BESTORE and three squirrels "put down their bodies", and casual snacks have entered the era of low-price racing?
Yang Yinfen, the new chairman of BESTORE, announced the largest price reduction in 17 years in a recent open letter to all employees, saying that BESTORE is facing "the most difficult challenge since its establishment, and it is the problem of whether or not to survive". Subsequently, Zhang Liaoyuan, the founder of Three Squirrels "Squirrel Daddy", responded to the price reduction of BESTORE in the circle of friends, saying that Three Squirrels implemented the "high-end cost-effective" strategy a year ago, that is, to ensure the high quality of products under the premise of low prices.
The two high-end casual snack brands are both "putting down their bodies", which is seen as a signal that casual snacks have entered the era of low prices. The data shows that the market size of the mainland snack food industry will shift from a rapid incremental market to a slightly increased market, and cost-effective, quality, and consumer experience will become the key to the next stage of competition for brands. In the face of the crazy expansion of snacks such as Zhao Yiming and other mass sellers in recent years, when the competition pattern of snack brands changes and the industry accelerates reshuffle, can the price reduction strategy allow BESTORE to "get out of trouble"?
Compete for value for money
In order to survive, BESTORE decided to reduce the price. Yang Yinfen, the new chairman of BESTORE, announced in a recent internal open letter to all employees that it will implement the largest price reduction for the first time in 17 years, with an average price reduction of 22% and a maximum price reduction of 45% for 300 products.
"It has little impact on the company's short-term performance", this is BESTORE's response to whether the price reduction has an impact on the company. BESTORE said that the price adjustment range is 10%-47%, and the proportion of the operating income of the offline store channel in the first half of the year to the total operating income of the first half of the year is 13.5%, and the price adjustment has little impact on the company's short-term performance.
On December 5, a reporter from Beijing Business Daily learned from the official staff of BESTORE that there are no BESTORE offline stores in Beijing for the time being, and some offline stores in the south have begun to implement price reductions in November. Since there are already store discounts in online channels, there is no price reduction involved online. In addition, high-speed rail, railway stations, airports and other stores are currently maintaining the previous price and do not participate in price reductions.
In the view of Xu Xiongjun, a strategic positioning expert and founder of Jiude Positioning Consulting Company, the rent and human resource costs of airports and high-speed railways are higher than those of other stores.
Unlike BESTORE, which clearly gives a price reduction signal, another snack brand, Three Squirrels, emphasizes benefiting consumers with a "high-end cost-effective" strategy. After BESTORE announced the price cut, Zhang Liaoyuan, the founder of Three Squirrels "Squirrel Daddy", posted in the circle of friends that Three Squirrels had clarified the "high-end cost-effective" strategy a year ago. Through the optimization of the whole link of the supply chain, the product quality is ensured and the profit overflow is realized, and this part of the profit is transferred to consumers, so as to achieve high quality and cost performance.
The relevant person in charge of the three squirrels told a reporter from Beijing Business Daily that "high-end cost performance" was clearly proposed for the first time at the end of 2022, and it began to be practiced from March 2023 to the present. High-end mainly refers to product quality, first of all, to ensure the selection of quality assurance, market share of products, through the supply chain upgrade to remove the brand premium. Then, while ensuring the real material, we will give consumers the most realistic price.
Zhu Danpeng, an analyst of China's food industry, said that at present, the entire leisure snack track has entered the "parity" cycle, and change is an inevitable choice. Under the premise of ensuring high-quality products, the brand adjusts the price by reducing costs and increasing efficiency, which is a very timely strategic adjustment.
Regarding whether other snack brands will follow up with price cuts, a reporter from Beijing Business Daily called the official staff and learned that at present, the overall price of Laiyifen's offline stores remains unified except for individual store promotions, and there is no consideration of large-scale collective price reduction;
Fight back against mass selling snacks
BESTORE and Three Squirrels, two high-end casual snack brands, have taken the route of "price reduction without quality reduction", which is considered to be a counterattack against mass sales of snacks. In recent years, I want to come, snacks are busy, Zhao Yiming and other wholesale snack stores have blossomed everywhere. Mass sales snacks are snack collection stores, that is, snacks of various brands are brought together for sale, with many main categories, low prices, and fast updates, with more than 1,000 SKUs.
The ever-expanding mass snack channels have brought a sense of crisis to traditional snack companies.
In September this year, Wanchen Group announced that its four major snack chain brands Hao Xiang Lai, Lai Youpin, Lu Xiao Yu and Yi Di Di were merged and named "Hao Xiang Lai", and on this basis, it will accelerate the synergy and integration of brand image, market development, operation, digitalization and culture. According to official data, the number of retail brands of Wanchen Group has exceeded 4,100.
