Zong Qinghou, the founder of Wahaha, passed away: at the age of 42, he started a business and became the richest man three times

Image source: Visual China

Blue Whale Financial Reporter Zhang Jinglun

On February 25, Wahaha released an obituary saying that Comrade Zong Qinghou, the founder and chairman of Wahaha Group, passed away at 10:30 on February 25, 2024 at the age of 79 due to ineffective medical treatment.

As a leading figure in China's beverage industry, he has created a large number of well-known beverage brands, including Wahaha Purified Water and AD Calcium Milk. With the death of Empress Zong Qing, his daughter Zong Fuli will take over the burden of Wahaha, what will be the future of this beverage empire?

At the age of 42, he started his own business and became the richest man three times

As one of the famous "Founding Generation", Zong Qinghou is undoubtedly a brilliant stroke in the history of Chinese business.

In 1987, 42-year-old Zong Qinghou borrowed 140,000 yuan to contract the distribution department of the school-run enterprise in Shangcheng District, Hangzhou, which had been losing money for many years, and made money by selling sodas, popsicles, stationery, and paper. In July of the same year, Zong Qinghou used the pollen sales proceeds and a bank loan of 50,000 yuan as the original capital to establish Hangzhou Baoling Children's Nutrition Food Factory to process pollen oral liquid for Hangzhou Baoling Company.

In 1988, Zong Qinghou discovered that loss of appetite and malnutrition were common among children, but there was no nutrient solution on the market that was specifically produced for children. Under the guidance of Professor Zhu Shoumin, Wahaha developed the first nutritional product for children. With the advertising slogan "Drink Wahaha, eating is fragrant", "Children's Nutrition Oral Liquid" became popular all over the country. Subsequently, the company's name was also changed from "Hangzhou Baoling Children's Nutrition Food Factory" to "Hangzhou Wahaha Nutrition Food Factory".

In 1991, Zong Qinghou merged Hangzhou Canned Food Factory with 80 million yuan to establish Wahaha Food Group Company. Since then, it has opened the "road to wealth" in the field of food and beverage, and formed a "food and beverage empire" with Wahaha purified water, AD calcium milk and other products as its main products.

With the wealth accumulated in this field, Zong Qinghou was named the "richest man" in the rich list of Chinese mainland in 2010, 2012 and 2013 respectively.

Of course, in addition to operating Wahaha as a first-echelon domestic food and beverage enterprise, Zong Qinghou's "fighting" is also well-known by the people. It is rumored that "in order to avoid infighting in the company", Wahaha has no vice president position and no board of directors, and Zong Qinghou has been active in the front line of the market as chairman and general manager.

At that time, some media asked Zong Qinghou when he would let his daughter take over? Zong Qinghou said, "Wait until you are 70 years old, help your daughter (Zong Fuli) on the horse and give her a ride, I can also relax." The year was 2004, and Zong Qinghou was 59 years old.

But in 2015, when Zong Qinghou was 70 years old, he was still running alone, charging into battle.

Zhu Danpeng, an analyst of China's food industry, told the Blue Whale financial reporter that Zong Lao (Zong Qinghou) has made great contributions to the development of China's beverage industry. Wahaha's original joint sales body is a channel model that many enterprises learn and imitate back then, and Wahaha's sales volume of 70 billion yuan has not been surpassed by other domestic enterprises so far.

Jiang Han, a senior researcher at Pangu Think Tank, said that Zong Qinghou is often seen as a passionate, tenacious entrepreneur with a strong sense of professionalism and social responsibility. His entrepreneurial story has inspired many people, especially in the early days of China's reform and opening up, and his success has demonstrated the power of the spirit of private entrepreneurship.

"Zong Qinghou is a very traditional and conservative entrepreneur, which is reflected in Wahaha's products and services, and is one of the reasons why Wahaha has become an evergreen tree in the food and beverage industry. Lan Shili, the actual controller of soda in Wuhan No. 2 Factory, said.

