After 100 days of succession, Zong Fuli was anxious

Chinese entrepreneur

2024-06-03 12:07Published on the official account of Beijing "China Entrepreneur" magazine

After 100 days of succession, Zong Fuli was anxious

"Chinese Entrepreneur" reporter Hu Nannan

Edited by Mina

Header image source: Respondents

On Children's Day just past, Wahaha had not been peaceful.

On May 30th, Robust's AD Calcium Milk was officially launched, ready to compete with Wahaha's AD Calcium Milk for the market. At this time, it has been just 96 days since Zong Fuli officially took over (as of press time, just 100 days).

In the past 100 days, the competition in the water market has become more intense. Last month, Zhong took the initiative to launch a green bottle of Nongfu Spring pure water, which directly entered Wahaha's base camp.

In the face of the opponents' attacks, Zong Fuli was actually not idle, and had been quietly exerting her strength.

Recently, "Chinese Entrepreneur" found that in some supermarkets, convenience stores and other terminals offline in Beijing, KellyOne Yicha products appeared on the shelves, together with Wahaha's classic products AD calcium milk, nutrition express, as well as raw leaf tea, iced tea and other drinks. Previously, I had almost never seen KellyOne's products offline.

Photo: Hu Nannan

KellyOne is a beverage brand established in 2016 under the English name of Zong Fuli. From the very beginning, Zong Fuli positioned it as a brand for young people in first- and second-tier cities, but it was not until 8 years later that this brand gradually appeared in a large number of offline supermarkets in first-tier cities.

At the same time, a recruitment platform shows that Wahaha is recruiting a large number of sales management trainees, and it is written in the job responsibilities that they are responsible for the development of the urban market and the direct face of terminal beverage sales customers.

At the end of February this year, after the death of Zong Qinghou, Zong Fuli became the helmsman of Wahaha. And the first step after she took over was to focus on offline channels. In March this year, an agent of Wahaha in Jiangsu told reporters that Wahaha has begun to launch freezers offline, but the initial scale is not large, and dozens of units are about to be put into a county; At the same time, Wahaha purified water and sugar-free tea have also appeared in offline supermarkets in first-tier cities.

Entering first- and second-tier cities and reaching out to young consumers in the first and second tiers has been Zong Fuli's wish for many years. In the past, Wahaha's strong channels have always been in the sinking markets such as counties and towns.

Now, Zong Fuli, who succeeded Wahaha, has taken the first step towards her dream.

But some signs also indicate that Wahaha seems to be a little anxious in terms of laying channels. Fang Tong, the owner of a supermarket in Changzhou, told China Entrepreneur that three batches of Wahaha salesmen had recently gone to her store to distribute goods, but the salesmen did not know each other. What made Fang Tong even more puzzled was that one of the salesmen said that he would buy 20 boxes of Wahaha's "new products" at one time, including iced tea, original leaf tea and kvass that Fang Tong had never seen in the local area before, and did not give any (display) fees, and the ticket price was charged by the company. Fang Tong explained that other FMCG brands that have business in the store will basically pay fees.

There are various signs that Wahaha has been better at taking the initiative recently, but it has also encountered some problems in channel management. For Zong Fuli, it is not easy or urgent to change the existing sales system while entering the first and second tier cities.

Assault on the city's offline market

On February 25 this year, after the unfortunate death of Zong Qinghou, many netizens have purchased Wahaha-related products to remember this legendary entrepreneur. As a result, Wahaha's official flagship store has experienced a "roller coaster" market in sales.

According to the statistics of Zheshang Magazine, from March 4 to March 19, Wahaha's total sales soared to nearly 25 million yuan, and the peak was concentrated from March 4 to 10, exceeding 2.5 million yuan for many consecutive days. After that, the heat quickly dissipated, and from March 12, sales began to decline, and on the 18th and 19th, sales were only about 200,000 yuan per day.

Zong Qinghou laid a good foundation for Wahaha, but the traffic brought by feelings was short-lived most of the time. If the traffic wants to become "retention", it also needs Zong Fuli's efforts.

