuan. These are not solely due to the natural drinking water category. For example, since this year, Nongfu Spring has accelerated expansion into more segmented markets such as coffee, middle-aged and elderly drinks, and low-temperature juices. Before this, products like Shui Rong C100, Oriental Leaf, Scream, and Vitamin Water have all grown within Nongfu Spring's system. When analyzing this industry, Qingshan Capital mentioned that the fragmentation of society has led to the so-called "mass" consumers no longer existing in many aspects: many people hope to be different from mainstream society or culture, but in today's society, everyone is "non-mainstream." The demand for personalization makes the "big single product" logic difficult to work. The multi-scenario coverage of "one for leisure, one for travel, one for gatherings" is becoming increasingly inefficient. Full-category expansion has become the choice of this era. Even Coca-Cola has begun exploring categories beyond carbonated drinks, such as coffee and even alcoholic beverages. From the current state of the industry, they are only saying one thing: this is not easy. As early as 2015, Huiyuan Juice's multi-brand expansion was in the news. First, it launched a premixed cocktail called "Zhen Xuan," then invested 1.3 billion yuan in frozen dumplings; it even partnered with "Ele.me" to create customized internet-exclusive juices. In those years, Huiyuan Juice quietly expanded into liquor, wine, Pu'er tea, and other fields. The ending is well known: at the beginning of the year, it was rumored to be sold to Tiandi No.1, and later the founder became a dishonest person. Wahaha has also tried. Feichang Cola was a brand that a generation knew well, but now it has disappeared from the market. Zong Fuli's NFC customized fruit and vegetable juice named after her English name Kellyone seems to have not made much of a splash. Before the brand was launched, Zong Qinghou expressed pessimism. Although Nongfu Spring has produced several well-known brands, its supply chain system remains tight. According to media reports, from 2010 to now, Nongfu Spring has spent nearly 10 billion yuan on building factories. But the company's revenue growth rate is actually slowing year by year: 20% in 2015, 19% in 2016, and 7.8% in 2017. With this rumored listing, Economic Daily even suspected that Nongfu Spring is "short of money."

-04- The internet intensifies social fragmentation, leading to an increase in demand for diversified categories. While water sellers build factories to produce products, downstream channels are also becoming tense under the influence of the internet. The internet has little impact on the beverage industry, because as the head of Tianfu Cola said, it is impulse consumption. If you are thirsty and have to wait for delivery, wouldn't that be deadly? Of course, when he said that, delivery-based businesses like Luckin Coffee and Heytea did not exist. Even if we set aside these delivery-based tea and coffee businesses, the traditional beverage industry is still being integrated by the internet. For example, the emergence of B2B online FMCG platforms like Lingshoutong, Yijiupi, and Zhongshang Huimin. The head of the southwest B2B platform Yishenghuo once said they wanted to get a distribution right for Nongfu Spring and sell it within Chongqing. But traditional beverage distribution boundaries are clear-cut; each district and county, even the north and south of a street, have different distributors. As an online platform, Yishenghuo's products can be sold throughout Chongqing or even the world, which undoubtedly damages Nongfu Spring's original distributor system. This was a hot topic during the O2O boom, and now it is focused on the beverage industry. At first, these B2B platforms grabbed goods across regions. "Especially when large supermarkets have promotions, water that costs 2 yuan is sold at 1.8 yuan or even 1.5 yuan." When encountering such good deals, B2B platforms would buy in bulk and then sell at low prices to mom-and-pop stores. Platforms may not make money from Nongfu Spring, but it is important to complete their product categories to enhance stickiness. Wang Chaocheng, founder of Yijiupi, once said publicly, "Nongfu Spring prohibits all channels from cooperating with Yijiupi, but Yijiupi sells Nongfu Spring everywhere." But in traditional channels, this is called cross-regional selling (channel stuffing), which directly affects the pricing power of the brand's distributor system. Before Zhong Shanshan founded Nongfu Spring, he was a distributor for Wahaha in Hainan and Guangxi. At that time, Hainan was still a special economic zone, so the purchase price was very low. But after Zhong Shanshan got the goods at a low price, he transported them to Zhanjiang and sold them out. Cross-regional selling caused Zong Qinghou to take back Zhong Shanshan's distribution rights. Now, B2B platforms are collectively disturbing the distribution links that Zong Qinghou had always been wary of. When cross-regional selling becomes a legitimate internet entrepreneurship trend, the traditional beverage industry is besieged. With slowing marketing effects, surging demand for full categories, tight upstream capital for factory construction, and hindered channel coordination, the traditional beverage industry is facing era anxiety: Huiyuan Juice eventually sold itself, Zong Qinghou has not retired, and Nongfu Spring's IPO remains a mystery... The industry's future is uncertain. The capital accumulation they relied on from era dividends is gradually dissipating in the confusion of changing times.

Source: New Retail Boss Internal Reference (ID: xlslbnc) Tips will be paid 400-2000 yuan upon adoption.