‘Princess of Wahaha’ looks to revive US$2b family business
Only child of drinks tycoon likely to succeed late father as chair of the group in challenging times
For about two decades, Kelly Zong Fuli operated in the shadows of her father, drinks tycoon Zong Qinghou – once the mainland’s richest man. His death last month is now thrusting the woman known as the “Princess of Wahaha” into the spotlight.
It will not be easy for the 42-year-old heiress, who is poised to take over an empire fighting for relevance. Sales at the family’s Hangzhou Wahaha Group have fallen in an increasingly competitive market, and another drinks tycoon, Nongfu Spring’s Zhong Shanshan, has become the mainland’s wealthiest person.
“She is facing different difficulties ahead,” said Wu Suheng, a business analyst at Daxue Consulting in Shanghai. “Consumer demand is changing, and the market competition is intensifying with new domestic and international brands emerging.”
Privately held Wahaha, which means “laughing child” in Chinese, has been slow to adapt to consumers’ changing tastes and habits, losing business to online shopping. While other brands have innovated and gained a following, Wahaha’s novelties have failed to get much clout.
The company’s sales fell by 35 per cent from a high in 2013 to 51.2 billion yuan (HK$55.4 billion) in 2022, the last year for which data was available, according to the All-China Federation of Industry and Commerce.
Revenue at Nongfu, which went public in Hong Kong in 2020, rose by 62 per cent in the five years to 2022 and by a further 28 per cent in 2023 to 42.7 billion yuan.
At stake is a family fortune worth at least US$2.2 billion, a fraction of the US$20 billion in 2012, according to the Bloomberg Billionaires Index. That is based on Zong Qinghou’s 29.4 per cent stake in Wahaha and Kelly Zong’s full ownership in Hongsheng Group, a drinks and packaging service business she has helmed since 2007 and has used to launch her own brand of tea drinks, KellyOne.
Wahaha did not reply to requests for comment for this story.
Kelly Zong, a graduate in international business from Pepperdine University in the United States, started at Wahaha with a stint at one of the empire’s factories to learn how to manage production. She rose through the ranks, eventually becoming vicechair and general manager in December 2021.
Recently, she has been helping the company develop marketing strategies to tap young consumers: she has picked a new brand ambassador, placed products on television shows and hired influencers to live-stream Wahaha’s products.
The only child is now expected to take over the chair title that her father held at the time of his death.
The Zong family is part of a succession wave that has been taking place as the mainland’s first generation of private entrepreneurs moves on.
Zong Qinghou founded Wahaha’s predecessor in 1987 with a US$22,000 family loan and turned it into a multibillion-dollar business in the boom years that propelled the mainland’s middle class.
Its milk drinks became particularly popular in the 1990s as parents with increasing spending power sought to provide better nutrition for their single child.
By 1996, Zong had formed several joint ventures with French dairy giant Danone. They soon fell out, triggering years of discord and a flurry of lawsuits that eventually required intervention from the governments. When Danone capitulated in late 2009, the elder Zong bought its stake, turning him into the mainland’s richest person with a fortune estimated at more than US$20 billion.
Wahaha, which also makes bottled water, has since developed carbonated beverages and canned congee products, but those have not managed to replicate the earlier successes. While other drinks makers seized onto the bubble-tea and coffee craze that has taken over the region – there are at least six bubble-tea firms waiting to go public in Hong Kong – Wahaha has remained largely on the sidelines.
Less than two weeks after her father’s death, Kelly Zong made her first public appearance at the annual gala of the China Beverage Industry Association. She called herself both a sector veteran and a “new general” to corporate operations, saying the company was pivoting to focus more on low-sugar, healthier drinks, the local press reported.
While Wahaha might face challenges – its existing distribution network is skewed towards lower-tier cities where consumers have yet to jump on the health trend, it is pushing to reach new consumers and build trust, according to Harry Han, a research analyst at Euromonitor.
“This is a strategic and yet bold move to refresh the brand image,” Han said. “Stable expansion and evolution of offline shelf space, together with aligned new products and marketing strategies, are expected to help Wahaha stand firmer in the future.”