China Food

Domestic drinks are not rich enough for three generations. Why?


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one kind of “old” has become “Earth”, while another kind of “old” has become “classic”.
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According to the “2021 list of China’s top 500 private enterprises” released by the China Federation of industry and commerce, Wahaha’s revenue in 2020 was 43.98 billion yuan.
This figure seems to be only 5.29% lower than the 46.4 billion yuan in 2019, but it has reached the lowest level of the company in ten years, which is equivalent to its revenue level in 2009.
For many years, Wahaha has been a banner of domestic drinks. However, under the new tide of consumption, the traditional beverage brands represented by Wahaha are undergoing big tests again and again. Unconsciously, the shelves of supermarkets and convenience stores are full of fresh faces such as low calorie drinks and low alcohol wine, and Wahaha has been hard to find.
A few months ago, Zong Qinghou was exposed to have obtained the fund qualification. It is understood that the 76 year old “research” of the old man is not to “learn endlessly and improve himself”, but to meet the filing requirements of private fund managers, so that Wahaha can officially enter the venture capital circle.
At the age of 76, he is still looking for a good way to break the situation for Wahaha. The will of “an old horse in Carpinus” is respected, but it also makes people sigh.
Think about the traditional beverage enterprises represented by Wahaha. Some are stagnant, some are forced to go bankrupt and liquidate, and some are forced to withdraw from the historical stage. Some continue to come up with new products with little effect… The traditional beverage brands are in adversity, while the new beverage brands are threatening.
Foreign acquisition of curse survivor
Traditional domestic drinks have experienced two ups and downs – one is the decline of soft drinks in the tide of foreign acquisition at the end of last century, and the other is the end of “national old brands” under the impact of new consumption in recent ten years.
In the 1980s, although Coca Cola has entered China, it has not yet taken root. China’s own production of Tianjin Shanhaiguan, Beijing Arctic Ocean, Shanghai zhengguanghe, Shenyang Bawang temple, Qingdao Laoshan, Wuhan No. 2 factory, Chongqing Tianfu Cola and Guangzhou Asian soda, as the “eight factories” of Chinese soda, LED the Jianghu and was the shoulder of the soda industry at that time.
Unfortunately, the local beverage companies that had just started at that time had a big gap with the powerful and experienced foreign-funded enterprises in terms of brand awareness and marketing. Domestic soda was left far behind, and the market share was seriously reduced.
Later, with the help of foreign-funded enterprises, domestic drinks wanted to “learn from foreigners and use their skills to control foreigners”. As a result, most of them failed to learn from the experience, but the wolf entered the tiger’s mouth and was swallowed up by foreign capital. They mainly wanted to use the channels and popularity of these soda brands to “run horses and enclosure” in China and then take root in the Chinese market.
Under the siege of “liangle” and other foreign beverage brands, Chinese soda lost sales, formula and even trademark. It was once hidden in the market. “Cola” replaced “soda” and became the most common carbonated beverage in the hands of Chinese people.
“Eight factories” is not an example of “from prosperity to decline” after domestic beverage enterprises are acquired by foreign enterprises.
Wahaha, founded in 87, and robust, founded in 89, were once the “northern and southern giants” of China’s beverage industry. In the late 1990s, Wahaha surrounded the city with rural areas, which greatly reduced robust’s market share.
In the face of great pressure, he Boquan, founder of robust, decided to introduce foreign capital and give it a go. It happened that Danone, a French food giant, threw an olive branch to it, and the two companies immediately hit it off.
In 2000, Danone invested US $2.38 billion in the revenue of robust, accounting for 92% of the shares, while he Boquan and other founders accounted for only 3%.
Originally, it was thought that robust, which had found a backer, was about to expand its ambitions. However, the airborne foreign management team was “acclimatized”. The enterprise fought its own battles, and Danone’s own motivation was impure. It wanted to expand its influence instead.
Since then, the development of robust has surprised people. Its performance has plummeted, and several business segments have been stripped off, leaving only the drinking water business.
Danone also destroyed Yili, a strong drinking water brand in South China in the same way.
In fact, before these two acquisitions, Danone established a joint venture with Wahaha, the rival of Le Pak, to produce purified water and Babao porridge. Each side accounted for 49% of the shares, and the other 2% was held by Hong Kong Peregrine. Later, during the Asian financial crisis, Hong Kong Peregrine transferred 2% to Danone, which was controlled by Danone.
