Zong Qinghou made a second bet on sauce-flavored liquor, while Zong Fuli favors the low-alcohol beverage track. Their different choices reflect the divergent understanding of consumer groups and trends between two generations of entrepreneurs. In early April, Zong Fuli's emerging beverage brand KellyOne announced the launch of "3.5 Degrees" sparkling wine, entering the low-alcohol category. Earlier this year, Wahaha's Zong Shuai Jia Liquor (sauce-flavored, 53% ABV) was exposed, with a suggested retail price exceeding 1,000 yuan, approaching Moutai's price and sparking industry discussion. From a second foray into sauce liquor to entering low-alcohol beverages, the Zong father-daughter duo shows their determination to conquer the liquor track. Why would a company primarily focused on fast-moving consumer drinks be so ambitious about the liquor track? In the industry's view, the FMCG sector is rapidly innovating, and the unwieldy Wahaha urgently needs to find a slow track that can accumulate value. However, the underlying logic of the liquor track is vastly different from the FMCG industry. Wahaha's previous approach of using FMCG thinking to do liquor business is bound to face significant challenges. However, Zong Fuli's entry into low-alcohol beverages has also been viewed favorably by some industry insiders, as "3.5 Degrees" sparkling wine shares many commonalities with the FMCG industry, though it will also face challenges from players like Meijian. In fact, Zong Qinghou's bet on sauce liquor and Zong Fuli's preference for low-alcohol beverages reflect the different understanding of liquor consumption trends between two generations of entrepreneurs. In this intergenerational shift in liquor consumption, can Zong Fuli fulfill her father's dream? ****Wahaha's Indulgence in the "Liquor Game" In early April, emerging beverage brand KellyOne officially announced the launch of "3.5 Degrees" sparkling wine, entering the low-alcohol category. Tianyancha shows that KellyOne's parent company, Hongsheng Beverage Group Co., Ltd., was established in 2003, initially wholly funded by Wahaha, with legal representative Zong Fuli. This means that Wahaha's current move into low-alcohol beverages is actually Zong Fuli targeting this track. Public information shows that "3.5 Degrees" sparkling wine is based on high-quality vodka, blended with fine bubbles, and features three selling points: low alcohol content, zero sugar, and zero fat. Additionally, it comes in two flavors: Nanko plum sake-flavored sparkling wine and bayberry-flavored sparkling wine, leveraging natural fruit aromas. "'3.5 Degrees' sparkling wine is closer to FMCG product characteristics and can leverage Wahaha's existing sales channels," analyzed Mr. Ding, a senior FMCG professional. "The zero sugar and zero fat claims are no different from Genki Forest's sparkling water marketing gimmicks. With an alcohol content of 3.5 degrees, lower than typical beer, if priced appropriately for young consumers' purchasing power, it could have a market." Compared to Zong Fuli's preference for low-alcohol beverages, her father Zong Qinghou is "intoxicated" with sauce liquor. As early as 2013, Wahaha announced a 15 billion yuan investment in sauce liquor and established Renhuai Moutai Town Lingjiang Guojiu Co., Ltd. The company's "Lingjiang Guojiu" brand includes series like Zong Shuai Jia Liquor, Guojiang, Zhenjiang, and Fujiang, positioned as mid-to-low-end products with prices ranging from 100 to 400 yuan. 2013 was a significant turning point for both Wahaha and the baijiu industry. At that time, the baijiu industry was in a cyclical trough and adjustment, while Wahaha achieved 78.2 billion yuan in revenue that year, second only to Huawei, becoming the second-largest private non-listed company in China. Several industry insiders familiar with FMCG told Jiu Zhouzhi that after Wahaha achieved 78.2 billion yuan, it immediately set a target of 100 billion yuan. How could this goal be achieved? Relying solely on existing businesses seemed hopeless. "At that time, Wahaha's entry into sauce liquor was both bottom-fishing and exploring new areas to find new growth curves," said the insider. What Zong Qinghou didn't expect was that 2013 would become Wahaha's performance peak, which it has never surpassed since. Because Wahaha's beverage core business faced many challengers, and Zong Qinghou, as an old-generation entrepreneur, had management thinking limited by the era, still stuck in a "grasp everything" and "one-man show" style, making it difficult to adapt to the rapidly innovating industry. For Wahaha, contracting its frontlines and concentrating on protecting its core business became an inevitable choice. In September 2018, it was exposed that Wahaha's Lingjiang Guojiu was "acquired" by Hebei Linhua Group. Although Wahaha publicly stated that only the production side changed, as part of the group's asset-light operation, and Wahaha still handled the brand and sales operations of Lingjiang Guojiu, In the industry's view, this was Wahaha's implicit admission of defeat in the sauce liquor field.
