---
title: "The Food Company with Over 46 Billion in Sales Was the First to Join Forces with Pinduoduo"
description: "This year, Wahaha has taken an unusually bold path, first venturing into micro-commerce with 'Tianyan Jingjing' and now launching 'Youyoujun' on Pinduoduo. Is this a sign of desperation or staying true to its original mission? The low-priced lactic acid bacteria drink targets lower-tier markets, and Wahaha's partnership with Pinduoduo marks the first official collaboration between a major Chinese FMCG company and the platform."
author: "快消记者 李珂"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2018-09-04"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/3XmYfwYqaXhtCFIVTdIrfg"
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# The Food Company with Over 46 Billion in Sales Was the First to Join Forces with Pinduoduo

> This year, Wahaha has taken an unusually bold path, first venturing into micro-commerce with 'Tianyan Jingjing' and now launching 'Youyoujun' on Pinduoduo. Is this a sign of desperation or staying true to its original mission? The low-priced lactic acid bacteria drink targets lower-tier markets, and Wahaha's partnership with Pinduoduo marks the first official collaboration between a major Chinese FMCG company and the platform.

This year, Wahaha has taken an unusually bold path. First, there was the micro-commerce 'eye care' product, and now 'Youyoujun' is launching on Pinduoduo. Is this a sign of desperation or staying true to its original mission?

**Low-Priced Lactic Acid Bacteria Drink**

Recently, Wahaha quietly launched a lactic acid bacteria drink called 'Youyoujun,' targeting 5th- and 6th-tier markets. The product itself hasn't attracted much attention; instead, it's Wahaha's partner this time—Pinduoduo—that has caught many eyes.

Public information shows that Youyoujun is a lactic acid bacteria drink 'made with a composite fermentation of six types of lactic acid bacteria, added dietary fiber, zero fat, and zero cholesterol,' with each bottle containing 100ml.

Wahaha stated that on September 1, 'Youyoujun' would be exclusively sold on Pinduoduo's Wahaha official store, with a group-buy price of 52 yuan for 40 bottles and a standalone retail price of 60 yuan.

An FMCG reporter noticed that as of September 2, Youyoujun was already on sale on both Pinduoduo's 'Wahaha Official Flagship Store' and Tmall's 'Wahaha Juhe Food Specialty Store,' both with a specification of 100ml*40 bottles. The actual group-buy price on Pinduoduo was 39.9 yuan, standalone purchase 46.9 yuan; the Tmall store price was 56 yuan.

It's worth noting that Wahaha may be the first Chinese FMCG company to have an official partnership with Pinduoduo.

In fact, although most brand stores on Pinduoduo carry titles like 'official' or 'flagship,' the store owners are actually individual distributors. When a reporter asked customer service at several 'flagship stores' of major dairy and beverage companies whether they were official stores, the response was 'yes'; upon further questioning, the customer service admitted their true identity as distributors, not manufacturers.

Major manufacturers' attitudes toward Pinduoduo are also ambiguous. The reporter sought clarification from relevant personnel at Hua Bin and Nestlé regarding cooperation with Pinduoduo, but the responses were 'not clear yet.'

The reporter learned from Wahaha's official customer service that the operators of both Pinduoduo's 'Wahaha Official Flagship Store' and Tmall's 'Wahaha Juhe Food Specialty Store' are Hangzhou Wahaha Juhe Information Technology Co., Ltd. (hereinafter referred to as Wahaha Juhe).

Tianyancha shows that Wahaha Juhe is a subsidiary with 51% shares held by Zhejiang Wahaha Venture Capital Co., Ltd., with Zong Juliang as chairman and general manager, and Zong Qinghou as one of the directors.

Wahaha Juhe, openly revealing its official identity, has stepped forward to become the 'first to eat the crab.'

In fact, this is not Wahaha's first foray into e-commerce. In May this year, Wahaha partnered with Hangzhou Zhongnan Tianyan Technology Co., Ltd. to launch 'Tianyan Jingjing' fermented milk, focusing on micro-commerce channels, with the latter responsible for channel work.

However, according to earlier reports by 'FMCG,' agents for Tianyan Jingjing experienced frequent packaging changes, and the market operations team and investment policies changed several times over the past four months. Some agents even said they were 'cheated.'

In June, Zong Qinghou said in a media interview, 'We've already paid over 40 million yuan in payment for goods, hoping it (Tianyan Jingjing) can grow into the next national beverage.' However, the industry questions how many of these products were actually purchased by consumers and how many are still sitting with agents.

'The setbacks in the micro-commerce business may have made Wahaha realize the need to do things themselves, which is why Wahaha Juhe has moved from behind the scenes to the forefront. I believe Juhe will play an important role in Wahaha's e-commerce-related business in the future,' said an industry insider.

**Why Pinduoduo?**

Wahaha's partnership with Pinduoduo this time can be said to be well-prepared; what it values is Pinduoduo's ability to move products in massive volumes.

How strong is Pinduoduo's volume-moving capability?