Therefore, when the traffic came, Wahaha also took advantage of the situation to raid offline channels and spread more Wahaha products to the terminal one after another. In March, the above-mentioned Wahaha agent in Jiangsu said that Wahaha's distribution at that time focused on pure water. Since then, "Chinese Entrepreneur" has found that Wahaha has gradually spread more new products such as iced tea and sugar-free tea to terminal stores. For Wahaha, these new products are not considered new products, but for the owners or consumers of some terminal supermarkets, they have never seen these new products before.

Photo: Deng Pan

In fact, Wahaha has never lacked new products over the years. According to the official website, Wahaha has more than 200 products in more than 10 categories, including packaged drinking water, protein drinks, carbonated drinks, tea drinks, fruit and vegetable juice drinks, and coffee drinks. In 2016, Zong Fuli also launched its own brand KellyOne, which includes bubble tea, sugar-free tea and other products that young people like.

However, in the eyes of the outside world, these new products lack a mature distribution channel system that can bring them to market. Previously, Wahaha's agents had told reporters that the ones that sold better in the local Wahaha were all the classic best-selling items in the past, such as AD calcium milk, nutrition express, eight-treasure porridge, etc. He also admitted that the next thing Wahaha needs to do is to enhance its brand image, thereby driving the sales of its products.

It is understood that in the past three months, although Wahaha has begun to make efforts in offline channels, and some new products have also appeared in supermarkets, convenience stores and other terminals, a number of supermarket owners revealed to reporters that Wahaha's best-selling products such as AD calcium milk, nutrition express and pure water have increased in price to varying degrees. This also exposes Wahaha's problems in the distribution of goods in first-tier cities: for the urban market, is the price increase an agent behavior or a company behavior? Is there a mature price management system? Regarding issues such as channel distribution and offline market planning, "China Entrepreneur" contacted Wahaha, and the other party said that it could not provide relevant content.

Lin Yuan, the owner of a convenience store in Zhangzhou, Fujian Province, shared a detail with China Entrepreneur that in May, she had been to the Wahaha supermarket in Hangzhou.

And Fang Tong also told reporters that brands such as Nongfu Spring and Master Kong will have salesmen to the store regularly. In addition to the salesman who specializes in running business, Nongfu Spring will also have a special tally clerk in the summer to help with the tally in the store.

Offline terminals also need to make up classes

In Lin Yuan's view, as an old brand, the biggest reason for the current status quo is that Wahaha has not invested funds in offline terminals. The control of offline terminals is also the advantage of beverage companies such as Coca-Cola and Nongfu Spring - they have established a mature offline channel distribution and profit distribution mechanism.

Photo: Deng Pan

In the past, Wahaha has always relied on the joint sales model, which is highly bound to the interests of dealers. This model is the key to Wahaha's success, enabling Wahaha to gain a firm foothold in sinking markets such as counties and towns, and even in remote areas. Up to now, Wahaha has more than 180 branches, more than 7,000 distributors, and more than 3 million sales terminals.

However, the joint sales model that Wahaha was proud of is no longer suitable for the current market environment. In recent years, Wahaha has been facing the problem of brand aging, without the drive of brand power, and dealers have no motivation to promote new products, which is why although Wahaha has no shortage of new products in recent years, it is rarely an important reason for a large single product. As for the aging of the Wahaha brand, Zong Fuli has also begun to continuously launch new products and change spokespersons.

In addition, Wahaha's joint sales model has too many participants in the whole link, namely: Wahaha headquarters - provincial companies - first-level/special first-level wholesalers - secondary/special second-level wholesalers - third-level wholesalers - retail terminals.

Compared with Nongfu Spring, which has only one exclusive dealer in each region, all aspects of Wahaha's distribution require profits, and too many links lead to profit dispersion. Especially in recent years, the employment cost of offline dealers has risen, and if there is not enough profit margin, it is difficult for dealers to do the market. Some people in the industry also said that the enterprises that are now secondary and tertiary dealers in various places are not living very well.

