After the capital enters the field, is the children's snack track a good track?

Image source @ Visual China

Text | Good Finance

"In the past two years, the capital market has been a lot of cold, and there are big environmental factors, but the fundamental reason is that there are fewer and fewer good tracks." One investor sighed. I asked him what kind of track is a good track, and his answer summed up in three words: "growth".

If you look at it by this standard, it is indeed difficult to find a track with strong growth in the current stock market environment, but if you focus on the segments, although the overall scale may not be particularly large, there are always new opportunities in the segments.

For example, the children's snack track.

From the perspective of the financing situation of the capital market, even in 2021, when the capital market is deserted, there are still many financing events in the children's snack track, such as Little Spoon, Akita Manman, Little Yellow Elephant, Doo Cat and other brands have financing in the account. Overall, although the amount of financing is not particularly large, it is also in the tens of millions of dollars, but many of them have just established brands in the past two years. More importantly, there are many big-name investors such as Sequoia China Seed Fund and Shunwei Capital.

Behind the entry of big names, the subdivision of children's snacks has risen, but it is not easy for players to pan for gold on this track.

Category thinking lands, from influencing decision-making to supply iteration

One of the main trends in consumption upgrading is the continuous improvement of market segments. Reflected in the snack track, the children's snack segment has ushered in new growth opportunities.

The growth of the segmentation track in the consumer field is nothing more than the following reasons: 1, the industry shows a trend of scale growth, 2, the habits of consumer groups change to promote market expansion, 3, the industry is not yet mature and standardized, and irregularities mean that there are more opportunities to break the game.

According to data from third-party agencies, the size of the children's snack market will reach 150 billion yuan in 2023. Although the market size of 100 billion is not too large, the key is that the growth potential has not yet been tapped. Moreover, compared with the 9.5 billion yuan of the good shop, the market value of the three squirrels of 8.8 billion, and the scale of 100 billion, there is also the possibility of the birth of a 10 billion children's snack giant.

According to the data of the seven national censuses, the proportion of the population aged 0-14 in the mainland has increased from 16.6% in 2010 to 17.95%, of which the proportion of second children has increased from 30% to 50%. In other words, since the liberalization of the two-child policy, a new wave of baby boom may bring new opportunities for infant and child consumption.

In addition to the demographic dividend, the change of consumption habits is also an important factor in promoting the growth of market segments.

From a young age with snacks as a companion of life experience, the post-90s group has always been the main consumer of the snack market. At present, the post-90s parents are more willing to spend money for their children, and they also have a strong willingness to consume children's snack products.

In addition, the current young people's family structure is "4 + 2 + 1", the proportion of children's consumption expenditure has increased, the data show that mainland family children 17,000-26,000, accounting for 30% to 50% of household expenditure, from the perspective of family expenditure structure, the market space for children's snacks needs to be further tapped.

"Children usually love to eat snacks, may be from the snack spicy strips grew up, now always feel that snacks are not very healthy, every time to buy snacks for children always have to spend a lot of time to choose, after all, children eat food can not be half sloppy." Fangfang, a post-90s mother, told Xiangshan Finance and Economics that even if the child will cry because of insufficient snacks, but for the sake of the child's dietary health and safety factors, she will usually buy fewer snacks.

Judging from the current situation of the snack industry, Fangfang's consideration is not unreasonable. On the one hand, although the demand side of children's snacks has been expanding in recent years, on the other hand, the changes in the industry relative to the market are always lagging behind, and the supply side of children's snacks needs to be further iterated.

In the consumption track, category thinking is the basic thinking, but in the landing of category thinking, it is always biased towards category differentiation at the marketing level, while ignoring the differentiation at the supply chain end.

In the snack track, food safety risks still exist, and in March 2021, the good shop was on Weibo's hot search because of the "chicken intestine maggot" incident, which caused widespread concern. Afterwards, the company issued an apology letter.

Yang Yinfen, president of Liangpin Shop, said in an interview with the media that the quality of leisure snack products is divided into systemic problems and occasional problems. The company has also made a lot of investment, "occasional problems are difficult to avoid", "if the cost of too much investment is too high, in the end, consumers have to pay".

For the children's snack track, because consumers are children, even if it is an occasional problem, it is difficult to be accepted by the public, for this problem, how to deal with the future of the good food fairy is worthy of industry attention.

In fact, compared to ordinary snack products, children's snacks are a separate category. This means two things for players in the industry:

First, children's food is a consumption track that emphasizes marketing and decision-making.

