The only constant thing in the world may be change itself.
Data from Flush iFinD shows that in the first half of the year, 21 A-share snack food concept stocks achieved a cumulative revenue of 35.045 billion yuan and a net profit of 2.646 billion yuan. Among them, Bestore’s operating income ranked first at 3.987 billion yuan, and Taoli Bread’s net profit ranked first at 292 million yuan.
The overall development of snack food is stable but there are undercurrents. From supermarkets and specialty stores to e-commerce, community group buying and now mass retail stores, the channels for snacks have been changing and driving changes in the industry structure. At present, the snack industry is in a new round of transformation. Which brands will stand on the top of the wave and become a new round of beneficiaries? Where will the new opportunities for casual snacks be?
The storm rises again
Every change is a period of opportunities and challenges. Those who adapt to changes will stand on the top of the wave, and those who change slowly will learn lessons. This is exactly the case in the snack industry.
The semi-annual reports of snacks have been released one after another, and the key word is differentiation. Except for Yanjin Puzi, Ganyuan Food, and Jinzai Food, which achieved double growth, the performance of other brands has declined to varying degrees. Among them, Three Squirrels' revenue in the first half of the year fell by nearly 30%, and Lai Yifen's net profit was almost halved.
Behind the divergence of performance is the resurgence of the snack food industry.
On the one hand, industry growth is slowing down.
Flush data shows that in the first half of the year, 10 of the 21 A-share snack food companies achieved both revenue and net profit growth. The growth of China's snack market is slowing down, making it more difficult for companies to grow their performance. This has become the norm in the industry, and all companies have to be prepared to face the challenge.
On the other hand, channel changes are accelerating.
As Everbright Securities said, the continuous transformation of the snack track is actually a manifestation of the phased development of the supply chain and channels. The combination of supply chains and channels at different stages makes the snack track enter different stages of change.
For example, around 2010, the combination of offline channels and supply chains led to the emergence of brands such as BESTORE. After 2014, the deep coupling of e-commerce and supply chains contributed to the rapid development of brands such as Three Squirrels and BESTORE.
As traffic becomes further decentralized and decentralized, the industry is now entering a new round of channel transformation. Online, traffic is shifting to platforms such as short videos and group purchases; offline, new channels such as specialty store snacks, ready-made snacks, and mass-selling snacks have emerged, and are in a period of rapid expansion. The number of leading mass-selling brand stores has expanded to 3,000.
Challenges often coexist with opportunities. The emergence of changes in online and offline channels has provided new opportunities for all brands. For example, by focusing on channels such as short videos, social platforms, and live broadcasts by experts, Jinzai Food’s revenue from emerging channels increased by more than 600% in the first half of the year; while Bestore is developing new channels online, it is also exploring multi-store formats offline. , invested in mass merchandisers and opened snack kingdom stores.
Under the dual factors, brands that benefited from the previous round of channel changes and even the previous round are experiencing many challenges in this round of channel changes, and some have already taken action to try to stand on the top of the new wave.
K-type differentiation
To seize the new round of channel changes, we must first understand the nature of this round of channel changes. According to "Yidian Finance", the essence is that China's social consumption is undergoing irreversible changes due to the slowdown in economic growth and the adjustment of population structure. There are examples of such changes in history.
Miura Exhibition, a Japanese consumer society research expert, once divided Japan’s century-old consumption changes into “four consumption eras”:
In the first era of consumption (1912-1941), consumption only belonged to a small group of elites in developed cities;
The second consumption era (1945-1974) saw the rise of household consumption, and the popularity of 3C home appliances, automobiles, etc.;
The third consumption era (1975-2004) saw rapid growth in personalized, branded, high-end, and experiential consumption;
In the fourth consumption era (2005-present), daily consumption is more rational and simple, de-branded, and tends to be cost-effective products.
The transformation of Japan's third and fourth consumption eras is closely related to the economic situation in the 1980s and 1990s: From the 1960s to the 1980s, Japan's economy developed rapidly. Since the late 1980s, Japan's economic growth has slowed down. % dropped to 5% or even lower.
Drawing on Miura's analysis of Japanese consumption, Chinese society is transitioning from the third era of consumption to the fourth era of consumption. It has the consumption characteristics of both eras. One end is high-end and personalized consumption, and the other end is mass cost-effective consumption.
It is worth noting that, unlike Japan’s fourth consumer society, China’s social structure and regional economic development are more complex, so the overall situation will be more optimistic. On the one hand, there is a large demand for upgraded consumption in China's sinking market; on the other hand, China's huge population base determines that there is sufficient market space for any type of consumption.
To sum up, from the perspective of social consumption, there are two certainties in the snack industry, one is growth certainty, and the other is opportunity certainty.
First, growth is still supported by certainty. There is a saying that "the worse the economy is, the more people need snacks to relieve stress." According to Euromonitor, my country's snack food industry is expected to reach a scale of RMB 1 trillion in 2027. In terms of consumption, the per capita consumption of snacks in my country is only 2.15kg/person, which is about 1/3 of Japan and 1/6 of the United States. It has broad development potential.