In fact, Nongfu Spring faced the same problem before 2008. A former executive of Nongfu Spring once told "China Entrepreneur" that before 2008, Nongfu Spring was also very extensive in channel management, and the whole was wholesale-oriented, focusing more on dealers than on terminals. In 2008 and 2014, he dug up a large number of people from the original Coca-Cola twice, helping Nongfu Spring build a new sales system, from the wholesale to distributors to the direct supply terminal; At the same time, it has also established a mechanism for decentralization, responsibility and profit, and has greatly transferred profits to terminals.

Because of this sales system and profit distribution mechanism, Nongfu Spring's performance has grown by leaps and bounds since 2016, with sales from 15 billion yuan to more than 40 billion yuan today. Investing resources in offline terminals and controlling terminal channels is also regarded by the outside world as a key factor for Nongfu Spring to win the battle of transformation.

In recent years, Zong Fuli has always wanted to enter first- and second-tier cities, because she feels that "the brand is a pyramid, and it must occupy the highest end, and then slowly radiate." "But Wahaha's choice of focus is online, and it wants to open up new channels through e-commerce in addition to traditional channels.

In 2020, Wahaha announced the launch of four e-commerce platforms, including a health care product e-commerce brand, a food and beverage platform, a cross-border e-commerce platform, and a Habao amusement park platform. For example, the Habao platform launched by Wahaha, according to the official website, is a platform integrating branding, sales, and social networking. Zong Fuli wants to listen to consumers' opinions and product ideas through the Habao platform, and at the same time attract traffic to offline promotional activities.

However, unlike other fast-moving consumer goods, beverage consumption is immediate, and after the brand power is launched, it is still necessary to rely on the distribution of offline channels to drive sales. According to Frost & Sullivan, in 2019, only 6% of the beverage industry's sales came from e-commerce channels, and 94% came from offline channels such as supermarkets, convenience stores, and restaurants.

Zong Fuli has long been aware of this. She once said that where consumers are, Wahaha will appear. For beverage companies, the closest place to consumers is offline.

Zong Fuli wants to solve the problem

For many years, Wahaha's sales have been in charge of Zong Qinghou himself. Zong Qinghou once said that sales are the top priority. Now, after Zong Fuli takes over, how to make a smooth transition and lead Wahaha's sales system to make changes is also a big challenge.

Photo: Deng Pan

Since entering Wahaha in 2004, Zong Fuli has experienced many positions. From a beverage production line to the helm of the 10 billion Hongsheng Beverage Group, to later in charge of the public relations department of Wahaha Group, it was not until 2020 that Zong Fuli began to be in charge of the sales business of Wahaha Group.

In recent years, it can also be seen in public statements that Zong Fuli intends to expand into new markets. At the Wahaha Group's 2024 National Sales Work Conference held at the end of last year, Zong Fuli pointed out that in 2024, it is necessary to truly open new sales channels. While grasping the strong markets such as Wahaha counties, towns and villages, we also aim at special channels and actively explore new markets. At the same time, in terms of products, Zong Fuli said that new products and old products should go hand in hand and play a good combination.

But the key to change is people.

According to the above-mentioned former executives of Nongfu Spring, in the years of change, Nongfu Spring changed several batches of high-level management. After the 2013 Standard Gate incident, in the 2014 reform of Nongfu Spring, Zhong Sui began to change a large number of people - the production system introduced a large number of Master Kong's people, and the sales system continued to introduce a large number of Coca-Cola people. According to him, 1/3 of the general managers of Nongfu Spring should be from the Coca-Cola system, and the proportion of general managers trained by Nongfu Spring itself does not exceed 20%.

This is also the problem that Zong Fuli wants to solve at the moment. How to stabilize the original dealer team and sink the market fundamentals at the same time, and gradually form a set of marketing system suitable for the urban market.

At the request of the interviewee, Fang Tong and Lin Yuan are pseudonyms

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