In the following years, Wahaha established dozens of non joint ventures across the country, with assets and income far exceeding that of joint ventures. Danone wanted to forcibly acquire 51% equity of Wahaha’s non joint ventures with RMB 4 billion, which was rejected by Wahaha. The contradiction between the two sides broke out, which attracted the attention of the whole society.
At that time, in the investigation of “Danone’s strong purchase of Wahaha” conducted by an authoritative financial website, 92.36% of the respondents believed that Danone’s acquisition of Wahaha’s non joint venture equity was intended to monopolize China’s beverage market.
After 70-80 lawsuits around the world, Danone and Wahaha entered the stage of peace negotiations under the mediation of the two governments.
In addition to Wahaha, the domestic drinks that survived under the eyes of foreign investors in those years, as well as Jianlibao, China’s first fruit juice brand Huiyuan, and Wang Laoji, a century old herbal tea brand. Through differentiated competition, they avoided being positive with the “two pleasures” of the main carbonated drinks, and became popular at the beverage segment track.
But up to now, Jianlibao has become a memory. Huiyuan, a “national brand”, was exposed to forced bankruptcy a few months ago, which has become a thing of the past. Wang Laoji’s scenery is no longer, while Wahaha’s revenue has returned to the level of 2009.
If the decline of the “eight factories” is more caused by the massive impact of foreign capital, the decline of Wahaha and other brands is more caused by the poor management of the brand itself.
Innovation weak childhood drink
“Where have all the salesmen of Wahaha gone? Except bottled water and AD calcium milk, other products have disappeared from the shelves of the supermarket. How can a good brand be lost?” when it comes to the once favorite beverage brands, the post-80s and 90s friends around them always hate iron and steel.
In recent years, Wahaha has quietly disappeared from the beverage waiting libraries of many young people, ranging from large supermarkets to convenience stores at the entrance of the street subway. It is difficult to see Wahaha on the shelves except bottled water and Babao porridge. Even the sinking market, which Wahaha has always been proud of, is hard to find Wahaha.
In the beverage industry, young people win the world. The rapid development of new consumer soft drink brands is standing on the tuyere of young people. Obviously, compared with rookie brands, old brands are difficult to cross the generation gap with young people. Not only Wahaha, but also other old brands are declining or dying in the dilemma of brand aging.
In order to meet the personalized needs of young people, today’s beverage market is more and more subdivided. There are many distributors in the same category, like a bottle of purified water. The brands include nongnongshan spring, Yibao, Wahaha, Kunlun Mountain, etc. the same product has been diluted too much market share, and more than 100 kinds of drinks emerge in the market every year, and users have more and more choices. In the beverage industry, a single product has been unable to support a brand for a long time.
Zong Qinghou obviously recognized this. He once said in an interview with CCTV dialogue that the most important reason for the decline of Wahaha is the lack of innovative products.
At the end of last century, China’s brand awareness was still low, and there were not a few enterprises starting from fake goods. This low-cost and fast development model also brought immeasurable success to Wahaha, but it also became a weakness for Wahaha to obtain fresh blood.
Wahaha has been ridiculed as “Tencent” in the beverage industry. On the one hand, it has built a “beverage Empire”. On the other hand, it has no original products since bottled water.
One of Wahaha’s first popular models, “children’s nutrition liquid”, benchmarked Guangzhou Sun God, and then targeted Le Pak’s calcium milk and launched an upgraded product, AD calcium milk. The nutrition express with the best sales volume in Wahaha’s product line was launched by imitating the wonderful love of foreigners. At the peak, the annual sales volume was 20 billion yuan, providing nearly one-third of Wahaha’s revenue.
It can be said that almost every Wahaha explosion is carried out along the path of follow-up – appropriate innovation – laying channels – seizing the market.
However, with the lack of innovation, the advantages of these items can no longer be continued. They are overtaken by other items of the same type, and new large items do not appear, so it is inevitable that they will decline.
Although Wahaha has made a lot of efforts in youth and innovation in recent years and launched many new products, it has only done a lively and little effect.