Wahaha's "Midlife Crisis"

In 2013, when Wahaha's revenue reached 78.3 billion yuan, Zong Qinghou proposed that Wahaha should reach the goal of 100 billion yuan in revenue. But it backfired, and since then, Wahaha's performance has declined year by year, and its sales performance in 2022 will drop by more than 30% compared with 2013.

Behind the collapse in revenue is the mass "death" of new products. According to media statistics, Wahaha has launched more than 300 products, and from 2015 to 2018 alone, Wahaha has launched more than 40 new products such as Qili, Kvass and Beer Catecha.

However, although Wahaha's products are diverse, the brand recognition is very low. Although there are many new products, few of them can break through successfully. Wahaha's revenue pillars still mainly come from the "old players" such as Nutrition Express, Wahaha Pure Water and Shuang Crooked, and the closest Cool Crooked has a history of 18 years.

Investigating the root cause, blindly crossing borders and following the trend of imitation, Wahaha gradually fell behind the times. There is a picture of Wahaha's popular counterfeit product circulating on the Internet, and Wahaha has also been named the "Tencent" of the beverage industry.

Zhu Danpeng told the Blue Whale financial reporter that in the past, because there were not many opponents to compete with, Wahaha could quickly occupy the market even if it "followed the trend" to make products; now, the needs of consumers are changing with each passing day, and Wahaha's pace is always one step slower, and every time it steps into a "red sea", the attention of young consumers has long been snatched up. "Over the years, the route of Wahaha's products has basically been based on imitation and following, and its own innovation ability is very poor, so there are not many popular models. ”

In Lan Shili's view, Wahaha's main products are still stuck in pure water and AD calcium milk, and there is no innovation, which is a big pity.

New product launches are frequent but difficult to gain recognition in the market, causing the company to gradually lose its advantage in a highly competitive market. Over the years, in order to find a new growth curve, Wahaha Group has been trying to diversify. Children's clothing, milk powder, liquor, real estate, urban commercial complex...... Wahaha has been involved in seemingly unrelated fields, but most of them have failed to bring new growth engines to the company.

Where is the business empire going?

In recent years, Zong Qinghou's daughter Zong Fuli has officially stepped into the center of the stage as the successor of the group.

According to public information, Zong Fuli was born in 1982, went abroad to study at the age of 14 to receive Western education, and returned to China in 2004 after graduating from Pepperdine University in Los Angeles with a major in international business, she went to Wahaha's production workshop in Xiaoshan to experience.

In 2007, Zong Fuli became the President of Hongsheng Beverage Group. It is understood that the group was established in 2003 and is a company that provides solutions for the whole industry chain of beverage production, and undertakes the OEM processing business of some Wahaha products. Under the leadership of Zong Fuli, Hongsheng Beverage Group has also been ranked among the "Top 500 Private Enterprises in China" and "Top 500 Private Enterprises in Manufacturing in China" for many times.

Until 2018, Zong Fuli returned to Wahaha as the head of the brand public relations department of Wahaha Group, and boldly brought a series of innovative attempts to Wahaha, such as cross-border products such as nutrition express makeup, haha dumplings, blind water, AD calcium milk ice cream, etc., and also through in-depth cooperation with platforms such as Station B and League of Legends Professional League LPL, using different products to reach the circle.

Since December 2021, Zong Fuli has officially served as the vice chairman and general manager of Wahaha Group, and Zong Qinghou is still the chairman of the group. Zong Qinghou has affirmed Zong Fuli to the media more than once, and once said in a talk show that one-third of Wahaha's enterprises are managed by Zong Fuli, and her performance in Wahaha Group "can be scored 90 points".

Zong Fuli once said that food and beverage is a long-term industry, and as a new generation, we must have a sense of awe and maintain a learning mentality. Keeping a business is sometimes more difficult than starting a business, not only to keep the integrity and innovation, but also to achieve the innovation breakthrough of the traditional brand.

As the older generation of entrepreneurs ages, a new generation of entrepreneurs begins to emerge and take center stage. They have more advanced management concepts and innovation levels than their parents, but they also face a more complex market environment. For Zong Fuli, this is an opportunity to prove herself, but it also needs to be explored.