The semi-annual reports successively disclosed by leisure snack companies show that the industry has experienced a state of "uneven cold and warm."
Companies such as Three Squirrels (300783.SH) and Yanjin Puzi (002847.SZ) have achieved significant performance growth; while companies like Good Product Puzi (603719.SH) and Laiyifen (603777.SH) are facing the pressure of declining performance.
In the current context where consumers pay particular attention to cost-effectiveness, different strategies in pricing and channels have led to a reshuffling in the industry. On one hand, the emphasis on emerging channels has widened the revenue gap between companies; on the other hand, the ability to maintain healthy gross margins in the "price war" also poses a huge challenge to the supply chain capabilities of companies.
Channel strategy widens revenue gap
The company that achieved the highest revenue in the first half of this year is Three Squirrels. Three Squirrels achieved a revenue of 5.075 billion yuan during the reporting period, a year-on-year increase of 75.39%; the net profit attributable to the parent company was 290 million yuan, a year-on-year increase of 88.57%.
Regarding the reason for the revenue growth, Three Squirrels stated that it was mainly due to the significant increase in revenue from various channels of the company.
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Three Squirrels originated from e-commerce, so the revenue from e-commerce channels accounts for a higher proportion. It is worth noting that although the revenue base of Three Squirrels in e-commerce channels is already large, it still maintained a high growth rate during the reporting period. In the first half of this year, the revenue of Three Squirrels on third-party e-commerce platforms was 4.09 billion yuan, accounting for 81% of the total revenue. In the same period last year, the revenue from third-party e-commerce platforms was 2.268 billion yuan, accounting for 78.40% of the total revenue.
The reporter noticed that the most significant growth channel during the reporting period was Douyin. In the first half of this year, the revenue of Three Squirrels on the Douyin channel was 1.224 billion yuan, a year-on-year increase of 180.73%, which has already exceeded the 1.083 billion yuan of Tmall series platforms and 793 million yuan of JD.com series.
In recent years, short video e-commerce represented by Douyin and Kuaishou has risen rapidly. According to data from Chan Mama, the upward momentum and market size growth rate of Douyin e-commerce in the food and beverage industry are still there, and the number of moving goods and the number of people reached are all in the growth stage. At the same time, the average price of goods has decreased year-on-year, and the cost-effective consumption mentality will continue to be verified.
The performance of "China's first snack stock" Laiyifen in the first half of 2024 was relatively bleak. The company's revenue was about 1.792 billion yuan, a year-on-year decrease of 15.05%; the net profit attributable to the parent company was about 14.92 million yuan, a year-on-year decrease of 72.56%. The company attributed the decline in performance to store adjustments. In the first half of this year, the number of Laiyifen stores decreased by 191 year-on-year. During the adjustment process, although the income of franchised stores increased slightly, the income of directly operated stores was affected and decreased year-on-year.Looking at the channels, Laiyifen, which has always prioritized offline channels, has a minimal investment in e-commerce platforms. During the reporting period, e-commerce business revenue was 146 million yuan, accounting for only 8% of Laiyifen's total revenue.
Yan Jin Puzi's semi-annual report shows that the company achieved a business income of 2.459 billion yuan in the first half of the year, a year-on-year increase of 29.84%; the net profit attributable to the parent company was 319 million yuan, a year-on-year increase of 30%.
Yan Jin Puzi's approach is somewhat similar to that of Three Squirrels. In terms of channels, while maintaining the advantages of existing KA and AB class supermarkets, it focuses on developing e-commerce, snack bulk stores, CVS, campus stores, etc., and cooperates with popular snack bulk brands such as Snack Very Busy, Zhao Yiming, and Snack Has a Sound, and collaborates with hosts on the Douyin platform for planting grass and attracting traffic.
Over the years, the proportion of revenue contributed by Yan Jin Puzi's e-commerce channels to the company's total revenue has been increasing year by year. As early as 2017, the revenue share of e-commerce channels was only 6.56%, and in 2023, this figure exceeded 20.13%, and in the first half of 2024, it further increased to 23.59%.
Liangpin Puzi achieved a revenue of 3.886 billion yuan in the first half of 2024, a year-on-year decrease of 2.52%; the net profit attributable to the listed shareholders was 23.89 million yuan, a year-on-year decrease of 87.38%.
