Core Insights - Wahaha is facing significant challenges due to controversies surrounding its outsourcing practices and internal conflicts, which have raised concerns about brand integrity and operational stability [1][2][3][4][5] Group 1: Outsourcing Controversy - Starting in 2024, consumers reported that Wahaha's bottled water was produced by its subcontractors, with prices 30% higher than its own brand, leading to questions about brand premium masking cost-cutting [1] - In March 2025, a complaint arose regarding a lactobacillus drink containing black sediment, causing health issues for children, revealing quality control gaps in the outsourcing chain [1] - Wahaha acknowledged its outsourcing relationship with Jinmailang and announced the termination of this partnership in April 2025, but did not clarify why it chose outsourcing despite underutilized production capacity [1] Group 2: Internal Turmoil - In February 2025, production was halted at Shaanxi Wahaha Dairy, forcing employees to stop working, with similar incidents occurring at other facilities [2] - The root of these conflicts lies in the clash between the traditional family-style management and the new reform initiatives led by Zong Fuli, which have resulted in a loss of employee morale [2] Group 3: Strategic Concerns - Despite a revenue rebound to 70 billion yuan in 2024, Wahaha's core products have not seen innovation, with packaging remaining unchanged for 20 years and a low convenience store stocking rate of under 30% [3] - The reliance on outsourcing has accelerated brand dilution, with significant layoffs and cuts in R&D, leading to concerns over product quality and increased costs [3] - The outsourcing model has created a vicious cycle of trust issues, as quality control risks are transferred to consumers, undermining brand credibility [3][4] Group 4: Industry Implications - Wahaha's strategic missteps during a period of industry restructuring are particularly detrimental, as the company struggles to balance rapid expansion through outsourcing with effective supply chain management and brand value [4] - The combination of internal management conflicts and external market pressures is pushing this once-prominent brand towards marginalization [4][5] Group 5: Conclusion - Wahaha's challenges reflect broader issues in family business succession and the difficulties of traditional brands undergoing transformation [5] - Immediate actions such as terminating outsourcing and addressing employee grievances are essential for rebuilding trust, while long-term success will depend on balancing reform efforts with cultural heritage and ensuring sustainable quality and cost management [5]