On November 10, the two major domestic snack brands "Snacks are busy" and "Zhao Yiming Snacks" officially announced their strategic merger. According to official data, Snacks started in 2017 and has more than 4,000 stores nationwide. Zhao Yiming snacks started in 2019, with more than 2,500 stores nationwide. The combined combination will have more than 6,500 stores.
Low prices are one of the main advantages of mass snack sales, Zhongtai Securities data shows that snack mass sales have a 30% price advantage over supermarkets, franchised stores and other channels. Statistics show that at the end of 2022, the total number of domestic snack stores will be about 13,000, and in 2021, the number of snack stores in the country will only be about 2,500, and according to estimates, the number of snack stores will reach about 25,000 by the end of 2023.
If you can't beat it, join in. In order to cope with the competition of mass sales of snacks, snack brands such as BESTORE and Three Squirrels are also exploring ways to build their own mass retail channels.
At the end of August this year, BESTORE said that in the face of competition in mass sales channels, the company mainly has two countermeasures: one is to actively expand the mass sales snack business through the layout of investment in snack stubborn homes, etc., and the other is to adjust the structure and layout in terms of products according to the differentiated needs of users. At the performance briefing for the third quarter of this year, BESTORE mentioned that it plans to open 500 new stores of snack stubborn stores this year. As of mid-October this year, there are more than 300 stores in Snack Stubborn Home.
The three squirrels are to create a "private label community snack store". Up to now, the total number of Three Squirrels' own brand community snack stores nationwide has exceeded 150. The three squirrels told the Beijing Business Daily reporter that compared with other mass snack stores, in addition to differentiated business methods such as peeling and weighing, integer quantification, no discount and no promotion, the three squirrels can rely on the core brand advantages of their own nuts and the supply chain capabilities of the development of all categories, directly customize to high-quality factories, remove middlemen and brand premiums, and achieve high quality and high price.
The era of discount snacks is coming?
Zhu Danpeng believes that from the perspective of consumption environment and development trends, China's leisure snack industry has entered a parity cycle, and leading brands such as BESTORE and Three Squirrels are achieving "cost reduction and efficiency increase" through supply chain optimization and store operation. With the official announcement of large-scale price reductions by BESTORE, it is expected to bring continuous reactions from the industry, which also means that the industry is expected to enter the era of discount snacks.
According to iiMedia Consulting survey data, the market size of China's snack food industry is expected to reach 1,237.8 billion yuan in 2027, and the snack market will shift from a rapid incremental market to a slightly increased market. When the competition pattern of snack brands changes and the industry accelerates the reshuffle, how should traditional leisure snack companies "get out of trouble"?
BESTORE said that the company will actively take a series of measures to improve profitability, including continuous optimization of offline channels to improve the operation capacity of single stores, online focus on core varieties to optimize the structure, create more popular models and broaden the traffic entrance, group purchase business in-depth layout of national and regional channels, through a rich product series to meet user needs in different scenarios and levels to increase market share, continue to develop products around the diversified needs of users, and enrich the product matrix.
Laiyifen's strategy is to seek growth across various categories. The person in charge of Laiyifen said that in the past two years, the company has continued to develop and expand innovative categories, and set up a second growth engine, including alcoholic beverages, dairy products, freshly made coffee, locking fresh lo-mei, refrigerated pastries, prefabricated dishes, fresh fruits, grain and oil seasoning and other categories. In the future, the company will rely on a diversified ecological platform layout, integrate resources, link the industrial chain and partners, meet the different needs of users in various scenarios around the clock in family life, further expand the consumer group, and strive to achieve further growth in the performance of innovative categories.
The person in charge of the three squirrels believes that from the current situation, whether it is a mass merchandiser or a community store, there are four dimensions that are very important, that is, whether the goods are rich enough, whether the cost performance is thorough enough, whether the brand premium can be killed, and whether they can control the supply chain by themselves. "Although the mass merchandiser store has 3,000 SKUs, it has redundancy, and the richness of private label community stores is catching up quickly. We also have our own differentiated products, such as our core category nuts, as well as children's snacks and children's nutrition. The only thing that can really kill the premium of big brands is their own brands. ”
In Zhu Danpeng's view, after the price reduction of BESTORE, which is the leading brand in the snack industry, other snack brands may also reduce costs and increase efficiency, control costs by continuously optimizing the supply chain, and improve the operational efficiency of stores, which is the future development trend of the snack industry.
Xu Xiongjun said that snacks are not necessities, and the price reduction of BESTORE and Three Squirrels is for the impact of survival and market competition, and also to better seize market share. BESTORE and Three Squirrels, as the leading snack brands, have their own scale effect through the optimization of the layout of the industrial chain, so the marginal cost can be lower and lower, so they have the strength to reduce prices. From a strategic point of view, it is appropriate to make a profit, but the volume will also rise, and in the end it will still make money.
Beijing Business Daily reporter Guo Xiujuan Zhang Han