ISMS DMS ANSWER SHEETS Ehen Zong Qinghou a Chinese

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Sales and Distribution Management

Case 4 :- Wahaha Taking the Fizz out of the Giant Cola Brands
Ehen Zong Qinghou, a Chinese farm worker, started a company of beverages and ice creams with two retired teachers in 1987, hardly anyone could have imagined that this company could give sleepless nights to global giants such as Coca-Cola and Pepsi Co. But the new company, Wahaha, the pride of many contemporary Chinese consumers, has managed to do just that.
Wahaha, one of the leading homegrown Chinese beverage brands, had revenues of US$1.37 billion (11.4 billion yuan) and profits of US$162.7 million (1.34 billion yuan) in 2004.
Wahaha, which is meant to mimic the sound of a baby laughing, demonstrates clearly what great brand stories are made of. The company started small, and in 1991, it merged with the state-owned Hangzhou Canning Factory. The 1996 joint ventures with the Danone Group gave the company foreign investment to the extent of US$45 million. After dabbling in many product categories, it launched its trademark brand the Future Cola in 1998 to compete against the global cola giants. Today, Wahaha s product portfolio includes milk and yogurt drink, and iced tea including cognee (rice porridge), canned food and health products.
Wahaha has been careful in its strategy to compete against the global cola and food giants. As the fashion conscious Chinese consumers seem to prefer the global colas in the larger coastal Chinese cities, Wahaha has till now focused on rural and semi-urban Chinese areas. Further, the Wahaha brand has generously used home grown celebrities for all its products. This is in line with its overall strategy to position Wahaha as a patriotic company and to tap into the patriotic fervor of the Chinese consumers.
By projecting Wahaha s products as China s own, the Wahaha brand has carved out a clear positioning in the market against the global brands. But whether this strategy will work in the long run is a million dollar question and will require constant efforts to balance the brand promise and its careful delivery in a hostile and increasingly competitive Chinese marketplace.
Questions
1. What aspects of consumer behavior have been discussed in this case?
2. What is likely to be the adoption process of Wahaha products among consumers?
3. Discuss the positioning strategy of Wahaha.

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