79-year-old Zong Qinghou was admitted to the ICU due to lung cancer, where will the 50 billion Wahaha empire go

Blue shark guide: Middle-aged Zong Fuli, can she support the middle-aged Wahaha

Author | Chen Shifeng

Edit | Lu Xucheng

On February 22, according to The Paper, 79-year-old Wahaha founder Zong Qinghou is currently being treated in the ICU ward of Sir Run Run Shaw Hospital affiliated to Zhejiang University School of Medicine. In addition, according to Red Star News, Zong Qinghou was seriously ill with lung cancer before the Spring Festival and was admitted to Run Run Shaw Hospital, and his condition has not been good.

According to Tencent News's "Frontline", Zong Qinghou's daughter Zong Fuli herself replied in the evening of the same day: "My father is indeed being treated in the hospital for physical reasons, and his condition is stable, thank you for your concern." "

Zong Qinghou is a native of Hangzhou, Zhejiang, born in December 1945. In 1991, he established Wahaha Food Group Co., Ltd. In 2010, 2012 and 2013, Zong Qing won the Forbes rich list three times in the last four years, and was the richest man in Chinese mainland. As of now, Wahaha Group is not listed, but Zong Qinghou's family ranks 31st in the "2023 Hurun Report" with a wealth of 95 billion yuan.

Under the leadership of Zong Qinghou, Wahaha Group has gone through countless cycles and has become an "evergreen" among China's private enterprises. In 2023, Wahaha's main business revenue and profit will still achieve "double growth". In the first half of 2023, Wahaha will give all employees a bonus of 10 million yuan due to the increase in performance. At the beginning of 2024, Wahaha will once again issue 600 million year-end bonuses to employees on the hot search.

After being ill, Zong Qinghou may retreat into the background, but can his daughter Zong Fuli continue to lead Wahaha to grow again?

From school-run factories selling water to food and beverage giants

In 1945, Zong Qinghou was born in Hangzhou. After graduating from junior high school in 1963, in order to reduce the burden on his family, Zong Qinghou went to a farm in Zhoushan, and a few years later went to a tea farm in Shaoxing, where he worked at the grassroots level in the countryside for a long time. It was not until 1978 that the 33-year-old Zong Qinghou was able to return to Hangzhou to replace his mother's teaching position and join the carton factory run by the Industrial and Agricultural School as a salesman.

In 1987, Zong Qinghou and two retired teachers formed a school-run enterprise distribution department, mainly to send stationery and popsicles to nearby schools. In the delivery process, Zong Qinghou found an opportunity: children generally have problems such as loss of appetite and malnutrition, and parents are also very troubled. "At that time, I felt that there was a big market for children's nutrition solution," Zong Qinghou, who is 47 years old, decided to give it a try.

In 1988, Zong Qinghou led the school-run enterprise to borrow 140,000 yuan, organized experts and scientific researchers, and developed the first nutritional product for children to drink - Wahaha Children's Nutrition Solution, which accurately positioned the selling point of its products to "comprehensively promote children's appetite", and strengthened this impression through "empirical advertising" and "children's rhyme advertising", which became an instant hit and harvested the first pot of gold.

Wahaha nutrient solutionWahaha children's nutrient solution is in short supply, which brings production bottlenecks. In order to quickly seize the market, Zong Qinghou set his sights on the Hangzhou Canned Food Factory, which was seriously insolvent at that time. Zong Qinghou later recalled, "If you follow the traditional development ideas, set up projects, acquire land, and build infrastructure, it would take two or three years to say the least at that time, and it is likely to fall into the dilemma of making good products in factories but not selling them." ”

At that time, Wahaha had only 140 employees and a few hundred square meters of production space, while the Hangzhou Canned Food Factory had more than 2,200 employees. There are three paths in front of Zong Qinghou: joint operation, leasing, and merger. If the first two methods are adopted, Wahaha can also solve the production dilemma immediately, but there will be a series of troubles such as property rights disputes in the future. Zong Qinghou chose the third option: took out 80 million yuan and merged the Hangzhou Canned Food Factory. This behavior of "small fish eating big fish" has caused a sensation across the country in one fell swoop.

The merger gave Zong Qinghou a taste of sweetness. After that, Wahaha integrated the production bases of multiple provinces and cities through multiple mergers and acquisitions, and was able to quickly distribute goods from the production bases to all parts of the country.

