Text | Huashang Tao's legacy

A local specialty drink with a long historical heritage but not very well known. It wants to beat the one that has led sales all year round and sold well all over the worldcoca cola, is it a fantasy in heaven?

He actually did it. This person is Chen Hongdao.

In 2018, Wang Laoji Herbal Tea made a high-profile announcement at its 190th anniversary conference that annual sales had exceeded 20 billion yuan, defeating foreign rival Coca Cola and becoming the company with the highest sales volume in the domestic market.

In 2010, Wang Laoji successfully won the title of China's No. 1 brand.

However, the “number one in China” later suffered a major loss of energy due to internal strife, and the turmoil caused by it has not subsided.

Wang Laoji herbal tea originated during the Qingdaoguang period. It was once known as the “king of herbal tea” and has a good reputation in Guangdong, Guangxi, and even Southeast Asia.

Later, after several wars and turmoil, Wang Laoji split into two branches: Wang Laoji from the mainland became publicly owned and managed by Guangzhou Pharmaceutical Group; Hong Kong's Wang Laoji continued to be managed by Wang's descendants. The operations on both sides are tepid, and the brand is gradually declining.

Had it not been for Chen Hongdao, no one could have imagined that the herbal tea that “lived on the streets” in Guangdong back then could become the “No. 1 pot in China” brand.

In the late 80s of the last century, Chen Hongdao, who was born in Dongguan, Guangdong, went to Hong Kong to seek greater opportunities after making his first pot of money through a wholesale business.

In 1990, he had a unique vision and reached an agreement with Wang Jianyi, a descendant of the Wang family, obtained Wong Laoji's secret recipe, and founded the Gadobo Group to officially start making herbal tea.

In order to obtain the right to operate Wang Laoji's herbal tea in the mainland, Chen Hongdao found Guangzhou Pharmaceutical Group and formally signed a 15-year trademark license lease agreement with Guangzhou Pharmaceutical Group in 1997, agreeing that Chen Hongdao would obtain the exclusive management rights of Red Can Wang Laoji in the mainland at a price of about 4.5 million yuan per year.

After that, Chen Hongdao ambitiously began to solicit agents on a large scale in various provincial capitals. However, due to strategic mistakes, Wang Laoji lost ground and was forced out of most markets.

In 2003, after summing up his experience, Chen Hongdao clearly positioned Wang Laoji — this is a drink that reduces fire. Since then, Wang Laoji has escaped the embarrassment of not knowing the effects of medicine and water rather than water in the past, such as health products. Afterwards, there was the famous advertising slogan “Drink Wang Laoji for fear of going up in smoke”, which is famous all over the country.

Next, Chen Hongdao formulated a targeted marketing strategy and determined a terminal scenario marketing method with catering as the core.

This kind of terminal-oriented, terminal-driven channel-driven approach enabled Wang Laoji to quickly establish a three-dimensional sales network covering “megacities - provincial capitals and developed coasts - prefecture-level cities - counties, towns, and villages” throughout the country.

At its peak, Wang Laoji's terminal coverage in markets above the county town reached over 90%. A herbal tea brand that has been obscure for 100 years has reached its peak in just 10 years. Chen Hongdao is also known by the industry as the “king of herbal tea,” and the popularity is endless.

However, as Wang Laoji grew bigger and stronger, Guangzhou Pharmaceutical Group's situation was quite embarrassing.

On the one hand, there is a lot of questioning in society: why is such a brand worthless in Guangzhou Pharmaceutical's hands, and can it become “number one in the country” when it comes to Chen Hongdao?

On the other hand, Wang Laoji's sales have skyrocketed, but according to that year's agreement, the annual trademark fee is still less than 6 million yuan. The business that once made a steady profit without loss now seems to be losing a lot.

As a result, Guangzhou Pharmaceutical Group initiated a wave of internal self-correction and self-investigation, which directly led to the East Window of the bribery case of Li Yimin, then general manager of Guangzhou Pharmaceutical Group. As a result, the Guangzhou Municipal Procuratorate officially launched an investigation into Chen Hongdao's alleged bribery crime.

What the truth is, it is difficult to make a conclusion. However, the results are certain: Chen Hongdao went from being the “king of herbal tea” to a fugitive prisoner overnight.

At the same time, internal strife inevitably began. The “Wang Laoji” trademark battle began, and the former partner became an enemy. In May 2012, Hongdao (Group) Co., Ltd. (parent company of Gadobo Group) was banned from using Wang Laoji's trademark. Until now, Wang Laoji and Gadobo are still fighting over and over again.

The only thing that is certain is that there will be no winners in this fight.

This reminds me of Guinlibao, which once defeated Pepsi and Coca Cola, but missed out on becoming a great opportunity due to internal strife after reaching the top.