The “supermarketization” of mass-market snacks is accelerating, and the performance of traditional snacks is diverging

"The snack industry is changing rapidly, and supermarket e-commerce is competing for development." In the fierce competition in the snack market, why are mass-market snacks becoming "supermarket-like"? Why are the performances of traditional snack companies diverging? In the face of market changes, what is the future development direction of the industry?

The future of the snack industry will not stop at "supermarketization" or "e-commerce". Author/Chuwuliuxiang ID/lingshouke If the snack industry in 2024 is like a river that suddenly forks, with more traditional snacks stuck in the mud and mass-market snacks running wild. Then, in 2025, "supermarketization" will become a watershed in the snack industry.

Players in the mass-market snack business are no longer content with the snack collection store business, and have begun trying out new business models, either by changing their appearance or upgrading and transforming - evolving from "snack shops" to "money-saving supermarkets" and "wholesale supermarkets."

A new round of competition with "supermarketization" as its core has quietly begun, and the leading mass-market snack players are trying to find a new growth point outside the snack track.

1

On January 22, Zhao Yiming’s official WeChat account announced that Zhao Yiming’s money-saving supermarket was newly launched.

According to Lianshang.com, Zhao Yiming's new store model has also been optimized in terms of store decoration, area, etc., the product structure has been deeply optimized, and the product categories are rich and diverse, which is more in line with consumer demand.

The new store type generally has a business area of ​​180-240 square meters, with more than 400 new SKUs, covering a variety of products such as department stores, daily necessities, stationery, trendy toys, eggs, etc., to meet consumer needs in all aspects.

At the same time, the store has newly added short-shelf-life bread to the shelves, which is located in a prominent position at the store entrance, specially displaying freshly baked short-shelf-life bread, and has added special areas for fresh food, fresh milk and low-temperature frozen products to meet the daily needs of the community and families.

In January this year, Zhao Yiming Savings Supermarket announced its latest franchise policy for 2025. Currently, many stores have been established.

Previously, on January 10, Wanchen Group announced that its first "Laiyoupin" money-saving supermarket opened in Hefei, covering categories ranging from snacks to rice, flour, grain, oil, eggs, milk and paper, and the number of SKUs has also expanded to about 3,000.

Relatively speaking, in terms of "supermarketization", Zhao Yiming and Lai Youpin are both latecomers.

As early as June 2024, Snacks Youming had opened its first Snacks Youming wholesale supermarket in Chengdu.

The first "Snacks Youming Wholesale Supermarket" was established in Chengdu in June 2024. As of December 2024, its number of stores has exceeded 1,000.

In addition, there are many players entering the "discount supermarket" format, including Snack Selection, Three Squirrels, and Qiahuo Puzi.

In September, Huizhen Wholesale Supermarket, a brand under Snacks Youxuan, began to distribute goods; Ai Snacks announced the addition of convenience stores in August; Qiahuopuzi transformed into a supermarket by expanding all product categories; Xixi Snacks opened a Wuxiaochao wholesale department; and Laiyifen opened its first warehouse membership store with a membership fee of 99 yuan per year.

In addition, Three Squirrels has also developed its hard-discount snacks and discount supermarket businesses through the mergers and acquisitions of AiZheZhou and AiXinXing, and announced that it would "open 200 hard-discount supermarkets within 60 days."

Snack hypermarkets have entered discount supermarkets one after another. On the surface, the core logic is to use snack shops as an entry point to attract customers, attract consumers by providing cost-effective products and full-category SKUs, thereby increasing store traffic and achieving revenue growth.

In fact, in the fiercely competitive snack market, small and medium-sized players can no longer "survive".

The logic is simple:

First, although the mass-market snack food market is still growing, it is becoming saturated.

Even though CICC's 2024 report predicts that the mass-market snack industry still has room to double in 3-5 years, and the future development prospects are still great, the market response is that competition is becoming more and more fierce. After the massive expansion, the pace of store opening has begun to slow down. To continue to grow, it is necessary to expand the category.

Second, the average customer spending in discount supermarkets is relatively higher, while the average customer spending in snack shops is between 20 and 30 yuan. By adding high-repeat purchase categories such as fresh food and daily chemicals to supermarkets, the average customer spending can be further increased, thereby increasing the profitability of individual stores.

Third, supply chain advantages can be replicated. Snack chain stores have achieved success by relying on the high turnover and high gross profit "white label + second-tier brand" model, and this model can be replicated in discount supermarkets, still reducing costs by reducing intermediaries and shortening the supply chain.

But the question is, can snack stores do as well as supermarkets?

2

In terms of operational difficulty, snack stores have around 1,000 SKUs, while supermarkets often have more than 3,000 SKUs, which greatly increases the difficulty of merchandise management, inventory turnover, and supply chain matching.

From the perspective of the competitive landscape, the competitors of discount supermarkets are not only their peers in the mass-market snack industry, but also regional supermarkets that have been rooted in the market for many years, such as Lele.

To truly seize the market, it is not as simple as expanding SKUs. The essence of mass-market snacks is a hard discount store in the community, while discount supermarkets take the low-price model to a more thorough level.

It is more difficult to run a discount supermarket. First, the product system is more complicated. The SKU structure of snacks is simple, while supermarkets involve fresh food, general merchandise, and daily chemicals, which greatly increases the difficulty of supply chain management; second, the cost is higher. Supermarkets are larger in size, and the rent, labor, and logistics costs are all rising; third, the competition is more intense. Traditional supermarkets such as Carrefour and RT-Mart have already failed.

