Click to read the original article for details Source: Beijing Business Today (ID: BBT_JLHD) Author: Li Zhenxing KellyOne currently has limited product categories, insufficient channels, and numerous competitors, making it difficult to support Wahaha's high-end ambitions in the short term. Wahaha has begun "exploring" the high-end market. Recently, a Beijing Business Today reporter noticed that Yicha, a high-end tea beverage under KellyOne, the first beverage brand created by Zong Fuli, daughter of Wahaha Group chairman Zong Qinghou and head of the group's brand PR department, has been put on shelves at Beijing Yonghui supermarkets. A KellyOne spokesperson told Beijing Business Today that in addition to the Beijing market, Yicha has also been distributed in key first- and second-tier cities nationwide. In 2016, Zong Fuli created KellyOne, initially launching customized juice products. After several years of operation, KellyOne's new product Yicha has appeared in important cities such as Beijing, which means that KellyOne has changed Wahaha's "rural surrounding the city" strategy and directly entered first-tier markets like Beijing. Industry insiders believe that KellyOne is positioned in the mid-to-high end. From the packaging, ordinary consumers can hardly see its connection with Wahaha. Entering the Beijing market and adopting a strategy of "de-Wahaha-ization" can help consumers break free from their inherent perception of Wahaha. However, KellyOne currently has limited product categories, insufficient channels, and numerous competitors, making it difficult to support Wahaha's high-end ambitions in the short term. -01- Landing in Beijing offline A Beijing Business Today investigation found that currently, two Yicha products are sold in offline channels in Beijing: Fangqilan Oolong Tea and Suishijiechun Oolong Tea, both in 330ml aluminum cans, priced at 9.8 yuan per can. This is more than double the price of Nongfu Spring's 335ml sugar-free tea drink, Oriental Leaf, which sells for 3.8 yuan. In addition to entering the Beijing market, Yicha has also been distributed nationwide. A KellyOne spokesperson told Beijing Business Today that in the first half of 2020, Yicha completed its national sales channel layout, with sales in key first- and second-tier cities in East China, North China, Northwest, Northeast, and South China. It is understood that Kelly is Zong Fuli's English name, and KellyOne is the first product she personally oversaw. In 2004, after graduating from university, Zong Fuli returned to China and worked at Wahaha's Xiaoshan No. 2 Base, Wahaha Children's Clothing Co., Ltd., and Hangzhou Wahaha Kaqianna Daily Chemical Co., Ltd. In 2010, Zong Fuli became chairman of Hongsheng Beverage Group Co., Ltd. (hereinafter referred to as "Hongsheng Group"). Xu Xiongjun, a strategic positioning expert and founder of Jiude Positioning Consulting, believes that KellyOne's customized juices were sold online, but the products have a short shelf life and a very limited sales scope, limiting growth potential. The core consumer market for beverages is offline, and products need to be ubiquitous to truly enter the mainstream. KellyOne's tea products solve the short shelf life problem and, through offline channel layout, reach a wider consumer base. According to information, Yicha's formula includes water, oolong tea, sodium bicarbonate, and vitamin C. Due to the aluminum can packaging, it is suitable for long-term storage and transportation, with a shelf life of 9 months. Yicha has now become the best-selling product under KellyOne. Data shows that on KellyOne's Tmall flagship store, the total sales of Yicha 12-can cases reached 9,860 units, while the total sales of KellyOne's juice products were only 64 units. -02- De-Wahaha-ization Several consumers told Beijing Business Today reporters that when they first saw Yicha, it was hard to associate it with Wahaha. A Beijing Business Today reporter noted that Yicha's packaging does not carry any "Wahaha" related logos. The production commissioning party is Ningbo Hongsheng Youpin E-commerce Co., Ltd. (hereinafter referred to as "Ningbo Hongsheng"), and the production enterprise is Chuzhou Huaguan Beverage Co., Ltd. Tianyancha data shows that the sole shareholder of Ningbo Hongsheng is Hongsheng Group, whose legal representative and chairman is Zong Fuli. Hongsheng