Single product seems to be a common problem of traditional beverage brands, such as Huiyuan juice. As of the first half of 2017, the proportion of 100% juice in the company’s product revenue rose to 37%. Although the company continues to introduce new drinks in fruit juice products, including ice sugar gourd juice, bailiwa, mixed fruit juice and other new products, as well as cocktails, Pu’er tea and other fields, it can not impress young people in terms of taste or packaging.
With the intensification of business innovation in the industry, there are more and more beverage categories such as sugar free drinks, milk tea and low alcohol wine. Recently, well-developed brands such as Yuanqi forest and Xi tea have also entered different categories of drinks. The single product of Huiyuan Juice competes with these brands and categories, which is tantamount to fighting alone.
After 95, Xiaoye expressed deep regret for the decline of Huiyuan. When asked how often to drink Wahaha, she replied that she basically didn’t drink it. “This brand sounds like” what the elders drink “, and the taste of ten years like a day has nothing new”.
I don’t want the old brand to disappear, maybe it’s just because of my childhood feelings. But the brand can’t go on for a long time only by feelings.
Among the “older generation”, Master Kang and uni president, who are relatively well mixed, also face the problems of single product and aging brand. The mix of instant noodles and drinks fails, and the new products with outdated packaging, invariable taste and uncertain consumer taste lead to the decline of revenue year after year.
Although the product development of domestic brands has been declining, the route of diversification is difficult to understand. The operation of Baijiu, clothing, furniture and so on will only make consumers dizzy.
The era of brainwashing consumers by blindly expanding and roughly smashing advertising distribution is over. It is obvious that the product development ability based on consumer insight and consumer demand is the most lacking of established enterprises.
Make a good product but not a good brand
The Chinese people have also made extraordinary Cola that is the target of coca Pepsi and Jianlibao that is exported to the other side of the ocean, but why did these brands with excellent product quality and popular with the people disappear in the end?
The reason is that compared with the century old brand Coca Cola, what domestic time-honored enterprises lack most is brand awareness and brand building ability.
To take an extreme example, the coconut brand coconut milk, which has been the top of the coconut milk market for many years, has been recognized by many consumers for its reputation and quality, but its ugly and earthy packaging and spicy eye advertising have been greeted by the State Administration for Industry and Commerce for many times. More and more female models with plump breasts are featured in its product packaging and advertising, combined with the advertising words “white, tender, beautiful curve” and “drink big from childhood”, It has aroused the annoyance of the majority of consumers.
Deep research shows that behind vulgar packaging and marketing is the dilemma of difficult performance improvement, while behind the seemingly high exposure and high traffic is the crisis of deterioration of brand image.
Most netizens believe that coconut trees have a certain popularity and products are well done. They can win by taste, but they can’t get on the table by relying on vulgar and sexual advertising.
Facts have proved that coconut has been disconnected from today’s consumer market, weak product innovation and incompetent brand construction. In the face of market shrinkage and brand aging, we can only use such a bad idea as negative marketing speculation to gain exposure.
Of course, suicide marketing such as coconut is an example. Generally speaking, the marketing methods of domestic old brands tend to be strong marketing piled up by stars, such as tianwo honey grapefruit tea endorsed by Fan Bingbing. After it became popular, it ushered in the year of water reversal. Now it is basically missing. When it is enlarged to the whole beverage industry, there are countless tianwo people.
How to follow the trend to lead the fashion is the key to seize young consumers and a required course for traditional brands. Many domestic brands in memory, facing the change of consumption concept and the fierce competition of similar brands, often lose the market due to the lack of effective brand operation, and some even become synonymous with “cheap goods” and “inferior goods”.
Generation Z is the main group of beverage consumers, and the old image of old drinks is contrary to the demands of young people.
Once “looted” the “two pleasures” in China’s soda market, he was good at playing a good hand in the brand story and making people pay for their emotions. Coca Cola once held the activity of “one bottle cap, one long-distance call”, so that all the poor working in South Africa could use one bottle cap to get a long-distance call and communicate with their families.
They have also launched the “city pot” in China to draw the customs and facial makeup of different cities, arouse the strong nostalgia of people wandering outside, and take care of people’s hearts.
Therefore, in the face of different brand images, one kind of “old” has become “soil”, and another kind of “old” has become “classic”.
