Recently, there were reports that Wahaha has completely exited the baijiu market, selling its Lingjiang Guojiu brand to Hebei Hualin Group. On September 12, Wahaha explained to Green Squirrel that only the production side was changed, and Wahaha still operates the brand and sales. Despite Wahaha's strong denial of exiting the baijiu market, industry insiders point out that Wahaha lacks experience in baijiu operations, making it difficult to break through in the short term. Coupled with Wahaha's declining performance, selling off the loss-making asset is understandable. Baijiu Business Said to Have Low Investment On September 9, a signing ceremony for investment projects at the Zunyi Baijiu Industry Chain Special Investment Promotion Conference was held, where multiple projects were signed, including Wahaha's Lingjiang Guojiu, but as an "acquisition" by Hebei Hualin Group. In response, on September 12, a Wahaha spokesperson told Green Squirrel that Lingjiang Guojiu was not sold and remains under Wahaha Group, with the baijiu business continuing in an orderly manner, and future focus will be on consumer development. The legal representative change for Lingjiang Guojiu is only for the production side, a move for the group's asset-light operation; Wahaha still handles the brand and sales. Green Squirrel checked the National Enterprise Credit Information Publicity System and found that Wahaha founder Zong Qinghou withdrew from Guizhou Renhuai Moutai Town Lingjiang Guojiu Co., Ltd. on September 6, 2017, with the company's legal representative changed to Liu Fuhui. Wahaha's investment subsidiary Hangzhou Wahaha Hongzhen Investment Co., Ltd., which once held 80% of Lingjiang Guojiu, also withdrew on the same date, with Shunping County Huajiang Commercial and Trade Co., Ltd. taking over. Meanwhile, the company name was changed to Guizhou Renhuai Moutai Town Hualing Guojiu Co., Ltd. Green Squirrel also found a company named "Guizhou Renhuai Moutai Town Lingjiang Guojiu Sales Co., Ltd." whose business scope is "pre-packaged food (alcohol) sales." The controlling shareholder is Wahaha Commercial Co., Ltd., holding 80%. Before February 6, 2015, Hangzhou Wahaha Hongzhen Investment Co., Ltd. was the controlling shareholder, but then it exited and Wahaha Commercial took over. In fact, as early as 2017, there were reports that Wahaha intended to divest its baijiu business. At that time, a Wahaha spokesperson told Green Squirrel, "The company's baijiu business is still operating normally and orderly, maintaining good cooperative relations with partners. Adjusting the business model of the baijiu business in light of various market factors is entirely a normal commercial behavior." Additionally, on September 12, Green Squirrel browsed Wahaha's official website and found no introduction of related baijiu products; the alcohol business only includes Zong's Beer. Cai Xuefei, a beverage analyst, said that Wahaha has not invested significant resources in the baijiu business. Chinese baijiu is a heavy-asset, long-cycle industry, and the sauce-flavor baijiu segment, to which Lingjiang Guojiu belongs, has higher brand requirements, making it difficult for outside capital to break through in the short term. Moreover, Lingjiang Guojiu's positioning is off, not aligning with the trend of sauce-flavor branding and high-end development. Given Wahaha's poor performance, selling off bad assets is a normal business operation. Failed Diversification Over 30 years, Wahaha grew from a school-run distribution department to a beverage industry giant, but under the pressure of brand aging and food rumors, performance has declined in recent years, and cross-industry ventures into milk powder, retail, and baijiu have yielded little. According to the "2016 China Top 500 Private Enterprises Report" released by the All-China Federation of Industry and Commerce, Wahaha's revenue in 2015 was 49.4 billion yuan, ranking 70th among the top 500 private enterprises, a sharp drop of 22.6 billion yuan compared to 2014. In the "2017 China Top 500 Private Enterprises" list, Wahaha's 2016 revenue was 45.592 billion yuan, ranking 104th. In fact, sales of Wahaha's popular star products have also declined significantly. According to reports, Wahaha's Nutri-Express sales peaked at 15.36 billion yuan in 2014, then fell to 11.54 billion yuan in 2015 and 8.42 billion yuan in 2016, nearly halving. In recent years, Wahaha, affected by declining performance and "aging," has been trying to launch new products, from "Tianyan Jingqing" (claimed to relieve visual fatigue) to weight-loss shakes and goat milk powder for middle-aged and elderly people, constantly catering to new consumers and focusing on WeChat business channels. Industry insiders point out that since 2013, Wahaha has entered a "strategic no-opportunity" phase, mainly relying on the inertia of beverage and food to compete. The market maturity and environment have changed, and relying on the original strategic structure can hardly support Wahaha's 100-billion-yuan revenue target. Regarding the sale of Lingjiang Guojiu's production business, Lu Shengzhen believes that Wahaha is likely to sell the sales business as well in the future, as Wahaha is also focusing on its main beverage business. Source: Green Squirrel (ID: xjbxinshipin) -END-