Group was originally named Hangzhou Hongsheng Beverage Co., Ltd., and later renamed Hangzhou Wahaha Hongsheng Beverage Group Co., Ltd. Subsequently, the company changed its name twice more and is now Hongsheng Beverage Group Co., Ltd., with "Wahaha" removed from the corporate name. However, Hongsheng Group has invested in 34 companies, still including Wahaha enterprises in Huaihua, Shaoguan, Jinan, Guilin, and other places. A KellyOne spokesperson told Beijing Business Today that KellyOne and Wahaha are two relatively independent and separately operated brands. Yicha is a product under the KellyOne brand system. Shen Boyuan, a marketing strategy management expert, believes that KellyOne's separation from Wahaha in packaging and operation mode is a de-Wahaha approach. From an operational perspective, Zong Fuli can have more freedom to play and reduce constraints. From a product perspective, it can help consumers break away from the inherent "aging" perception of Wahaha beverages, thereby forming a dual-brand, high-low matching operation model. In fact, **previously, to avoid direct competition with Coca-Cola and Pepsi, Wahaha adopted a "rural surrounding the city" strategy, ** and its products gained a foothold in third- and fourth-tier cities. But with consumption upgrading, the first- and second-tier beverage markets have been occupied by numerous brands, and Wahaha's successful products in third- and fourth-tier cities, such as Nutri-Express and Woway, have struggled to deeply penetrate first- and second-tier markets. "This is due to the aging of Wahaha's beverage products and the loss of long-term partners, leading to a gradual decline in performance in recent years. Although a series of new products have been launched, there has not yet been a blockbuster product that can boost performance," Shen Boyuan said. KellyOne needs to remove the inherent label of Wahaha beverages and reshape its brand image. -03- Brand shortcomings "KellyOne, founded four years ago, still has a weak influence at the market level," Shen Boyuan believes. Apart from being high-end and niche, the most important reason is that KellyOne's products were initially only sold through online channels, with too small a scope and a lack of deep marketing. It is understood that KellyOne entered the beverage market through online channels. In 2014, Zong Fuli planned to launch a beverage brand different from Wahaha. In 2016, KellyOne was officially launched, positioned as a high-quality niche route, using a fresh-made model with a shelf life of 7 days. Unlike Wahaha, the product did not adopt a large-scale omnichannel layout; it was only sold online, with delivery limited to the Jiangsu, Zhejiang, and Shanghai region, with each bottle of juice priced up to 38 yuan. Shen Boyuan said that beverages are not suitable for online sales; online can only serve as a supplement, and the mainstream channel remains offline. Offline supermarkets and convenience stores such as Carrefour, Walmart, and 7-Eleven cover products from high-end to low-end, and this is the main channel for beverage consumption. Facts have also proven that although online channels are increasingly important, mainstream brands still focus on offline channels. After Coca-Cola's high-end juice brand innocent entered China, it was mainly sold in high-end premium supermarkets such as Hema Fresh, G-super, Super Species, and Lawson. In the tea beverage field, brands such as Oriental Leaf, Genki Forest's Ran Tea, and Uni-President's Chaliwang have been deeply cultivated for many years and have achieved deep offline channel layouts. Regarding channels, KellyOne responded to Beijing Business Today that Yicha has established a city partner system. Compared with the dealer system, the city partner and dealer system creates a stronger sense of a community of shared interests, a cooperative model of starting a business together. "Although KellyOne operates separately from Wahaha, from the current perspective, KellyOne's space is firmly occupied by large enterprises. KellyOne still needs to leverage Wahaha's channel advantages to gain market share," Shen Boyuan said. KellyOne also needs to expand its influence among consumers through event marketing and brand marketing; otherwise, it will be difficult for KellyOne to shoulder the heavy responsibility of Wahaha's high-end transformation.