Channel transformation is challenged
In earlier years, experts in China’s FMCG industry said that for FMCG, the quality of the brand is not the most important, the quality of the product is not the most important, and even the demand of consumers is not the most important. The most important thing is the channel.
In other words, if you can display the products in supermarkets and stores in the first, second and third tier cities in China, you will get twice the result with half the effort. As the king of channels in those years, Wahaha has galloped in the beverage industry for more than ten years relying on the strong radiation ability of the traditional food wholesale market, and the role of channels can be seen.
We are all familiar with the wholesale system. Product production and commodity exchange increase the purchase and sales of commodities and expand the circulation scope. It is often difficult to realize the direct commodity exchange between producers and consumers. Therefore, there are dealers serving a certain region and wholesalers who buy commodities from producers and then sell them to other producers or businesses, Commercial society has wholesale and retail.  
Traditional food and beverage enterprises mostly carry out fine management on this basis. Although the radiation range is wide, it is not difficult to see the crux of the traditional channel model: Manufacturer dealer distributor wholesaler terminal merchant consumer. The supply chain is complex, there are too many links, and the terminal is difficult to be controlled.
In those years, Jianlibao was not favored by the industry in terms of channels. Firstly, it adopted the traditional multi-level dealer agency system and widely recruited large households as agents in various places. The distribution channel was too long, and there was a lack of due guidance and control on the promotion of terminal products, advertising and product placement. Then it adopted the direct marketing mode of Coca Cola and opened more than 100 business offices in various provinces and cities to store the goods to the terminal. The combination of the two is very contradictory: on the one hand, I hope I can control the terminal like coca cola, on the other hand, I hope to increase the volume through the automatic flow of large customers.
Jianlibao soon had channel conflicts, disorderly prices, fleeing goods and other phenomena, followed by many crises such as capital crisis, arrears of payment to suppliers, factory shutdown and forced Palace by dealers, which directly led to the company’s weak sales follow-up and insufficient product innovation.
Today, Internet e-commerce has changed channels, and consumers buy more and more things. A considerable number of people abandon traditional shopping methods and choose online shopping. Especially with the global spread of the epidemic in 2020, the rapid development of new retail is difficult to stop, and the advantages of traditional channels are gradually disappearing. For old players, this is very deadly.
Since the rise of e-commerce, many physical industries have also recognized the urgency of transformation, and have carried out both physical stores and e-commerce. However, some people regard e-commerce as a sworn enemy and resolutely resist it.
Why Wahaha achieved the winning streak of “always imitating and always surpassing” in those years was mainly due to its indestructible “joint sales Body” distribution system, which was once its biggest advantage.
However, when more and more Wahaha products become difficult to sell, the original strong sales system is also being challenged, and various contradictions begin to appear between dealers and sales teams. In some markets, there are serious deceptions between salespeople and dealers.
Wahaha’s sales system seriously restricts its development. Zong Qinghou’s stubborn views on sales channels are also the main factor for Wahaha’s decline.
“No matter how powerful e-commerce is, it can’t impact Wahaha.” Zong Qinghou once said that Wahaha was still at its peak at that time. When Zong Qinghou began to despise e-commerce, it was also when Wahaha’s revenue began to decline.
Faced with the unstoppable trend of new retail, Zong Qinghou’s stubbornness did not allow him to continue the glory of Wahaha. After many years, he “condescended” to the Internet. First, he took the initiative to test the wechat channel, then laid out new retail in the community, and cooperated with Hangzhou nutrition happy New Retail Technology Co., Ltd. to build an offline life Museum.
In recent years, Zong Fuli, the “Princess” of Wahaha, has made urgent reforms in both products and marketing. However, whether Zong Qinghou is at the helm or her daughter zongfuli is at the knife, Wahaha has failed in its transformation for many years.
The new retail outlets of the new Title such as “Internet plus”, “community” and “O2O” have been reduced to a level of wholesalers, but with more advanced ordering systems, more efficient distribution, more comprehensive warehousing and more bargaining power with brand manufacturers.
Local wholesale markets are shrinking day by day, and convenience stores, chain supermarkets and hypermarkets are all over urban and rural areas. If traditional beverage enterprises continue to eat their old capital and follow the old road, what they are waiting for is the ruthless elimination of the market.
