---
title: "Unpacking the 'Extraordinary' Aspects of Wahaha's Marketing Channels"
description: "Wahaha's channel management and innovation capabilities have long been admired in the industry. This article explores the structure of Wahaha's marketing channels and the key innovations in its channel management, including its credit management system and the 'joint sales body' model."
author: "New Distribution"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2014-09-15"
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# Unpacking the 'Extraordinary' Aspects of Wahaha's Marketing Channels

> Wahaha's channel management and innovation capabilities have long been admired in the industry. This article explores the structure of Wahaha's marketing channels and the key innovations in its channel management, including its credit management system and the 'joint sales body' model.

Wahaha's channel management and innovation capabilities have long been admired in the industry. Behind the attention, what are the secrets?

What is the structure of Wahaha's marketing channels? Wahaha's products are distributed across most provinces and cities in China, holding a significant share of the beverage market. The channel model is: headquarters – provincial branch companies – authorized first-level wholesalers – authorized second-level wholesalers – second-level wholesalers – third-level wholesalers – retail terminals. Among these, the first-level distributors who directly conduct business with the group currently number over 2,000.

Looking at Wahaha Group's channel management, it implements phased channel management. Wahaha's channel management has the following characteristics:

**Innovation 1: Marketing Management – Wahaha's Credit Management System**

In the early days of Wahaha, state-owned sugar, wine, non-staple food, and pharmaceutical wholesale companies and their subordinate wholesale stations dominated the channels. Market competition was relatively calm, consumers generally lacked brand awareness, and had an irrational trust in advertising. Wahaha fully utilized these channels, launching massive advertising campaigns to preemptively make consumers quickly recognize Wahaha, thereby seizing market opportunities and gaining a large market share.

In the early stage, Wahaha bombarded consumers with advertising, continuously penetrating their minds, and thus accumulated a certain brand awareness. To further expand the market, Wahaha established a credit management system in the mid-1990s to win the trust of distributors and consumers in the Wahaha brand. The core of this system was the deposit system: distributors were required to pay a certain amount of deposit to Wahaha annually, and adopt a one-in-one-out settlement method in business operations. In return, Wahaha offered more favorable policies and interest rates higher than those of banks at the same period.

In the market environment at that time, individual wholesale merchants were gradually becoming a trend, and traditional state-owned sugar and wine wholesale channels were greatly impacted. Market competition was fierce, and market order was extremely chaotic, leading to a multiplied increase in marketing risks, with cash flow management being a major issue. The cash flow problems in the distribution system largely stemmed from the credit management of channel members. Therefore, Wahaha took the lead in building a credit management system in China, which was highly praised by distributors and was a wise move at the time.

But how was this system successfully implemented?

After the system was launched, Wahaha implemented a 'push-pull' strategy:

**1. Strong and unique brand image**

In the early days, Wahaha used state-owned distribution channels and supporting advertising campaigns to establish brand awareness and reputation, placing the brand in a strong position. Coupled with its products being leading in the dairy beverage industry and even the entire beverage industry at that time, Wahaha established a strong and irreplaceable brand image in the market.

**2. Honest cooperation, mutual benefit and win-win**

In the market environment at that time, wholesalers did not have the diversified development thinking and large capital occupation of today's merchants; often, funds were idle. Wahaha fully utilized this opportunity, offering merchants policies with interest rates higher than bank rates, making it profitable for distributors, improving their operational efficiency, and expanding Wahaha's market territory.

**Innovation 2: Joint Sales Body Model**

Around 1996, competition in the health products and beverage markets became intense. Many enterprises began to imitate Wahaha's model, shifting channel focus downward to farmer's markets, professional markets, and county-level markets. Due to the chaotic market order at the time, there were multiple distribution channels, severe cross-regional selling, and even temporary market stagnation. To effectively control merchants, Wahaha introduced its famous joint sales body model.

What is the joint sales body model? The core content is to guarantee profit margins at each level, allowing distributors to weave a network for the enterprise. How does such a large business model operate?

**1. Continue the deposit system, binding interests**

**2. Sales area responsibility system**

Wahaha clearly defines the sales area for each distributor based on their capabilities, with specific regulations on shelf placement rate, price control, promotional activities, and other details within the area. Merchants who fail to achieve targets are dynamically eliminated.

**3. Price difference system design**

A key factor for enterprises to effectively control the market lies in profit control among distributors at all levels, wholesalers, and terminal points. Wahaha sets prices for each level of distributor, ensuring the interests of all members within the system. The more cooperative a distributor is with the company's policies, the more support they receive in new product supply and advertising expenses.

**4. 3-month return/exchange policy**

Wahaha has clear provisions in contracts for new product promotion: within 3 months after a new product launch, if the distributor has made efforts to develop the market but has not achieved the predetermined sales target, Wahaha will take back or exchange the goods and compensate the distributor for losses incurred in market development.

**5. Internal sales personnel responsibility system**

Wahaha assigns a salesperson to each distributor to help manage the sales network, and together with the distributor, research and analyze the market, and formulate effective promotional methods within the region. Sales personnel must be responsible for the distributor's market development performance; distributors must supervise the sales personnel and report their performance to headquarters monthly.

**6. Professional market supervision system**

Wahaha has established an independent supervision department specifically responsible for market supervision and maintenance of market merchants and branch companies. This ensures the normal operation of the joint sales body system.

Analysis of the success of the joint sales body model:

**1. Products have high profit margins**

The implementation of the step-by-step profit guarantee system requires products to have high profit margins to support it. In the competitive environment at that time, Wahaha's products had much higher profit margins than other beverage products, and the strong brand position gave it more pricing space. Therefore, Wahaha also tended to choose products with larger pricing space.

**2. The high-voltage line of the deposit system**

Since merchants pay deposits in advance, and the deposits themselves still bring considerable income to merchants each year, this high-voltage line undoubtedly acts as a sword hanging over merchants' heads, ensuring they comply with the game rules.

**3. Dispersing merchants' market development pressure, weakening their independence**

Wahaha's sales personnel help merchants develop markets and conduct sales, which undoubtedly shares a large amount of market pressure for merchants. This is easily accepted by merchants, but at the same time, it means merchants become dependent on the company for sales of this brand. The enterprise gradually takes control of market initiative by utilizing merchants' local connections and resources, providing a foundation for its strong channel management strategy. First-level distributors play more of a logistics general agent role, making money easily.

We can see that Wahaha's joint sales body model is actually a very 'personalized' custom model. Strictly speaking, channel model design itself is a strategic planning behavior with strong customization. No model can be completely innovative or easily replicated across the board. The key to success in enterprise channel model design is to strictly analyze one's own product characteristics, sales features, population characteristics, price space, brand advantages, internal personnel, and other factors for targeted design, and to introduce it in an orderly and purposeful manner.

The standard for measuring whether a channel model is good or bad cannot be simply based on innovation, replicability, or profitability, because no model can guarantee profitability. More attention should be paid to the operability of the model. In each of Wahaha's channel management innovations, we can see that it fully considered the operability of the model and the feasibility of introduction.


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