Consumers Can Also Educate Pagoda

A remark intended to defend high pricing has thrust Pagoda into a storm of public scrutiny. Earlier today, Pagoda’s Chairman Yu Huiyong addressed criticisms of the company’s fruit prices in a video, asserting two main points: that businesses either exploit consumer ignorance or educate consumers toward greater sophistication—and that Pagoda has chosen the latter path for years—and that the company will not pander to consumers whom he claims “do not understand fruit.”

Those comments immediately provoked widespread backlash. On social media, consumers asked, “You profit from me and still want to educate me?” and “Do I have to sit through a lecture just to buy fruit?” The hashtag #PagodaSaysItWon’tCaterToConsumers quickly trended, reflecting discomfort with a perceived power imbalance in the buyer-seller relationship.

Beyond the uproar over one executive’s words, this incident highlights the complex interplay among consumer sovereignty, market realities, and corporate governance—an interaction intensified by Pagoda’s recent revenue decline and rapid store closures.

In the social dimension of ESG, respecting stakeholders is fundamental, and consumers—being the most direct stakeholders—deserve equitable dialogue. Pagoda’s 2024 ESG report identifies customer communication, food safety, and responsible marketing as priority topics. Yet the chairman’s characterization of consumer education as a corporate mission undermines that very trust, as the term “educate” carries connotations of condescension that violate the principle of equal exchange and erode consumer dignity.

This backlash arrives at a moment when tolerance for price premiums is waning: without visible quality or verifiable origin, high prices are dismissed as unjustified. Consumers react not to cost itself but to “expensive yet underwhelming.” Indeed, many online commentators labeled Pagoda’s fruit “overpriced and mediocre,” questioning any added value.

For Pagoda, one misstep might not be fatal, but in a fiercely competitive fruit retail sector, consumers wield the ultimate “educating” power. When brand trust is already scarce, an offhand remark can accelerate a consumer exodus toward rivals offering greater transparency and respect for buyer choice.

The episode also exposed a glaring deficiency in Pagoda’s corporate governance: the absence of safeguards around executive communications. Seasoned companies typically subject high-level statements to topic vetting, rehearsal, and risk assessment to prevent uncontrolled public reactions. Pagoda’s lack of such protocols allowed Chairman Yu’s personal views to be conflated with official company policy, magnifying reputational damage.

Pagoda has long pursued a premium-fruit positioning. Yet sustaining a price premium requires not only demonstrable product quality but also skillful consumer engagement. Once consumers equate premium pricing with corporate arrogance, the rationale for that premium collapses.

Indeed, recent results underscore the pressure Pagoda faces. Its 2024 revenue fell 9.8% year-on-year, generating a net loss of RMB 391 million—the first annual deficit in five years—and it shuttered 966 stores, averaging 2.6 closures per day. These figures reflect a consumer shift toward balancing quality with cost. In this climate, talk of “educating consumers” rings hollow and highlights a disconnect between corporate rhetoric and market expectations.

Yuan Shuai, Executive Vice President of the Institute for Agricultural, Cultural, and Tourism Industry Revitalization, notes that fresh-fruit franchise models confront multiple sustainability challenges. Pagoda’s franchisees have reported overstock and high rental expenses, exposing weaknesses in cost control, supply-chain management, and franchisee support.

High-end fruit chains also endure competitive pressures from platforms such as Hema Fresh and Dingdong Maicai, which leverage scale procurement and half-hour delivery to foster impulse purchases, as well as from community group-buy models that combine peer networks with aggressive pricing to undercut premium retailers’ margins.

Compounding these challenges, Pagoda has grappled with recurrent food-safety controversies. In 2022, it was cited for selling spoiled and overnight fruit; in 2023, a Shanghai franchise faced penalties for excessive pesticide residue; and during the 2024 “3·15” consumer rights campaign, a Wuhan store was exposed for offering expired produce.

Although Pagoda’s 2024 ESG report asserts that food safety underpins its quality system and that a safety-first culture permeates every operational dimension, these incidents reveal significant room for improvement.

In summary, when a company proclaims itself “customer-centric” and pledges respect for consumers in its ESG disclosures, a top executive’s assertion that the firm must “educate consumers” directly undermines those commitments and invites skepticism that they are mere window dressing. When quality-control lapses contradict a premium pricing strategy—and management fails to provide transparent remediation—brand trust erodes, further weakening Pagoda’s market position.

Pagoda’s early success in premium fruit stemmed from the founder’s instinctive product selection and supply-chain insights, with quick decision-making reducing friction in execution. Yet in today’s swiftly evolving market, product excellence alone no longer guarantees consumer acceptance. Ignoring shifts in consumer sentiment, price sensitivity, and communication style risks alienating buyers.

This episode underscores that Pagoda’s governance still relies on founder-centric management rather than fully embracing professional executive leadership. The founder’s internal communication style, lacking public-speech training, has provoked consumer resentment that may further dampen sales.

If Pagoda genuinely seeks to “educate” the market, its first step must be to embrace consumer feedback on quality control. ESG is not a decorative header in an annual report—it manifests in daily operational choices, every interaction detail, and the resilience shown in addressing customer complaints.