Wahaha plummeted by more than 20 billion yuan, and the Nutrition Express is still struggling to support its performance

"2016 China’s top 500 private enterprises released the report" shows that in 2015 Wahaha operating income 49.40 billion yuan, compared with 2014 revenue plummeted more than 20 billion yuan, causing industry attention.

Industry analysts believe that the real main reason for Wahaha’s decline in performance lies in its aging brand, lack of star products, and too single market.

Revenue plummeted by more than 20 billion yuan　

2015 revenue plummeted more than 20 billion yuan, equivalent to losing the entire nutrition fast line, Wahaha performance decline once disclosed quickly caused concern and concern in the industry. According to publicly disclosed data, 2013-2015 Wahaha revenue were 78.30 billion yuan, 72.80 billion yuan and 49.40 billion yuan, showing a downward trend year by year.

Regarding the plunge in revenue in 2015, Wahaha responded that the main reason was that the data of Hongsheng Beverage Group Co., Ltd., which was controlled by Zong Qinghou’s daughter Zong Fuli, was not consolidated. In addition, online rumors and product transformation and upgrading also had a certain impact.

The official stressed that Wahaha’s current production and sales are normal, and the company has paid 3.10 billion yuan in taxes to the state from January to July this year. "Not only does the company not have a penny of bank loans, but it also has tens of billions of yuan in deposits."

Zong Qinghou said recently that the beverage industry is facing a downward trend. Wahaha’s growth rate fell from more than 20% in previous years to 4% last year and only 2% in the first half of this year. For the reason of the decline, Zong Qinghou concluded that it was affected by malicious attacks on online rumors.

"China’s beverage industry will always be a sunrise company, and as long as it is done well, I think it will always develop healthily. Because no matter what, people always want to eat and drink."

Nutrition Express still supports Wahaha’s performance

In Wahaha’s entire product system, there is an over-reliance on individual products. According to Wahaha’s previously disclosed figures, as of the end of 2014, Wahaha had a total of more than 100 categories of milk beverages, bottled water, carbonated beverages, tea beverages, juice beverages and functional beverages. Among many products, Nutrition Express, which has a product age of nearly ten years, is still the largest single product supporting Wahaha’s performance.

According to public data, the sales of Nutrition Express in 2013 exceeded 20 billion yuan, which means that this single product alone contributed about 1/4 of Wahaha’s performance. The previous online rumors that Nutrition Express contains Botox also caused Wahaha’s performance to suffer, and the revenue loss was said to be as high as 5 billion yuan.

According to industry insiders, the sales performance of old products such as Nutrition Express, AD calcium milk, and purified water has accounted for more than half of Wahaha’s overall revenue, and the market performance of these large single products is also declining. With the rise of new beverage brands, Wahaha Nutrition Express’s market share is also gradually shrinking. In the bottled water sector, brands such as Nongfu Spring and China Resources Yibao have made competition more intense and continue to occupy Wahaha’s market share of purified water.

Food Industry Researcher, China Brand Research InstituteZhu Danpeng believes that the aging of the Wahaha brand is manifested in three aspects: first, Zong Qinghou is still addicted to the business philosophy of the late 1990s and early 2000s; second, the entire Wahaha executive team has been working hard with Zong Qinghou for many years and has been assimilated seriously. It cannot make changes in time for market changes; third, market research and development is "like a boiled frog", innovation is delayed, and the success rate of new products is getting lower and lower.

Wahaha’s self-help requires innovation

With the decline of the third- and fourth-tier markets and more intense competition, since the end of 2015, Wahaha has seen its own shortcomings and decided to make up for the shortcomings of the mainstream market in first- and second-tier cities. Subsequently, Wahaha launched some new products to meet the needs of first- and second-tier mainstream consumer groups. Wahaha launched some new beverages, such as C drive, coconut milk vegetable protein drink "Come and squeeze", blood orange juice, etc., but failed to win market recognition.

For Wahaha’s new strategy, Zhu Danpeng is not very optimistic, believing that Wahaha’s brand power and recognition in first- and second-tier cities have declined very severely. At present, Wahaha’s brand recognition and price positioning are mainly in third- and fourth-tier markets, but in the price range of more than 5 or 6 yuan, Wahaha basically has no products.

For Wahaha’s future prospects, industry analysts believe that if it fails to achieve brand rejuvenation, product innovation, and a redefinition of its marketing model, Wahaha’s performance will accelerate its decline.