The hard discount model requires in-depth cultivation of each category. Consumers need to focus not only on basic livelihood categories such as rice, flour, grain and oil, but also on fresh fruits, frozen foods, etc., rather than just hanging a sign of a snack shop on the surface, using fresh hot products to attract customers and then selling other categories.

More importantly, hard-discount supermarkets need to weigh the overall operational efficiency, such as human efficiency and logistics system, and cannot simply mix different categories together.

In fact, there are many brands in China that have tried the "discount supermarket" model, but almost none of them have really succeeded. Of course, it does not mean that there is no opportunity for mass-market snacks to transform into discount supermarkets, but the hardships and pressures they have to face are more and greater.

At the same time, traditional snack companies are not calm either.

On the one hand, the traditional snack brand Three Squirrels is making great strides, with revenue once again breaking through the 10 billion mark and net profit surging by nearly 90% year-on-year; on the other hand, the former "No. 1 snack brand" Bestore and the old snack company Laiyifen have fallen into an unprecedented quagmire of losses.

On the evening of January 16, Liangpin Puzi (603719.SH) released its 2024 performance forecast, predicting that the net profit attributable to shareholders of the listed company for the whole year will be a loss of 25 million to 40 million yuan, compared with a profit of 180 million yuan in the same period last year.

It is worth noting that this is the first time that Liangpin Puzi has suffered an annual loss since its listing in 2020.

According to the forecast, the company will continue to follow the policy of "reducing prices without reducing quality" in 2024, further implement price reduction strategies for some products in store channels, and make adjustments to the product structure and try new product categories. The price reduction and product structure adjustment have affected the company's gross profit margin, and therefore the company's net profit showed a decline.

3

In fact, it only took three years for Bestore to go from its peak to its lowest point.

At the end of 2023, Bestore announced with great fanfare that it would “cut prices without reducing quality”, with 300 products reducing prices by an average of 22%, with the highest price reduction being 45%. The logic of the price war is simple - under the impact of mass-market snacks, Bestore hopes to retain consumers by cutting prices while expanding its market share.

But the reality is even more cruel. The price reduction has resulted in a decline in gross profit margin. In the third quarter of 2024, the gross profit margin of Liangpin Puzi dropped from 28.54% to 26.84%, and the net profit growth rate dropped by nearly 90%.

What is even more fatal is that consumers’ brand recognition has been shaken. The once high-end snacks are now sold at “value for money” prices.

However, mass-market snack brands represented by "Ming Ming Hen Mang" and "Hao Xiang Lai" have risen and expanded rapidly, and their cost-effective model is very popular among consumers. They have lower prices and wider channels. Compared with them, Bestore has no advantages.

The market structure has been reshaped, consumers' demand for high-end snacks has declined, and they prefer "high-quality and low-priced" products.

In addition, negative events frequently occurred at Liangpin Puzi, and its brand image was damaged.

In 2024, Bestore was caught in a public opinion storm due to the "falsified ingredient list" scandal. Although the regulatory authorities determined that the reported problem was not established, the incident still had a negative impact on the brand image.

Compared with Bestore, Laiyifen’s (603777.SH) dilemma is more direct - its market is being eroded by mass-market snacks.

In 2024, Laiyifen's East China base was completely lost, and its revenue in Shanghai alone dropped by nearly 1 billion yuan. In order to break through, Laiyifen tried to bet on the "snacks + community" model and established a mass-market snack brand in a joint venture with Yangchanji.

But the problem is that the market has long been occupied by Snacks and Haoxianglai, and Laiyifen’s late entry seems like a struggle that is doomed to fail.

Laiyifen recently released its performance forecast, saying that its net profit in 2024 is expected to be -86 million yuan, a decrease of 143.05 million yuan compared with the same period last year, a year-on-year decline of 251%; the non-net profit is expected to be -76 million yuan, a decrease of 87.70 million yuan compared with the same period last year, a year-on-year decline of 750%.

In contrast, Three Squirrels made a strong comeback, with revenue returning to 10 billion and net profit increasing by nearly 90% year-on-year.

On January 21, Three Squirrels (300783.SZ) released its performance forecast, showing that the company is expected to achieve operating income of 10.2 billion yuan to 10.8 billion yuan in 2024, a year-on-year increase of 43.37% to 51.80%; net profit of 400 million yuan to 420 million yuan, a year-on-year increase of 81.99% to 91.09%.

The growth in this performance is mainly due to the company's firm implementation of the "high-end cost-effectiveness" strategy and continued deepening of the "full category + omni-channel" model.

Three Squirrels no longer blindly pursues traditional e-commerce from Tmall and JD.com, but instead bets on live streaming and content e-commerce for traffic.

At the same time, Three Squirrels gave up inefficient direct-operated stores and focused on franchising and retail terminals, such as investing in the mass-market snack brand "Love Snacks" to seize the lower-tier markets.

The counterattack of Three Squirrels did not rely on price war, but on channel transformation and brand upgrading. A brand that once rose to prominence on Taobao has once again made a comeback with new e-commerce.

Of course, the future of the snack industry will not stop at "supermarketization" or "e-commerce".

Price wars are not the solution to the problem after all. The real way out is still to improve supply chain efficiency, build brand power, and accurately capture consumer needs. In this "elimination match" in the snack industry, only players who truly adapt to market changes can have the last laugh.