Looking at the channels, during the reporting period, Liangpin Puzi's revenue from e-commerce platforms accounted for 42% of the company's total revenue, which is not a small proportion in the industry, but it still failed to make the company profitable.
Regarding the reason for the decline in net profit, Liangpin Puzi stated that it was mainly due to the price reduction strategy implemented for some products in the store channels since November 2023, and in the first half of 2024, the company was in the stage of adjusting its business strategy, and the price reduction had a certain impact on gross profit.
Ouyang Yu, the chief analyst of food and beverage at Hua Chuang Securities, believes that in the process of continuous channel iteration, the layout of all channels has become an industry consensus. Therefore, in the new round of channel iteration, the fragmentation of channels has intensified, and whether it is snack bulk, Douyin, or Pinduoduo, the core of these rapidly expanding channels is still based on strengthening the supply chain, embracing the changes in channel traffic, and achieving a rebalancing process on both the supply and demand sides.
Behind the competition of cost-effectiveness is the competition of the supply chain.
In recent years, bulk snack stores, known for their wide variety and low prices, and mostly located in communities, have opened one after another in lower-tier cities, becoming a new consumer format favored by local consumers.Wanchen Group (300972.SZ), whose main business is wholesale snacks, has achieved impressive performance. The company's operating income for the first half of this year was 10.915 billion yuan, a year-on-year increase of 392.45%. The net profit attributable to the shareholders of the listed company was 934,600 yuan, a year-on-year increase of 116.77%.
Against this backdrop, traditional snack companies have also had to embark on a path of competing on cost-performance ratio. Wang Wenjie, Deputy General Manager of Sales at Hao Xiang Ni Health Food Group, once publicly stated: "The market front end appears to be an ultimate cost-performance ratio, and the back end must be the polishing and forging of an ultimate supply chain."
As early as April 2023, Three Squirrels clearly defined the "high-end cost-performance ratio" strategy, which integrates the supply chain and strengthens internal management to improve quality and reduce prices. While ensuring a basic profit, the strategy also focuses on cost reduction and channel reform to maintain the terminal price at a healthy level.
Currently, it seems that this strategy is showing initial results. The essence of the "high-end cost-performance ratio" strategy is to reduce costs. Zhang Liaoyuan, the founder of Three Squirrels, once publicly stated that in the snack industry, the entire process from raw materials to consumers' hands is actually bloated. "The cost is very high, but a lot of it is ineffective. We want to change and solve this place, so behind 'high-end cost-performance ratio' is not to lower the price, but to make the cost of this matter lower. Low price is definitely not the strategy, low cost is the strategy."
In November 2023, Liangpin Puzi announced the launch of the largest price reduction in 17 years. At that time, Yang Yinfen, Chairman and General Manager of Liangpin Puzi, said in an internal letter that online consumer traffic has shifted, competition has intensified, and various snack models have bloomed offline, with a series of new species emerging. In addition, consumption has entered a rational era, and people's wallets are tighter, with different consumer levels becoming more differentiated and distinct. "The reality that consumers think we are 'expensive' also indicates that our product prices must be more people-friendly."
Yan Jin Puzi is also trying to reduce costs. The company currently has 4 production bases in Liuyang, Hunan, Xiushui, Jiangxi, Luohe, Henan, and Pingxiang, Guangxi. More than 95% of the leisure snacks sold by the company are self-produced.
However, Laiyifen has not joined the price war in the snack industry. Shi Yonglei, Chairman of Laiyifen, once publicly stated: "We refuse low-level price competition, but are committed to enhancing product value, providing consumers with products with higher cost-performance ratio and quality-price ratio."
There is no standard answer to whether snack companies should join the price war. The most critical thing is that the brand value and product value match the product price.
The market prospect of China's leisure snack industry is still broad. According to Frost & Sullivan data, it is expected that the retail sales of China's leisure snack industry will reach 1,142.7 billion yuan in 2026, with a compound annual growth rate of about 6.8% from 2021 to 2026, maintaining steady growth. With the upgrading of consumption, market demand shows a trend of diversification, segmentation, and health, and leading companies with advantages in products, brands, channels, and supply chains will usher in new development opportunities, and the industry concentration is expected to be further improved.
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