Behind the "Liquor Game" Lies the Weakness of the Main Business
The failure in the first foray into sauce liquor did not extinguish Wahaha's ambition in the liquor track. Earlier this year, Wahaha's Zong Shuai Jia Liquor (sauce-flavored, 53% ABV) was exposed, drawing industry attention because its suggested retail price of 1,388 yuan per 500ml bottle approaches Moutai Feitian's suggested retail price. Industry insiders bluntly stated that Wahaha's sauce liquor is more about hype and trend-chasing, with no real market, and is most likely used as internal hospitality or business gifts. This speculation is not unfounded. Since its market launch earlier this year, Zong Shuai Jia Liquor has been almost "silent" in the baijiu market. In 2022, both the old and new generations of Wahaha's leaders chose to focus on the liquor track. Why would a company primarily focused on fast-moving consumer drinks be so ambitious about the liquor track? "Wahaha urgently needs to find a slow track to counter the challenges from new forces in the FMCG industry," said Mr. Ding, the FMCG professional. "The pandemic's impact and changing consumer attitudes over the past two years are forcing and innovating the product logic of the FMCG industry." He believes that the rapid rise of new beverage forces like Genki Forest actually represents the FMCG industry trend—rapid innovation to meet the needs of younger consumer groups. Previously, Genki Forest told Jiu Zhouzhi that it invests heavily in R&D for new products each year, and many new products may be iterated by better ones before even hitting the market. Compared to the "small boat turns easily" of new beverage forces like Genki Forest, Wahaha, with its large base, dares not easily launch new products. If a nationwide rollout doesn't go well, the disruption and losses would be unacceptable for Wahaha. To this day, the public's impression of Wahaha remains stuck in the era of AD Calcium Milk, Wow Yangyang, and Nutri-Express. Multiple media reports have shown that Zong Fuli does not fully agree with her father's marketing and relationship culture. But this time, she found resonance with her father in the liquor field. Because for Wahaha, it craves a track with technology, brand barriers, and slow cycles and iterations—the liquor track clearly fits these requirements. "Wahaha's 'drinking' is because it sees the advantages of liquor's profitability, sustainability, and high premium. For a large enterprise, it should strategically diversify into multiple categories and scenarios," Zhu Danpeng, a food industry expert, analyzed to Jiu Zhouzhi. "Wahaha's strategic direction is correct, but its talent pipeline and business philosophy are not yet aligned." Zong Qinghou's bet on sauce liquor and Zong Fuli's preference for low-alcohol beverages reflect the different understanding of liquor consumption trends between two generations of entrepreneurs. In this intergenerational shift in liquor consumption, can Zong Fuli fulfill her father's liquor dream?
Is Low-Alcohol Beverage an Opportunity?