In 1996, Wahaha's products have expanded from a single children's nutritional oral liquid to three series of milk-containing drinks and bottled water. This year, Zong Qinghou formulated a long-term plan with an investment amount of hundreds of millions of yuan, and introduced strategic investment from Danone, an international beverage giant. Danone invested US$43 million to establish five joint ventures with Wahaha, in which Danone acquired a 51% stake. When foreign investors asked for holdings, Zong Qinghou adhered to the "four basic principles": the brand remains unchanged, the chairman's position remains unchanged, the treatment of retired employees remains unchanged, and the positions of employees over 45 years old remain unchanged.

In the more than 10 years of cooperation between the two sides, Wahaha has made great progress, and Danone Group has also earned billions of yuan. It was not until 2007 that the "Dawa dispute" broke out, and the French company Danone wanted to forcibly acquire 51% of the shares of other non-joint venture companies of Hangzhou Wahaha Group Co., Ltd. with total assets of 5.6 billion yuan and profits of 1.04 billion yuan in 2006 at a low price of 4 billion yuan.

The two sides engaged in 29 rounds of litigation, and Danone did not win any of them. In February 2009, Zong Qinghou said that if Danone asked for a sky-high price, he would dissolve all 39 joint ventures. With this killer move, Danone finally had to reach a settlement with Wahaha - Danone sold 51% of the equity of the joint venture and withdrew from Wahaha.

In this process, Zong Qinghou completed the restructuring of Wahaha Group in 2000, and Zong Qinghou and his employees bought back 55% of the equity of Wahaha Group from the government, and Wahaha realized "full shareholding". Zong Qinghou stressed that before 2000, "the state did not invest a penny. Later, Zong Qinghou said, "I started from scratch, I didn't engage in power-for-money trading, I didn't engage in profiteering industries, I don't mind being called the richest man, and I am not afraid of being the richest man, which is the affirmation of my personal and corporate value, and this makes more people pay attention to Wahaha, and there are more opportunities for foreign cooperation." ”

Zong Qinghou has always been on the lips of a sentence that "an enterprise is like a boat sailing against the current, and if it does not advance, it will retreat." For this reason, in the process of Zong Qinghou's entrepreneurship, he did not dare to relax for a moment. 365 days a year, 200 days to personally go to the front line to investigate, life is also extremely simple, eat canteens, live in the office, and dress is not particular, and finally become a Chinese food and beverage giant.

Can the "second generation" Zong Fuli succeed smoothly?

Before the news broke that Zong Qinghou was ill, the 79-year-old Zong Qinghou was the "Dinghai God Needle" of Wahaha Group, personally controlling Wahaha's affairs. Perhaps, today's Wahaha has come to consider the issue of "succession". In fact, it took Zong Qinghou nearly 20 years to train his daughter Zong Fuli to take over.

In 2004, Zong Fuli, who majored in international business in an American university, returned to China and joined Wahaha Group the following year, serving as the deputy director of the management committee of Wahaha Xiaoshan No. 2 Base, and later served as the general manager of Wahaha Children's Wear and Kaqiana Daily Cosmetics Co., Ltd. After Zong Qing, who started from the factory, his experience in Zong Fuli also started from the factory.

In 2007, Zong Fuli was appointed as the President of Hongsheng Beverage Group (hereinafter referred to as Hongsheng Beverage). Hongsheng Beverage is Wahaha's upstream OEM foundry, and initially there was only one beverage filling line. After Zong Fuli "took charge" of Hongsheng Beverage, on the basis of beverage production, the company gradually covered all links of the industrial chain such as food raw ingredients, printing and packaging, and machinery manufacturing through investment and the establishment of subsidiaries.

Zong Fuli

It is worth noting that unlike the in-depth distribution system led by Zong Qinghou, Zong Fuli is more inclined to do brand incubation (which may also be approved by Zong Qinghou). In 2016, the fruit and vegetable juice brand "KellyOne", named after Zong Fuli's English name and aimed at the high-end market, was officially launched, and the young crowd is the focus of Zong Fuli's attention. In 2018, Zong Fuli became the head of Wahaha's brand public relations department, and Wahaha Group then launched an intensive brand co-branding and marketing campaign to establish a connection with Gen Z consumers.

An important move by Zong Fuli to promote Wahaha's "rejuvenation" is to replace Wang Leehom, who has cooperated with Wahaha for 20 years, and replace it with the new traffic star Xu Guanghan as the brand spokesperson, which has aroused heated discussions among the public. But Zong Fuli did not compromise on this, she said, "Wang Leehom is old, and from the perspective of consumers, the audience will be aesthetically fatigued. "As a consumer goods company, young people will always be the top target group we strive for. Zong Fuli once mentioned in an interview with "Xinhuanet", "...... ACG, trendy toys, and e-sports are all bridges that we need to build a bridge of communication with young people in the future. ”

Under the leadership of Zong Fuli, Wahaha has made frequent efforts on the marketing side, but Wahaha has never been able to break through on the product side - since the nutrition express line, Wahaha has rarely appeared a super single product. Without product power, Wahaha's brand power is difficult to get out of the circle by relying solely on marketing and channel drive.

