Summary of Key Points
Cai Yanming, the chairman of Wangwang, recently sent a letter to the entire company, stating that the company is at its "most dangerous moment." The company has been relying on classic products such as Xianbei, Xuebing, and Wangzai Milk for nearly 30 years, reaping the benefits of their success. However, these good times have come to an end—revenues in the first quarter of the 2026 fiscal year dropped by 6%, and profits plummeted by 38%. Although many new products have been launched over the past decade, they have not been able to take over from the classic products. It's like a dynasty team that has missed its peak: the old players (classic products) are well-known but too outdated, while the new players (new products) have not succeeded, leading to a decline in overall performance.
1. Classic Products Are Out of Date, and Young Consumers Are Not Buying Them
Wangwang's core products are all "grandfather-era" products: Xianbei is 39 years old, Xuebing is 38 years old, Langwei Xian is 33 years old, and Wangzai Milk is 26 years old. These products have accompanied the childhoods of people born in the 1970s and 1980s. However, the current generation of consumers (born in the 2000s and 2010s) has changed:
- Changing taste preferences: Young people prefer snacks that are low in sugar, low in fat, and healthy. Xianbei and Xuebing are too salty and sweet, and Wangzai Milk has a high sugar content, which does not align with the trend towards a healthier lifestyle.
- Changing aesthetics and consumption scenarios: The packaging of these old products is still from decades ago and lacks the "internet-famous" appeal that younger consumers seek. They prefer snacks with attractive packaging or clever marketing (such as certain brands with traditional Chinese styles or quirky packaging for chips).
- Overwhelming competition: The snack market is highly competitive, with internet-famous brands (like Sanzhi Songshu and Liangpin Puzi), imported snacks, and healthy options (like protein bars and low-calorie jellies) attracting a large portion of consumers. Wangwang's classic products no longer have a unique selling point.
2. Profits Dropped More Sharply Than Revenues—Where Did the Money Go?
The 6% decrease in revenue is not insignificant compared to the 38% drop in profits. The reasons are as follows:
- Rising costs: The prices of raw materials such as flour, sugar, and milk have been increasing in recent years, and the production lines for these old products are outdated, resulting in higher maintenance costs. Wangwang cannot afford to raise prices easily, as it fears that existing customers will leave.
- New products That Don't Make Money: The new products launched over the past decade (such as certain flavored drinks and types of cookies) have required significant investment in research, development, and marketing but have not been successful. Unsold products have become a burden on profits.
- High channel costs: Traditionally, Wangwang has relied on supermarkets and convenience stores for distribution. However, the importance of online channels (such as live streaming, short videos, and community group buying) is growing, and the costs associated with online promotion and logistics are higher than those of offline methods. Additionally, Wangwang's classic products are not as appealing to online consumers.
3. Why Didn't the New Products Succeed Despite a Decade of Efforts?
It's not that Wangwang hasn't tried; the problem lies in the new products not addressing the needs of young consumers:
- Superficial innovation: Many new products are merely minor tweaks to the classic formulas (such as changing the flavor of Wangzai Milk or packaging Xianbei in smaller sizes), without addressing the issues of being unhealthy or outdated.
- Failing to Meet Young Consumers' Needs: Young people prefer functional snacks (such as blueberry snacks for eye health or melatonin gummies for sleep aid). Wangwang's new products still focus on simply satisfying cravings.
- Lack of Strong Marketing: New products receive little exposure on short-video and live-streaming platforms, making it difficult for young consumers to become aware of them. In contrast, ads for classic products are often nostalgic but do not attract new customers.
4. Is Wangwang's Crisis a Common Problem for Traditional Food Companies?
Wangwang is not alone; many established food companies are facing similar issues:
- Kangshifu and Uni-President: Sales of instant noodles have declined as young people prefer to order takeout or eat healthier meals.
- Dabaitu Milk Candies: Although they became popular for a while through collaborations (such as with Dabaitu lip balm), their core products remain the same, and young people buy them more out of nostalgia than for daily consumption.
- The Root of the Problem: Established brands tend to become complacent and react slowly to market changes. By the time they realize that young consumers are no longer interested, it's already too late.
What is the solution? One option is to "revitalize the old products" by upgrading them (such as launching low-sugar versions of Xianbei or sugar-free Wangzai Milk). Another is to "create something new" that fully meets the needs of young consumers (such as a line of healthy snacks). Additionally, companies need to learn to leverage social media and live streaming to reach younger consumers, rather than relying solely on traditional advertising methods.
In Conclusion
Wangwang's crisis is a reflection of the broader issue of traditional food companies failing to keep up with changing consumer trends. No matter how delicious the classic products are, they cannot withstand the impact of the times. No matter how many new products are launched, if they do not meet consumer needs, they will be ineffective. It is hoped that Wangwang will truly "wake up" this time. Otherwise, the next time might not be a simple "danger," but a definite "elimination" from the market.