The different understanding of the liquor track between Zong Qinghou and his daughter has both advantages and disadvantages for Wahaha's current layout. For the sauce liquor that Zong Qinghou favors, it remains one of the strongest trends in the baijiu field. "For Wahaha, on one hand, it has brand recognition; on the other, it has a vast related sales system, which has demand for baijiu and can bring certain sales volume," said Cai Xuefei, a baijiu expert. "The shortcoming of Wahaha entering sauce liquor is the significant difference between baijiu's scenario consumption and the FMCG field." Cai further explained that baijiu heavily relies on scenario consumption, opinion leader PR and promotion, and the creation of quality concepts. These are long-term projects requiring substantial resource investment. For Wahaha, it has the funds, strength, and time to deeply cultivate the sauce liquor industry, but in the industry's view, Wahaha's two attempts at sauce liquor have been superficial, without the determination to go all in. For the low-alcohol beverages that Zong Fuli favors, they solve some of the problems Wahaha faced in selling sauce liquor. As Mr. Ding mentioned earlier, the consumption scenarios of low-alcohol beverages have high compatibility with FMCG channels. As long as the price is right, they can attract young consumers and better cater to younger consumer groups. Additionally, in January this year, the Ministry of Industry and Information Technology's Consumer Goods Industry Department drafted the "Guiding Opinions on Accelerating the Construction of a Modern Light Industry System (Draft for Comments)", which proposed developing "diversified, fashionable, personalized, and low-alcohol baijiu products" targeting young and foreign consumer groups. This policy is seen as the "spring" for low-alcohol beverages. Compared to the high capital and brand barriers of sauce liquor, low-alcohol beverages have higher mass-market penetration but also face fierce competition similar to FMCG drinks—Moutai's Youmi Yu, Fenjiu's Zhuyeqing Lu Jiu and Rose Fenjiu, Wuliangye's Xianlin, Luzhou Laojiao's Qingyu and Huajian Zhuo are all strong competitors in the low-alcohol track; new forces like Meijian, Bingqing, and Luoyin are also rising. Industry veterans believe that for "3.5 Degrees," the barrier to entry for low-alcohol sparkling wine is not high. Even if the business model succeeds, it will attract many imitators, requiring constant iteration, making it difficult to "rely on one trick for a lifetime." From this perspective, Zong Fuli's "3.5 Degrees" is just another alcoholic beverage in Wahaha's many SKUs, hardly building a true moat. **What Does Wahaha's Liquor Business Lack? Of course, Wahaha, founded in 1987, is a memory for the post-90s and post-00s generations. This consumer group has reached drinking age, and Wahaha's liquor can still evoke a wave of nostalgia. Leveraging the sentiment of two generations, Wahaha can still seize the last opportunity to implant its "liquor dream," but the window is closing. Given Wahaha's current situation, deeply cultivating baijiu would better align with its desire for a slow track and allow it to use existing resources to build a moat. How to do the liquor business well? It requires a combination of measures. On one hand, don't overly rely on Wahaha's brand empowerment; start anew. Cai Xuefei said that the high-end upgrade of Chinese baijiu is very evident, with higher demands on brands. "Wahaha actually has no brand in the liquor segment, no recognition or brand value, and its existing brand cannot empower high-end products." This is indeed the case. Zong Qinghou, as an old-generation entrepreneur, has keenly sensed this trend, which is why Zong Shuai Jia Liquor's second coming proposed a suggested retail price approaching Moutai. However, Wahaha's brand equity cannot be grafted onto Zong Shuai Jia Liquor. "If Wahaha launches a new product at most 10 yuan, many consumers would be willing to try it, but for a bottle priced over 1,000 yuan, it targets business scenarios," Mr. Ding believes. "In business settings, would you drink Moutai 1935 at over 1,000 yuan or Zong Shuai Jia Liquor at over 1,000 yuan? The answer is obvious." On the other hand, tell a good quality story. FMCG products differ from liquor; they emphasize channel control and firepower coverage, while baijiu focuses on opinion leader PR and promotion. In this regard, Wahaha has an advantage because both its suppliers and vast distributor network have demand for baijiu, and they can become the first tasters and promoters. But this is a slow process requiring time to cultivate. For Wahaha, accustomed to fast business, if it doesn't prepare for long investment cycles and large investments, expecting immediate results is unrealistic. Of course, the most important thing is to control the key supply chain links. Back then, Jindong Group acquired the loss-making Zhenjiu, which seemed like a bad deal at the time, but over time, Zhenjiu became one of Jindong Group's trump cards. After selling its distillery, Wahaha appears to be operating asset-light, but in essence, it's no different from a large OEM brand. While Wahaha still has sufficient "ammunition," it could seek a good baijiu asset again, and it's not impossible that it could become a trump card in the future. Source: Jiu Zhouzhi (ID: jiuzhouzhi69) _**-END-_