It is worth mentioning that Zong Qinghou started with "empirical advertising" (whether advertising is more acceptable to consumers, and whether it is easier to generate purchase desire and purchase action after acceptance), but he has always believed that "corporate profits are driven by products", such as the earliest children's nutritional oral liquid.

In addition, in Zong Qinghou's simple brand concept, he is more inclined to "popular brand", he emphasized, "If the price of the product is very high, but only a few people consume it, it cannot be regarded as a famous brand." ”

Zong Fuli was born with a golden key, and in her second year of junior high school, Wahaha already had a net profit of 70 million. At a young age, she was very assertive and strongly asked her parents to send her to study in the United States. Finally, in 1996, he went to the United States to study, went to a well-known aristocratic school in the United States, and returned to China in 2004 after completing all the courses in international trade. In such a living environment, Zong Fuli may have the idea of a new trend, but is this compatible with Wahaha's current system?

The challenge of the 50 billion Wahaha Empire

It is worth noting that after Wahaha's revenue exceeded 50 billion yuan in 2010, Zong Qinghou announced that he would "create another Wahaha", aiming at the goal of 100 billion yuan, but Wahaha's performance gradually declined after reaching the top in 2013. According to the data, Wahaha's revenue in 2013 was nearly 78.3 billion yuan, and from 2014 to 2020, it achieved revenue of 72.8 billion yuan, 49.4 billion yuan, 52.9 billion yuan, 46.4 billion yuan, 46.8 billion yuan, 46.4 billion yuan, and 43.9 billion yuan respectively. Since the beginning of 2021, Wahaha's revenue has exceeded 50 billion yuan again, and its revenue and profit have increased in the past two years, but there is still a big gap from Wahaha's peak.

Wahaha, a huge food and beverage empire, is experiencing development bottlenecks. Specifically, there are mainly the following aspects:

1. Product aging

In recent years, although Wahaha has launched a number of SKUs. For example, in 2022, Wahaha released more than 20 new products, including soda, sports drinks, and "new tea and new juice", and in 2023, Wahaha released 17 new beverages and health products at the sales conference, plus more than 10 products reserved for 2024, Wahaha has released a total of about 80 new products at the sales conference in the past five years. However, the public's impression of Wahaha is still the "same three things" - AD calcium milk, nutrition express, and pure water.

2. The joint sales model has suffered from the impact of new retail

Wahaha's fortune comes from the unique "joint sales" model. The joint sales body divides the dealers into: headquarters - dealers - two batches of merchants - terminal multiple links, each dealer occupies an exclusive area, no cross-selling, must follow Wahaha's pricing system. Therefore, even within the capillaries of the national network, Wahaha still maintains control over dealers.

With the continuous development of Internet information technology, the mainland has entered the era of e-commerce. At this time, the lengthy chain of the joint sales body has become a drag: slow distribution, slow withdrawal, and slower feedback. When the beverage industry enters the era of "rapid iteration", Wahaha is still slowly advancing in "years".

Some industry insiders pointed out that Wahaha's system can no longer match the needs of the entire new retail, nor can it keep up with the rhythm of the entire consumption upgrade. Wahaha officials also said that in the fragmented information age, the traditional marketing model is also facing innovation and upgrading, and the entire food and beverage industry is also facing greater challenges in new product promotion and track innovation.

3. There are roadblocks in front and chasing soldiers in the back

In China's food and beverage industry, there is never a shortage of "challengers". Previously, Nongfu Spring tore a hole in packaged water, functional drinks and other categories through category marketing, and Zhong, who is well versed in marketing, also gradually grasped the emotional release of young people, and through products such as tea π and younger spokespersons, it has pulled in the distance between it and young people, and has stepped to the top of China's beverage giants, becoming the biggest obstacle in Wahaha's 100 billion revenue.

In recent years, new beverage brands such as Genki Forest have also been catching up at a rapid pace. It took about 15 years for Uni-President, Coca-Cola, and Dongpeng Special Drink to become the fastest beverage brand to reach 7 billion annual sales so far, Master Kong took 10 years, and Yuanqi Forest only took five or six years. Nowadays, Yuanqi Forest is marching into traditional channels and sinking markets, which may touch Wahaha's original in-depth distribution system.

If Zong Qinghou retreats into the background, can Zong Fuli solve the above problems and lead Wahaha to another glory?