'What is the concept of a bestseller? For example, in 2017, sweatshirts on Pinduoduo—if they could be listed, one style would sell hundreds of thousands of pieces,' said a Pinduoduo seller. During a period in the middle of last year, sweatshirts from Guangzhou's Shahe and Shisanhang were bought up by Pinduoduo sellers. Even so, many sellers were heavily fined by Pinduoduo for being out of stock and failing to ship on time. 'This shows how fast Pinduoduo's volume can ramp up.'

Pinduoduo's first financial report after its IPO further confirms this claim.

On August 31, Pinduoduo released its first earnings report since listing in the U.S. In the second quarter of 2018, Pinduoduo's operating revenue was 2.7 billion yuan, a year-on-year increase of nearly 25 times.

Two key metrics for e-commerce platforms—GMV (gross merchandise volume) and active buyers—both grew significantly. In the 12 months ending at the end of June this year, platform GMV was 262.1 billion yuan, a year-on-year surge of 583%, and active buyers exceeded 340 million.

A Pinduoduo seller told the FMCG reporter that the fundamental reason for Pinduoduo's GMV surge is the 'narrow SKU, high volume' model; under this model, Pinduoduo stores have extremely high sales per product, especially for daily necessities.

Food ranks first among the top ten categories with the highest sales on Pinduoduo.

What kind of products have the potential to become 'bestsellers' on Pinduoduo?

Industry insiders say, 'Pricing must not only be lower than similar products, but also lower than other e-commerce platforms; that's the principle... Every merchant comes in and first loses 30,000 to 50,000 yuan in product value, for example, if the cost is 9 yuan, they sell it for 6 yuan on Pinduoduo.'

The aforementioned Pinduoduo seller said that there is a saying in the e-commerce industry: 'Small losses are losses, big losses are steady gains.' Low-price, high-volume sales help them clear inventory, improve store reputation, and attract customer traffic. They know very well how to achieve larger transaction volumes to gain profits.

'These trial-and-error costs and initial investments are nothing for Wahaha; the hard part is 'lowering oneself.'' An industry insider said, 'The Pinduoduo model of 'few SKUs,' 'high order volumes,' and 'short bursts' has been proven feasible by the 'pin factories' that focus on tissue paper; but perhaps due to public opinion considerations, major brands are still cautious in cooperating with Pinduoduo.'

'In this regard, Wahaha's attitude of respecting the market is admirable, especially since Zong is already over 70 years old,' the insider lamented.

**At the End of the Article**

'It's getting more and more 'monstrous'—first micro-commerce, now Pinduoduo. Is this a dead end?' This was the first reaction of a distributor upon hearing the news of Wahaha's partnership with Pinduoduo.

In recent years, whenever Wahaha makes a move, the rhetoric of 'dead end' and 'desperate remedies' immediately becomes rampant. Labeling Wahaha as 'old and outdated' seems to be becoming a 'political correctness' in public opinion. Titles like 'Wahaha's Annual Revenue Plunges 22.6 Billion, Where Is the Future?' and 'Wahaha's Cliff-Like Decline: How Long Can Zong Taihou's Beverage Empire Last?' are everywhere online.

The logic behind this may be as a media reporter said two years ago: 'As media, we shouldn't just sing praises for companies; we should raise more questions about their problems. Don't be afraid of being wrong; companies without problems won't be afraid of your questions.'

However, 'pointing out problems' and 'wishing for the company's demise' are not the same thing.

A company that sold beverages priced around 3 yuan and achieved peak revenue of nearly 80 billion yuan deserves respect. It's worth noting that over the years, regardless of external opinion, Wahaha has always had sufficient cash flow and rarely seen reports of layoffs.

Today, Wahaha still sells over 30 billion bottles of various beverages a year, equivalent to 21 bottles per Chinese person. Although annual revenue has dropped by 30%, it still stands at 52.9 billion yuan, with over 30,000 employees, cumulative revenue exceeding 460 billion yuan, and taxes paid of 52.6 billion yuan. It remains one of China's largest and most profitable beverage companies.

Wahaha has tried liquor, clothing, and shopping malls, and has been repeatedly criticized for 'diversification failures.' But these attempts were never positioned by Zong Qinghou as core strategies; they were all trial balloons. With Wahaha's corporate influence, the cost advantages in these industries are unimaginable to outsiders.

As chairman of Wahaha, Zong Qinghou has faced increasing scrutiny in recent years as performance declined. But in the current FMCG circle, how many dare to claim a deeper understanding of the Chinese market than Zong?

Take the newly launched Youyoujun, for example; its positioning targets consumers with limited purchasing power or those more sensitive to product prices.

Perhaps those who once consumed Wahaha products have now seen their quality of life leap forward and 'look down on' Wahaha. They think Wahaha is old and unhealthy, so they choose to 'abandon' it.

But Wahaha itself hasn't changed; more precisely, Zong's original intention hasn't changed—to let everyone buy guaranteed products.

**'You've become rich, so go consume something else. There are still people who need Wahaha at this price point.'**

The FMCG reporter sent an interview outline regarding Wahaha Juhe-related issues, but as of press time, no response had been received from Wahaha.

-END-


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