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AsianFin -- China’s beverage giant Wahaha, valued at an estimated 90 billion yuan ($12.5 billion), is embroiled in a high-stakes family and corporate battle that has now escalated into a “brand war.” The latest development: Wahaha heiress Zong Fuli, daughter of founder Zong Qinghou, has announced plans to rebrand parts of her controlled business empire under a new name, “Wa Xiao Zong,” starting from the 2026 sales year.

The move was confirmed in an internal memo obtained by Chinese media outlet Blue Whale News, which outlined that following the passing of founder Zong Qinghou, the company has been working to resolve longstanding historical disputes. To ensure the lawful use of the “Wahaha” trademark, the memo said the decision was made to transition to the new brand for certain subsidiaries, signaling a bold and unprecedented step in the ongoing intra-family corporate dispute.

The Wahaha saga traces back to disputes over founder Zong Qinghou’s estate. Zong Fuli’s half-siblings—Zong Jichang (Jacky Zong), Zong Jieli (Jessie Zong), and Zong Jisheng (Jerry Zong)—have filed lawsuits in Hong Kong and Hangzhou seeking $2.1 billion (roughly 15 billion yuan) in trust rights reportedly promised by their father.

While litigation over these trust claims is still ongoing, Zong Fuli’s move to introduce a new brand has captured significant public attention, raising questions about the implications for the iconic Wahaha name and the wider Chinese beverage market.

Founded in 1987, Wahaha grew from a single nutrition-focused milk drink, AD Calcium Milk, into a household name with products like Nutri-Express. Over decades, it has become deeply ingrained in the collective memory of multiple generations in China. Yet, the company’s prominence has increasingly been overshadowed by the complexity of its internal family and shareholder disputes.

According to corporate filings and internal documents, the “Wa Xiao Zong” rebranding is being executed by seven companies under the control of Zong Fuli, collectively referred to as the “Hongsheng group,” including Hangzhou Wahaha Honghui Co. and Zhejiang Wahaha Food & Beverage Marketing Co.

Importantly, these Hongsheng entities are not directly linked to Wahaha Group’s official corporate structure. Wahaha’s equity is divided among three stakeholders: state-owned Hangzhou Shangcheng District Wen Shang Tourism Investment Holding Group (46%), Zong Fuli (29.4%), and the employee stock ownership committee (24.6%). The official Wahaha trademark remains under Wahaha Group ownership, meaning any unilateral use of the “Wahaha” name by Hongsheng entities without unanimous shareholder approval could face legal challenges.

Between May 21 and 28, 2025, the Hongsheng group registered 43 “Wa Xiao Zong” trademarks across a wide array of industries—from pharmaceuticals to textiles, restaurants, finance, and chemical raw materials—indicating a comprehensive attempt to establish a new corporate identity. Earlier in February, similar trademarks such as “Zong Xiao Ha” and “Wa Xiao Ha” were also registered.

Legal experts caution that the new brand carries risks. “From a legal perspective, ‘Wa Xiao Zong’ could potentially infringe on the ‘Wahaha’ trademark if other shareholders challenge its similarity and possible consumer confusion,” said Zhang Xinyuan, head of research at Kofang Think Tank. He added that while establishing a separate brand could demonstrate Fuli’s value and indispensability to other shareholders, it may also escalate disputes or lead to a complete corporate separation.

The decision to create a new brand appears to be as much strategic as it is forced. Earlier in 2025, Wahaha Group had attempted to transfer its trademarks to Wahaha Food Co., a subsidiary in which Zong Fuli effectively holds a controlling stake (62.47% combined). However, the transfer has not been completed, leaving Fuli without clear legal authority to independently use the “Wahaha” brand for her controlled entities.

Wahaha’s brand value is substantial: according to the 2024 China Top 500 Most Valuable Brands report by GYBrand, the company is valued at 911.87 billion yuan. Losing access to the trademark presents major hurdles: consumer recognition, brand equity, and existing distribution channels could be compromised.

Zhang Xinyuan notes, “Establishing brand recognition in the beverage sector typically requires extensive capital and multi-year marketing efforts. It may take three to five years and billions of yuan to achieve a meaningful consumer foothold. The risk of low acceptance and high costs is significant.”

Additionally, the move to rebrand could lead to substantial disruption in Wahaha’s sales network. Zhang predicts a potential initial loss of 30% to 50% of distributors who rely heavily on the established brand. On the flip side, Zong Fuli may leverage her personal reputation and international education background to differentiate the new brand, employing storytelling, social media, and content marketing aimed at younger consumers.

The origin of the latest moves lies in posthumous succession challenges. Following Zong Qinghou’s death on February 25, 2024, internal conflicts over management and control intensified. Fuli briefly resigned from her executive roles in July 2024 after facing internal opposition but subsequently assumed the roles of legal representative, chairperson, and CEO, inheriting her father’s 29.4% stake.

Since then, she has initiated extensive restructuring. Employees were asked to transfer labor contracts to Hongsheng-controlled entities, with non-compliance resulting in drastic reductions in year-end bonuses and equity allocations. Numerous factories have been closed, including long-standing facilities in Quzhou, Shenyang, Nanjing, Tianjin, Dali, and Shuangcheng. Many front-line workers have faced layoffs, forced transfers, or significant salary reductions.

This corporate reshuffling also extends to high-speed water production lines in cities such as Tianjin, Huaihua, Zhengzhou, Nanjing, Chengdu, and Guiyang, with several under Hongsheng’s operational control. Analysts see this as part of Fuli’s broader strategy to consolidate power within the Hongsheng framework.

While public perception positioned Zong Qinghou’s family as simple—wife Shi Youzhen and daughter Zong Fuli—the ongoing lawsuits have unveiled the existence of three half-siblings from a prior relationship with former executive Du Jianying. The siblings are claiming equal inheritance rights under Chinese civil law, including access to trust funds reportedly set up by Zong Qinghou.

The legal battle is escalating. DNA testing has been requested to confirm biological ties, and both sides are presenting competing claims over the handling of the trust assets. This litigation represents a rare public exposure of previously private family dynamics, raising questions about governance, succession, and legacy within China’s corporate elite.

Despite the internal strife, Wahaha under Fuli’s leadership continues to deliver impressive financial results. In 2024, the company reportedly returned to pre-crisis revenue levels, with estimated sales reaching 70 billion yuan—an increase of approximately 40% year-on-year. Fuli herself was recognized on the 2024 Hurun Rich List as China’s wealthiest self-made woman, with a net worth of 81 billion yuan.

Yet, beneath these achievements lies significant uncertainty. The ongoing brand transition, unresolved inheritance disputes, and the challenge of establishing consumer recognition for “Wa Xiao Zong” all pose material risks. For investors, employees, and consumers alike, the future of one of China’s most iconic beverage brands is now inextricably linked to the outcome of both corporate and family battles.

The introduction of “Wa Xiao Zong” is a bold, high-stakes maneuver by Zong Fuli. It could either mark a successful adaptation to a complex inheritance and shareholder landscape or become a costly gamble with uncertain returns. Success will depend on careful management of legal challenges, market acceptance, and the ability to translate personal and corporate reputation into a fully-fledged brand identity.

As China’s beverage sector continues to evolve and family-owned conglomerates face succession pressures, Wahaha’s ongoing saga may serve as a high-profile case study in brand management, governance, and intergenerational business transition. For now, all eyes are on how “Wa Xiao Zong” will be received and whether Zong Fuli can assert her control while preserving the enduring legacy of the Wahaha name.