Other beverage enterprises such as Master Kang and uni president are also constantly seeking digital transformation of sales channels. They were once leaders in the field of products and channels, but old players are a little shy about new retail, but their sales performance in recent years is not satisfactory, and they are surpassed by the “young people” vitality forest.
Lack of “clock maker
In the early stage of reform and opening up, traditional beverage brands had a strong momentum, could resist and fight, and led China’s beverage market into a new and brilliant era with one-hand “centralized” family management.
However, when such enterprises achieve a certain scale, the way of family management is difficult to keep up with the pace of the market, which has been criticized repeatedly.
Huiyuan, which started in this period, is also a member of a family enterprise. As the founder, Zhu Xinli, who has a strong local plot, did not leave room for entrepreneurs and professional managers, but let his relatives intervene in the management. It is said that Zhu Xinli’s sons, daughters, brothers and son-in-law have all served in Huiyuan’s management positions, and most of the other middle and senior managers are his Shandong villagers.
Later, after the M & a disaster, Huiyuan’s revenue fell year after year, and Huiyuan’s self-help action was to start from the management mode. In 2013, Su Yingfu, former CEO of Li Jinji sauce group, took the post of chief executive. After taking office, he moved Zhu Xinli’s people and opened a lot of Huiyuan elderly people. The two are difficult to be compatible, so after su resigned, Huiyuan embarked on the old road of family.
Later, Huiyuan successively hired senior executives of Coca Cola bottling plant, uni president and Jianlibao, and senior executives of Tetra Pak in China. However, the business model of family enterprises hindered the reform of professional managers to a certain extent, resulting in the continuous departure of senior executives of Huiyuan Group.
First of all, the individual will is obvious, the financial risk and strategic risk are difficult to prevent, and the lack of perfect professional managers and financial management system is destined to make it difficult to make the enterprise large and stable.
There are not a few domestic beverage enterprises like Huiyuan.
 
Jianlibao, xurisheng and other well-known brands have declined one after another, which is actually the failure of naked organization and management.
Jianlibao’s internal management is chaotic and lacks a perfect talent management system. On the premise of completely lacking the awareness of enterprise development strategy, the young successor Zhang Hai made successive mistakes in decision-making, which led to the reduction of Jianlibao’s brand value and finally to decline.
The rising sun was mainly due to the confusion of internal management, especially in the construction of sales channels, the corresponding regulations and systems were not established. Since then, the management carried out drastic and radical reform, and finally declined after failure.
Collins described two kinds of leaders in “everlasting foundation”: having a great idea or being a charismatic leader with foresight is like “telling the time”; establishing a company makes the company flourish after any leader for a long time and many product life cycles, like “making a clock”.
There is “Wahaha minus Zong Qinghou is equal to what?”, Zong Fuli once answered “equal to zero”. It is reported that Wahaha is a highly centralized company. It is one of the ten billion club enterprises that has not set up a deputy general manager for many years. Zong Qinghou has the authority to respond to all calls, do everything by himself, which requires him to have the ability to master the overall situation.
It can be said that Wahaha relies more on the extraordinary ability of its leaders than on this organization.
In the rapidly changing market, Wahaha’s decision-making has relied on one person’s experience and intuition for many years, which will inevitably reduce its sensitivity to the market. Many market changes are difficult to cope with, which not only inhibits product innovation and transformation to a certain extent, but also restricts its development.
Zong Qinghou is more like a charming “timekeeper”. When the “timekeeper” gets old, the company may be at a loss.
In July this year, Zong Qinghou obtained the fund qualification certificate. The industry speculated that he officially entered the venture capital circle and would seek new transformation targets for Wahaha from the perspective of investment.
At the age of 76, Wahaha is still looking for a way to break the situation for Wahaha to return to its past glory. There is the revered will of “old steeds and Carpinus” and some sadness.
In the whole industry, the reasons why domestic drinks are “not rich enough for three generations” include insufficient innovation, aging brands and channel defects, but perhaps the most important thing is the lack of “clock makers” who can build a continuity excellent organization.
Original title: Wahaha lost ten years
Author: Lingzhu; Editor: Qi Ma; Source: shangyinshecj (ID: shangyinshecj), reprint has been authorized. Reprint authorization and media business cooperation: Amy (wechat: 13701559246);
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