Text / William
Producer / Node Finance
Since its establishment in 2012, the three squirrels have gone through a full decade.
Ten years is a watershed for many companies, which means that the company is moving from the infancy of the entrepreneurial period to maturity, or from glory to decline, of course, it is enough to make the company more resilient through several rounds of industry cycles.
So, what kind of historical stage are the three squirrels who have just turned 10 years old? A few days ago, the emerging snack food giant, known as the "first share of national snacks", disclosed its 2021 annual financial report. The report shows that in 2021, the company achieved revenue of 9.770 billion yuan, which was basically the same as last year; the net profit attributable to the parent company was 411 million yuan, an increase of 36.43% year-on-year.
It can be seen through the financial report that under the background of the overall obstruction of the snack industry due to the rise in the price of some raw materials and the epidemic, the three squirrels still show strong operating capabilities. This is due to the company's clear focus on the main nut strategy during the reporting period, through the active adjustment of stores, optimization of SKUs, and thus achieved the target result of "profit output".
As the "baseball theory" in investment science says, when it comes to companies, attention should be focused on the field, not on the scoreboard. In addition to the objective cold financial report data, the determination and broken wrist of the three squirrels in responding to industry challenges, as well as the efforts to seek a second growth curve, are actually more worthy of our attention.
/ 01 /
Focus on nuts, basic plate stable
Buffett, the stock god, likes to use "long slope and thick snow" to describe the investment target he likes, that is, the market size is large enough and the development prospects are broad. Undoubtedly, the track where the three squirrels are located is a "long slope thick snow" business.
According to data from iiMedia Research, the scale of domestic leisure food has increased from 410 billion yuan in 2010 to 1156.2 billion yuan in 2021, and is expected to reach 1239.1 billion yuan in 2022, with a growth rate of 7.2%; according to Frost & Sullivan, the compound annual growth rate of retail sales in the mainland snack food industry from 2020 to 2025 is about 7.3%, of which nut fried goods as an emerging category have a compound annual growth rate of 9.0%.
Under the background of such a "long slope", the three squirrels handed over a fairly good report card in 2021. According to the company's annual report, the three squirrels achieved revenue of 9.770 billion yuan in 2021, although it failed to reach the "10 billion target", and even fell slightly by 0.24%, but the net profit attributable to the parent company reached 411 million yuan, an increase of 36.43% year-on-year compared with the previous year, becoming the biggest highlight in the annual report.
Specifically, the three squirrels have grasped the core of the nut business and maintained an absolute leading position in the industry. Throughout 2021, the company has created 1 billion-level large single daily nuts, as well as pecans, macadamia nuts, paper-skinned walnuts, hand-peeled badan wood, cashew nuts, pistachios and other billion-level large single products, making the company's revenue in the nut category reach 5.058 billion yuan, an increase of 4.33% year-on-year.
Facts have proved that making full use of the existing industrial position and focusing on a single leading product brand is often the only way for enterprises to achieve long-term development and obtain profits. The reason why the three squirrels have been able to harvest a lot in the nut field is inseparable from the "focus on nuts" strategy released in June last year. In the annual report, the three squirrels expressed this as follows, "Through mental transmission, trend innovation, product upgrading, strict quality control and other measures to effectively enhance brand power and product power, drive the growth of core nut categories; comprehensively layout the offline distribution market, with a moderate distribution model into the offline mainstream channels to bring new growth, laying a solid foundation for future offline growth." ”
It can be seen that the three squirrels have finally achieved the stability of the overall revenue by improving brand power, product strength and expanding the distribution model.
In addition to the basic plate of nuts, the achievements of the three squirrels in multi-brand expansion are also worth mentioning. The annual report discloses that in 2021, the company's independent sub-brand Xiaolu Blue achieved sales of 550 million yuan in the omni-channel range, of which the average monthly sales in the second half of 2021 exceeded 50 million yuan, and the sales during the "Double Eleven" period alone exceeded 40 million yuan, doubling the year-on-year increase, and won the champion of online sales in the segment of baby snacks. Once criticized by the outside world as a "laggard", the input-output ratio increased quarter by quarter, and the loss in the second half of 2021 gradually narrowed in December close to breakeven. It is foreseeable that in addition to the basic plate of nuts, fawn blue and blue will also become an important growth plate for the three squirrels.
As a leading nut brand, the three squirrels have seized the e-commerce dividend period to quickly build a national IP brand recognition, and then continue to expand categories, channel development, and gradually build a snack kingdom covering research and development, production, sales and logistics. According to the report of the Circulation Industry Promotion Center of the Ministry of Commerce, from 2016 to 2020, the company ranked first in China's nut sales for five consecutive years and was far ahead.
But after ten years of full speed forward, this huge nut snack company is also inevitably facing the industry dilemma of stagnant e-commerce growth and fading traffic dividends, and in order to continue to maintain its leading edge, the three squirrels must make new decisions, open new strategies, and embark on a new transformation road.
/ 02 /
Strategic transformation into a high-quality track
The famous management scientist Jim Collins reinterpreted the "hedgehog theory" in "From Excellent to Excellent", that is, companies should find their own good, enthusiastic, simple and effective business models, and at the same time resolutely stop bad business models, and then promote themselves to excellence. Looking at the 2021 annual report, we find that three squirrels are moving closer to this concept: through a drastic self-revolution, the company has entered a period of deep adjustment.
From the "Important Announcement on Comprehensively Promoting Strategic Transformation and Upgrading and Moving Toward High-quality Development" issued by the three squirrels, we can see that the three squirrels have made a great determination to self-revolution this time.