The general consumer consumption track is a track that emphasizes marketing and light decision-making, because consumers mostly make instantaneous decisions when making purchase decisions, and the decision chain ends, so brand marketing is the focus.

Children's snacks are different, although they also value brand marketing, but what is more needed is to break the inherent impression of snack products on the consumer side and take off the hat of "junk food". For example, in addition to brand marketing, more through children's nutrition knowledge and other content to guide consumption decisions, in terms of consumer cognition, play the concept of "nutritional snacks".

In fact, most parents do not have enough understanding of the various types of nutritional intake knowledge that children need, relying more on their own experience rather than scientific knowledge, and secondly, young parents are more willing to help their children grow up healthily by understanding this part of knowledge.

Second, in terms of supply, it is not the expansion of the existing snack product production line, but the iteration of the production end.

In addition to the cognitive shaping affecting C-end decision-making, the core of the Nuggets children's snack track is actually to solve supply chain problems.

For example, after the "irradiation" sterilization process of snack foods, although the shelf life of the product is longer, the nutrient content will be destroyed, and it will not be able to meet the needs of children affecting their intake. Therefore, how to innovate a new production process, or for the healthy nutritional needs of children's snacks, the establishment of a new production and quality control system, is a problem that needs to be urgently solved on the supply side.

"Compared with the adjustment of the production management system, it is easier for the brand to change in marketing, because the former pays a higher cost and the consumer perception is not obvious, and the snack brands are mostly OEM manufacturers who are not willing to invest too much in this regard." The person in charge of a domestic snack consumer brand told Xiangshan Finance: "Most of the children's snack products on the market are at the marketing level, and the production and supply side has not yet established a perfect system, and it may take a period of investment and deep cultivation at this point." ”

The value of children's snacks is deeply cultivated: a substitute for meals or complementary products

In addition to the perfect supply side, the children's snack track may have to go some way to maturity.

Previously, the first domestic children's snack group standard "General Requirements for Children's Snacks" was officially implemented in June 2020, but it only clarified the concept of children's snacks, and initially established industry norms in terms of safety and health.

It is worth noting that since it is not a national standard, the binding force of the group standard itself may be limited.

On April 27 this year, the Beijing Municipal Consumer Association issued a consumer tip to remind consumers to be cautious about buying "children's food". In fact, there is no clear classification of "children's food" in China, and there is no special national standard for "children's food".

In the past for a long time, the snacks produced by domestic manufacturers are mostly adult standards, and the national food additive standard is formulated with 60 kilograms of adults as the standard, and behind the industry's spontaneous implementation of children's snack group standards, the competition in the children's snack track is becoming more and more fierce.

In May 2020, The Shop released its sub-brand Liangpin Snack Fairy, a snack product positioned as a nutritional supplement for children over 3 years old. In the same period, Baicaowei launched the "Tong An An Xiao Friend" series of products, and three squirrels released fawn blue and blue to announce their entry into the field of children's snacks.

The three major snack brands enter the children's snack track, on the one hand, they are interested in the opportunity of the existence of this subdivision track, the current children's snack market is not yet mature, which means that the track has new opportunities, coupled with the lack of benchmark brands in the industry, at this time the entry is intended to seize the user's mind. On the other hand, from the operational level, the gross profit margin continues to decline, which means that the operating efficiency of enterprises is declining, and the brand urgently needs new growth points.

Taking the good product shop as an example, the operating cost of the good product shop in the third quarter of 2021 was 4.63 billion, an increase of 22.2% year-on-year, higher than the growth rate of 18.8% of the operating income, resulting in a 2% decline in gross profit margin. It is worth noting that due to the increase in sales expenses year by year, the gross profit margin has decreased year by year, once falling below 30%, and as marketing costs continue to rise, the gross profit margin may be further compressed.

Although the children's snack brand Xiaoshixian under the good shop seems to have a good growth rate, as the children's snack track is getting hotter, a number of brands that focus on children's snacks have rapidly appeared in the industry, such as little yellow elephant, Kai Xu Duo cat cat, full score cow cow, Akita Manman and many other players. According to the search of the Tianyancha APP, there are 160 results for children's snack-related enterprises within one year of establishment.

The low threshold and weak barriers make the success of the brand easy to be copied, which gives the emerging brand more opportunities, coupled with the blessing of the capital side to the new brand, players such as the good food fairy may not have much competitive advantage.

