Eliza Wong
Executive Summary
- Zong Fuli, daughter of late Wahaha founder Zong Qinghou, is launching a new brand, Waxiao Zong, amid unresolved trademark and inheritance disputes.
- Wahaha’s iconic trademarks, valued at over ¥90 billion, remain legally contentious, blocking full control by Zong Fuli or other stakeholders.
- The new brand faces significant challenges, including distributor resistance, market saturation, and potential legal risks over brand similarity.
- Waxiao Zong’s success hinges on Zong Fuli’s ability to replicate Wahaha’s distribution strength and emotional connection with consumers.
A Strategic Pivot in China’s Beverage Industry
The future of Wahaha (娃哈哈), one of China’s most iconic beverage brands, hangs in the balance as Zong Fuli (宗馥莉), daughter of the late founder Zong Qinghou (宗庆后), launches a new brand—Waxiao Zong (娃小宗). Internal documents from Hangzhou Wahaha Honghui Food and Beverage Co., Ltd. (杭州娃哈哈宏辉食品饮料有限公司) confirm plans to transition to the new brand starting in 2026, operated by Zong’s fully controlled Hongsheng Group (宏胜集团). This move signals a dramatic shift in strategy amid prolonged inheritance disputes and trademark complexities.
Wahaha, founded in 1987, is not just a company—it is a cultural touchstone for generations of Chinese consumers. From AD Calcium Milk to Nutri-Express, its products evoke nostalgia and trust. However, since Zong Qinghou’s passing in February 2024, the company has grappled with internal governance challenges, ownership ambiguities, and regulatory scrutiny. Zong Fuli’s push for Waxiao Zong represents both an attempt to break free from these constraints and a high-stakes gamble to redefine her legacy.
The Trademark Dispute: A Legacy of Complexity
At the heart of Wahaha’s turmoil lies the unresolved ownership of its valuable trademarks. In 1996, Wahaha Group and French giant Danone established Wahaha Food Co., Ltd. (娃哈哈食品公司) and signed an agreement to transfer the Wahaha series trademarks to the joint venture. However, the National Intellectual Property Administration (国家知识产权局) never approved the transfer, leading to a provisional licensing agreement instead.
By 2007, the Hangzhou Arbitration Commission ruled that the trademark transfer agreement had terminated, further complicating legal ownership. Today, Zong Fuli holds a 62.47% stake in Wahaha Food but does not legally own any of the Wahaha trademarks. In early 2025, she attempted to transfer 387 Wahaha trademarks from Wahaha Group to Wahaha Food, but the effort was halted amid public concerns about potential state-owned asset流失 (loss).
Implications for Brand Control
Without full trademark ownership, Zong Fuli’s ability to steer Wahaha’s strategic direction remains limited. The trademarks are not just legal assets—they are synonymous with consumer trust and market dominance. According to brand valuation agency GYBrand, Wahaha’s brand value exceeded ¥90 billion in 2024. This value is now at risk of being diluted or contested.
Zong Fuli’s solution? Waxiao Zong. By creating a new brand, she aims to circumvent these legal entanglements and establish a fully controlled entity. However, this approach carries its own risks, including potential lawsuits from other Wahaha shareholders alleging unfair competition or trademark infringement.
Zong Fuli’s Broader Strategy: From Inheritance to Ownership
Zong Fuli has long expressed her desire to be an owner, not merely an inheritor. In a 2016 interview, she stated, “I don’t want to be a successor; I want to be a founder.” This mindset underpins her current strategy. Since taking over Wahaha’s operations, she has implemented sweeping reforms, including management reshuffles, channel optimizations, and now, brand diversification.
Her Hongsheng Group has already registered multiple trademarks, including Waxiao Zong, Zong Xiaoha (宗小哈), and Wa Xiaoha (娃小哈), covering categories from beverages to convenience foods. This proactive trademark filing suggests a well-planned effort to build a parallel business ecosystem.
Operational Challenges and Distributor Resistance
One of the biggest hurdles for Waxiao Zong is distributor adoption. Wahaha’s extensive distribution network has been a cornerstone of its success, but recent reforms have strained relationships. In 2025, Wahaha began phasing out distributors with annual sales below ¥3 million and raised performance benchmarks significantly—some regions required 50%–200% growth year-on-year.
Many distributors are reluctant to support Waxiao Zong. As one 20-year partner noted, “99% of Wahaha distributors won’t carry Waxiao Zong.” Reasons include slim margins (net profits of 2%–3% after costs), market saturation, and the high cost of educating consumers about a new brand. Without distributor buy-in, Waxiao Zong’s route to market will be challenging.
Market Realities: Can Waxiao Zong Succeed?
China’s beverage market is fiercely competitive, with giants like Nongfu Spring (农夫山泉) and Coca-Cola dominating shelf space. Wahaha itself has struggled with brand aging and evolving consumer preferences. While Zong Fuli’s leadership initially boosted Wahaha’s revenue—from ¥500 billion in 2023 to ¥700 billion in 2024—much of this growth was driven by a temporary surge in consumer sentiment following Zong Qinghou’s passing.
Waxiao Zong’s first product, an unsweetened tea called “Ningxiang Oolong” (凝香乌龙), targets health-conscious younger demographics with sleek, neo-Chinese packaging. However, early social media feedback has been mixed, with many consumers comparing it unfavorably to established brands like Master Kong (康师傅) or Nongfu Spring’s Oriental Leaf (东方树叶).
Learning from Past Brand Ventures
This isn’t Zong Fuli’s first attempt at launching a new brand. In 2016, she introduced KELLYONE, a lifestyle beverage line that failed to gain traction and was eventually scaled back. Similarly, a 2018 collaboration between Wahaha and cosmetics brand Heimao (黑猫) to sell “Nutri-Express eyeshadow” saw disappointing sales—less than 1,000 units in the first hour.
These experiences highlight the difficulty of building new brands in Wahaha’s shadow. As one brand strategist noted, “Even Wahaha’s own attempts at younger-oriented products have rarely succeeded.” Waxiao Zong must overcome not only market competition but also consumer skepticism.
The Road Ahead: Risks and Opportunities
Zong Fuli’s move to Waxiao Zong is fraught with risk, but it also offers a potential path to independence. If successful, she could demonstrate her ability to innovate beyond Wahaha’s legacy and pressure other shareholders to resolve the trademark deadlock. If it fails, however, it could further fragment Wahaha’s business and weaken its market position.
Key to Waxiao Zong’s prospects will be its ability to leverage Zong Fuli’s personal brand and narrative. As the daughter of a beloved entrepreneur, she commands significant public sympathy and media attention. However, translating this into commercial success requires strong execution, consumer trust, and operational excellence.
Regulatory and Legal Considerations
Waxiao Zong must also navigate China’s stringent food and beverage regulations, including labeling, safety standards, and advertising rules. Any misstep could attract regulatory scrutiny or public backlash. Additionally, if other Wahaha shareholders pursue legal action over brand similarity, it could delay or derail the launch.
Final Analysis: A High-Stakes Gambit
Zong Fuli’s launch of Waxiao Zong is a bold attempt to reclaim agency amid one of China’s most watched corporate succession battles. While it offers a way around trademark limitations, it also exposes her to significant operational, market, and reputational risks. The coming months will be critical for assessing consumer reception, distributor cooperation, and competitive response.
For investors and industry watchers, this case underscores the challenges of legacy brand management in China’s evolving consumer landscape. It also highlights the importance of clear governance and succession planning for family-owned enterprises. As Zong Fuli forges ahead with Waxiao Zong, the world will be watching to see if she can turn a new brand into a new legacy.
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