In the announcement, the three squirrels clarified the new strategic direction of "focusing on the nut industry, creating a multi-brand model, and gradually moving towards health, digitalization and globalization" in the next ten years, and proposed to move towards a new stage of high-quality development through the transformation and upgrading of development concepts, development paths and development models.
In fact, before the announcement of strategic transformation, the three squirrels have silently opened the road of exploration.
For example, in terms of offline store operation, the three squirrels mainly took a large-scale and extensive development model in the past, and from the perspective of high-quality development, this development model is obviously not a long-term road, for this reason, the three squirrels have completely suspended store expansion, and vigorously take the initiative to close stores that do not meet long-term positioning and poor performance, and further optimize offline retail channels from a strategic height.
In terms of category management, the three squirrels used to achieve full coverage by continuously filling the category gaps in various subdivisions, and now under the trend of "focusing on nuts" strategy, the company has established a mental cognition with nuts as the core, continued to reduce the SKU, and gradually stopped selling multiple categories that do not meet brand recognition, insufficient scale of single products, weak profitability, and insufficient core competitiveness.
In terms of product research and development and brand promotion, the three squirrels invested 57.5437 million yuan in research and development expenses in 2021, and the research and development investment ranked in the forefront of China's leisure food listed companies, leading and participating in the revision of 8 national standards, 10 industry standards and 8 group standards based on nuts; in addition, the company increased brand advertising investment while reducing the diversion of the station, and enhanced the psychological preference of the three squirrel nuts with the help of CCTV, ladder media, social media and other platform matrices. Throughout 2021, we will continue to invest more than 100 million yuan in brand advertising expenses.
All the actions are showing that the three squirrels are to change the growth engine from the past traffic drive to mind-driven and brand-driven, but for a ten-billion-level listed company, it is bound to release a certain bearish sentiment in the short term, but this is also a temporary pain that is difficult to avoid on the road of transformation.
In fact, the three squirrels also pointed out in the announcement that the transformation and upgrading means a huge change in the status quo, while firmly believing that the long-term improvement, the adjustment of the store system strategy, the optimization of the SKU under the focus nut strategy and the increase of scientific research investment, distribution channel expansion and supply chain construction may have a certain impact on short-term performance, but the so-called "not broken and not standing", only from the internal examination, adjustment, advancement and even breakthrough of self, in order to condense a strong endogenous force, so as to cope with the complex and changeable external environment.
/ 03 /
Channels expand and new flywheels are turned
The book "Flywheel Effect" writes: The transformation of enterprises from excellent to excellent must be to continuously promote the continuous rotation of heavy giant ships, and when the flywheel breaks through the critical point to form acceleration, the enterprise will successfully cross a major strategic inflection point.
All along, the three squirrels are known for their online business, and even failed to get rid of the genes of e-commerce for a long time. Although founder Zhang Liaoyuan has vigorously laid out offline channels since 2017, as an important part of the company's business increment, the "flywheel" of offline business has not yet been running at full speed.
In fact, compared with the characteristics of online real-time, flexibility and wide coverage, offline channels have many advantages such as convenience, social interaction, and sense of experience. According to Frost & Sullivan data, offline channels for leisure food accounted for 82% in 2020, which shows that it is still the main battlefield of the leisure snack market. At present, the three squirrels are also trying to seize this market space that has not yet been fully occupied.
In October 2021, Three Squirrels released a new distribution strategy, actively launching actions around products, channels and brands. In terms of products, the company has targeted the development of 33 distribution special supplies; in terms of channels, it has established cooperation with nearly 300 dealer partners to enter The Top 100 Chain Supermarkets in China such as Yonghui, Wal-Mart, and RT-Mart, covering nearly 300 prefecture-level cities across the country; in terms of brands, regionalized advertising at the sales nodes of the New Year Goods Festival has driven sales to increase sales.
Driven by the new distribution strategy, the three squirrels took the lead in making new breakthroughs in the "nut gift" market. During the New Year Festival, the company carried out elevator media saturation in 22 core cities across the country, and was committed to creating new ideas such as "sending nuts during the New Year Festival". With the concept of high-end and health deeply rooted in the hearts of the people, the nut ceremony represented by three squirrels is expected to replace pure milk, eight treasure porridge, ham sausage, etc. to become the new favorite of the gift market. And this is a large market with a scale of more than 10 billion.
According to the data disclosed in the annual report, the company's new distribution channels achieved operating income of 1.609 billion yuan during the reporting period, an increase of 38.16% over the same period of the previous year, accounting for 16.47% of the total revenue.
In addition to the nut gift, the three squirrels also set their sights on the scattered food market that most brands ignore. At the beginning of this year, three squirrels announced to the outside world through their official micro-market that they had officially entered the offline bulk business, trying to seize the market gap of independent small package nuts in the distribution channel. Up to now, the three squirrels scattered counter project has reached a cooperation intention with 100 high-quality dealers across the country, and will make breakthroughs in these dealer markets as the origin to create a benchmark market.
Whether it is a nut gift or a scattered food market, the biggest advantage of the three squirrels is the brand potential energy it has built in ten years, with the deep drainage of a strong IP image and the mental flow of "nuts = three squirrels", all commercial activities will become logical, which is of great significance for the three squirrels to expand offline layout and achieve omni-channel transformation.
The glory of the past cannot be traced, and the transformation of the coming day can still be expected. For the three squirrels, the short-term transformation pain is not terrible, what is important is how to reconstruct the corporate brand power, channel power and product power in the crisis, and achieve butterfly upgrading and high-quality development.
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