In addition to the new brands, brands such as Want Want Group, Wahaha, and even Baby Jinshui compete across borders in the children's food and beverage track. These consumer brands have strong advantages in supply chain and channels, and also add a lot of variables to the next competition.

One point that cannot be ignored is that the competition in the snack consumption track is not only the competition between brands, but also the competition between categories. The same goes for the kids' snack track.

The snack industry is very large, and the children's snack track is also very large, but no matter how large the consumer industry is, the entry point is very small.

The route chosen by the good shop and the three squirrels is to focus on the nut category and do the long-tail category. The advantage of long tail is that the brand effect is more obvious, but the selection and management of categories has a threshold and needs to be more sensitive to market changes.

The problem is that due to the large number of categories involved and most of them are OEM production, the food safety risk is high, and if a vertical category is exposed to food safety problems, it will have a joint impact on the entire brand. In addition, the probability of explosive models in the category is small, and it is difficult for new brands to have explosive growth.

In contrast, the advantage of a single product is that the consumption memory point is stronger, the repurchase rate is strong, and the disadvantage is that the brand differentiation has a limited impact on consumer decisions. For example, in the big single product of melon seeds, the brand memory point is obviously stronger than other brands, and it is easier to cause repurchase, but the replaceability of melon seed products is too strong, and higher brand loyalty is needed as the basis for repurchase growth.

For children's snacks, their own positioning is as important as the choice of category.

Children's snack premium space is relatively high, can give manufacturers more cost redundancy, which means that the problem of lack of nutrition in children's snacks is expected to be solved through technical means, health is the standard rather than selling point, the key is product positioning.

The long-term value of the children's snack track is deeply rooted in two positions: substitutes and complementarities

The logic of substitutes: Taking the great white rabbit milk candy as an example, under the advertisement of "seven great white rabbits equal to one cup of milk" in the early years, milk candy became a substitute for milk, and the great white rabbit brand became a household name and became the childhood memory of a generation.

Nowadays, under the concept of healthy eating, light food products such as oats are becoming more and more popular, and there is a trend to replace some meals. The closer you get to a children's snack replacement, the more room for growth. For example, nutritious children's yogurt products replace protein food intake.

In fact, for children, the temptation of snacks is far greater than the meal, in this logic, then some alternative positioning of children's snacks in the premise of ensuring nutritional content, can also have a good space for growth.

Complementary product logic: Wahaha is complementary product positioning, the earliest Wahaha is a nutritional liquid rather than the well-known AD calcium milk, even if it is later positioned drink, it is essentially a property of snack complementaries.

From the perspective of most consumers, snacks are snacks after all, but children's snacks are indispensable.

In fact, the reason why snacks can stimulate appetite lies in the sense of satisfaction in a short period of time, just like the addiction of brushing short videos, which is an instant satisfaction.

However, children's snacks as a substitute, considering more nutrition, means giving up more taste, the logic of the so-called complementary products, that is, under the premise of ensuring health, in the choice between higher nutritional content and better taste, more partial to the latter. For example, the current popular sugar reduction candy, sugar reduction pudding and other products on the market are all such logic.

From the perspective of the market audience, the product under the logic of alternatives needs to be "fixed" to parents. To get parents, the core lies in healthy nutrition and solves the problem of "helping children eat" (eating enough nutrition).

Under the logic of complementary products, it is necessary to "get" the child, and the core lies in the taste and texture of the product and the content IP marketing. For example, Peppa Pig cookies, bear-infested children's snacks, etc., are all through children's familiar cartoon images to obtain traffic.

For children's snacks, fully exploring children's content IP is actually exploring this part of the traffic.

The rise of new brand consumption has a characteristic, and the growth comes from the double growth of traffic + brand. The secret of the rise of new consumer brands such as Yuanqi Forest and Daily Black Qiao actually lies in the double growth of traffic + brand. The growth of children's snack brands is also inseparable from this growth logic.

Write at the end:

The children's snack track is hot, which is a good thing for both the capital market and the consumer market, but for the brands and companies in it, it still needs to have a sense of awe and prudence.

In the past, children's snacks have been notorious in the hearts of parents for many years, after all, for every parent, any small thing about their children's food, clothing, shelter and transportation is a big thing. Nowadays, with the growth of market demand and the emergence of industry opportunities, how to hold the bottom line and grasp growth is still a problem that needs to be pondered.