Second, as the third consumption era transforms into the fourth consumption era, China’s consumption shows an obvious K-shaped differentiation. There are two definite opportunities. One is the high-end opportunity, which provides consumers with higher emotional value; It is a cost-effective opportunity to provide consumers with higher use value.
The shift to a consumer society is not a temporary one, but a long-term process. This means that for a long time, high-end and high cost performance will be opportunities for Chinese consumption, and the same is true for the snack industry.
On the one hand, with consumers’ pursuit of high cost performance, snack mass merchandisers are expanding rapidly; on the other hand, with consumers’ pursuit of higher quality, better appearance, and higher consumption experience, BESTORE represents There are also opportunities for high-quality brands. While accelerating the expansion of offline stores, in the first half of this year, Bestore was also exploring multiple store types, one of which was to continue to adhere to high quality.
"Flowing water does not rot, and door hinges do not have beetles." At any time, only through change can an enterprise continue to innovate and not be eliminated in the ever-changing market competition. Change is not without rules. Only by grasping the essence of change can we avoid losing our way in the fierce change.
Opportunities for intensive farming
For a company, whether it is high-end or cost-effective, seizing these opportunities requires down-to-earth and intensive cultivation, and the essence of intensive cultivation is to win with quality.
After the snack industry has experienced production as king, channel as king, and channel decentralization, the current competition has entered the competition of comprehensive supply chain strength including R&D, channels, supply chain, etc. For example, the high cost performance of snack mass merchandise stores does not mean blindly low prices, but must rely on the company's supply chain integration capabilities.
It can be said that this change is not so much a channel change as a comprehensive reform, requiring enterprises to carry out comprehensive changes in channels, products, supply chains, etc. The direction of comprehensive change is also where the opportunities for more detailed cultivation of the snack industry lie.
The current development of China's snack industry coincides with these trends. There are currently three opportunities for intensive cultivation of snacks: one is intensive cultivation of channels, that is, working hard on convenience; one is intensive cultivation of products, working hard on health, personalization, etc.; one is intensive cultivation of efficiency, which is to work hard on convenience. We will work hard on supply chain efficiency and single store efficiency.
First, there are opportunities to facilitate channels.
According to a research report from Everbright Securities, 72% of consumers of snacks "want to buy them as soon as they see them", which is much higher than 51% of beverages and 30% of family planning consumers. Whether it is online live broadcasts, community group buying, or offline mass merchandisers, community stores, etc., they all fit in with this near-field opportunity.
For example, BESTORE has deployed online platforms such as instant retail. In the first half of the year, sales on instant retail platforms such as Meituan and Pupu increased by 72% year-on-year. Sales on Tmall supermarket-type lifestyle supermarket platforms increased by 16% year-on-year. On the other hand, BESTORE has deployed offline platforms. Mass-selling stores, 4 snack stores will be opened in 2022, store openings will be accelerated in 2023, and they will participate in the A round of financing of "Zhao Yiming Snacks".
Second, opportunities for product innovation.
There are two product innovation directions for snacks: one is market segmentation, such as children's snacks, etc.; the other is healthy and personalized, such as healthy snacks with less sugar, less oil and fewer calories.
Currently, companies are innovating products from these two directions. For example, Bestore, in the first half of the year, focused on the special needs of segmented groups and scenarios, independently developed and launched 48 products, and conducted 9 research on innovative nutritional and health processing technologies. Among them, the children's snack brand "Xiao Shi Xian" launched a total of 25 new products. The new chickpea tofu skin launched in May sold 100,000 bags in July.
△BESTORE Mini Program
Third, efficiency improvement opportunities.
The essence of retail competition is efficiency competition. Supply chain innovation, logistics efficiency and store floor efficiency have become the key to determining how far a brand can go in the face of fierce competition.
Through strict supplier access screening and supplier performance control, Bestore continues to promote product concept iteration, upgrade production facilities and process standards, and form a high-quality, quick-response cooperation mechanism. The shortest time from product concept to production delivery can be 26 sky.
In terms of stores, while expanding, it is exploring new store types based on users' needs for "richer products and better store shopping experience." On the product side, we piloted high-frequency series of products such as coffee, baking, and short-term guarantees under new store types, driving the new store type stores to increase customer numbers and single store sales compared with the original old stores.
As the growth rate of the industry slows down and changes accelerate, competition in the snack food industry becomes more intense. Only companies that work intensively and have comprehensive quality in channels, products, supply chains, etc. can make it to the end in this competition.
Conclusion
On the one hand, there are fierce new forces, and on the other hand, there are giants with a certain market share. The current snack market is in the midst of drastic changes. However, countless cases in history show that instead of rushing into the so-called "new situation" and "new changes", it is better to calm down and re-examine the current competitive situation from an overall perspective.
The depletion of online and offline traffic and the decentralization of sales and marketing platforms mean that snacks must bid farewell to the flooding of the past and shift from marketing-driven and traffic-driven to efficiency-driven.