Summary in Plain Language
The national herbal tea brand that once became incredibly popular across the country because people believed it helped prevent heatiness, Wanglaoji, is now facing tough times. The recently released 2026 mid-year report from Baiyunshan clearly reveals the company’s struggles: Its core business, Wanglaoji Health, saw a 13.6% decrease in revenue in the first half of the year, and its net profit plummeted by nearly 28%. This isn’t just a temporary fluctuation; since reaching its peak of over 10 billion yuan in sales in 2023, Wanglaoji has been on a downward trend for three consecutive years. The overall market for pre-packaged herbal teas has even shrunk by 6 billion yuan compared to 10 years ago.
The fundamental issue is that young people no longer prefer sugary beverages. New and sugar-free tea options have taken over the market segments that were once dominated by herbal teas. Wanglaoji’s decades-long success with its iconic red-canned herbal tea has come to an end. The company is now trying to rejuvenate its old product by making it more appealing to younger consumers and launching a series of new products such as Cilinji (lime and ginger tea), coconut juice, electrolyte water, and lychee juice, in hopes of creating another hit product. However, after years of effort, it has yet to succeed in developing another major hit.
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Detailed Analysis
1. Understanding the Severity of the Decline
Many people might think, “There are still people around me who drink Wanglaoji,” but the actual data shows a much more severe decline than people realize:
- In 2023, Wanglaoji Health’s revenue reached its peak of over 10 billion yuan, earning 1.46 billion yuan. The following year, it dropped to 8.76 billion yuan, a nearly 25% reduction in profit. In 2025, revenue remained virtually unchanged, and in the first half of 2026, it fell by another 13%, meaning the company lost nearly 300 million yuan in just half a year.
- This decline is not unique to Wanglaoji; the entire pre-packaged herbal tea market has shrunk. When Guangyao took over Wanglaoji’s management 10 years ago, the industry’s annual sales were 31.5 billion yuan. By 2025, this figure had dropped to 25.5 billion yuan, a 60% reduction. The industry’s growth rate has slowed to just 2%, and the competition has shifted from acquiring new customers to competing for existing customers among a few leading brands.
- What’s more troubling is that Wanglaoji’s gross margin has barely decreased, indicating that the problem is not with price cuts or promotions. Instead, sales in restaurants, convenience stores, and other retail outlets have slowed down, indicating a decline in consumer demand.
2. The Change in Consumer Preferences
The reason Wanglaoji is struggling is not that its formula has become unappealing; rather, it’s due to broader changes in the consumer landscape:
- The trend towards reducing sugar consumption has impacted Wanglaoji significantly. A regular red-canned Wanglaoji contains about 27 grams of sugar, which is equivalent to six cubes of sugar. Young people now prefer tea with less or no sugar when ordering milk tea. Although Wanglaoji has introduced sugar-free versions, most consumers still associate it with sweet herbal tea and are unlikely to look for the sugar-free options.
- New tea beverages have also taken over traditional herbal tea consumption scenarios. Ten years ago, when people ate hot pot, grilled food, or went shopping, there were few options for sweet drinks in convenience stores, making Wanglaoji a popular choice. Today, with over 400,000 new tea beverage stores, the market size is more than a dozen times that of herbal teas. You can order fruit tea with a desired sugar content via mobile ordering in just 10 minutes. Young people at gatherings no longer reach for a red-canned Wanglaoji. Traditional scenarios such as afternoon tea, meal accompaniments, and on-the-go drinks have largely been taken over by new tea beverages.
- Even though Wanglaoji spent years establishing a presence in every village and small shop across the country, younger consumers in these areas prefer brands like Mixue Bingcheng. Its traditional distribution network is no longer sufficient to meet changing consumer demands.
3. Wanglaoji’s Dual Approach to Transformation
Wanglaoji’s strategy is clear: it wants to diversify its products rather than rely solely on herbal tea. It is following the example of brands like Nongfu Mountain Spring and Dongpeng Beverage by expanding into various categories:
- Maintaining the Base: The company is trying to make its brand more appealing to younger consumers by changing packaging and flavors, hiring well-known endorsers like Zhang Linghe and Halande, and sponsoring variety shows to change the perception of Wanglaoji as an outdated drink. It aims to gain more market share from the shrinking herbal tea market.
- Hoping for New Hits: Over the past few years, Wanglaoji has launched several new products, such as Cilinji, coconut juice, and electrolyte water, in an attempt to create another billion-dollar hit. However, so far, none of these products have achieved the same success as its red-canned herbal tea.
- Among these new products, “Wang’s Lychee Juice” has performed the best, receiving 200,000 reviews on JD.com. However, its sales are negligible compared to the red-canned herbal tea’s annual revenue. Even Cilinji, which was a major investment, has not become as well-known as brands like Dongfang Shuye.
4. Challenges in Innovation
Despite its efforts, Wanglaoji is facing several obstacles:
- Changing Consumer Perceptions: The brand’s image as a “heat-preventing herbal tea” is deeply ingrained in people’s minds. It’s difficult to change this perception when competing with other popular brands for the same market segments.
- Lack of Differentiation: New products lack distinct advantages. Existing brands have already occupied key market positions, and consumers are not willing to try lesser-known products just to supplement their vitamin C intake.
- Weakening of Traditional Channels: Wanglaoji’s traditional distribution network, which used to be very effective, is becoming less important as consumers prefer online ordering or bulk purchases. Its decades of channel strength is no longer as significant.
5. A Common Challenge for National Brands
Wanglaoji’s struggles are not unique. Many national beverage brands that once thrived on a single product have encountered similar issues. Brands like Jianlibao, Very Coke, and Huiyuan Juice are also experiencing declines. The reason is that the older generation of consumers is gradually leaving the mainstream market, and the needs, preferences, and consumption patterns of younger people have changed. Brands that relied on marketing and distribution channels in the past can no longer rely on these strategies to stay successful.
In summary, Wanglaoji’s transformation is complex and challenging. It faces three main barriers: changing consumer perceptions, a lack of differentiation in new products, and the weakening of its traditional distribution network. Overcoming these challenges will be difficult, and the company may not have much time left to make a comeback.