Consolidations, price reductions, lawsuits... In 2023, the leisure snack industry will change dramatically

The snack industry is moving from a dark war to a open war.

On November 27, Ningbo Guangyuan Juyi Investment Co., Ltd. (hereinafter referred to as "Guangyuan Juyi") formally filed a lawsuit with the people's court because the invested company Yichun Zhao Yiming Food Technology Co., Ltd. (hereinafter referred to as "Zhao Yiming") deliberately concealed the company's major matters and damaged the right to know of minority shareholders during the cooperation period between the two parties. At present, the court has accepted the case.

The two parties involved in this lawsuit are very representative, Guangyuan Juyi is a wholly-owned subsidiary of the leisure snack giant BESTORE, and Zhao Yiming is a new force in mass snack sales that has risen rapidly in recent years. The cause of the incident was the merger of Zhao Yiming and another new mass snack selling force, Snacks, on November 10, and Guangyuan Juyi, who was unaware of it just 22 days ago, sold 3% of Zhao Yiming's shares.

Is it possible for two companies with nearly 7,000 stores and combined sales of more than 7 billion yuan to complete these processes within 22 days?

As we all know, business combination is one of the important factors affecting equity transfer and pricing. Therefore, Guangyuan Juyi believes that Zhao Yiming's deliberate concealment and guidance directly led to Guangyuan Juyi transferring its equity based on the wrong or false transaction background and pricing basis, which seriously damaged the legitimate rights of Guangyuan Juyi.

What is the truth of this incident, and whether Zhao Yiming really "backstabbed" the former shareholder BESTORE, is still inconclusive. However, from the busy merger of Zhao Yiming and snacks to the lawsuit between BESTORE and Zhao Yiming, the leisure snack industry is setting off a war with low prices as the core and no gunpowder.

In this war, the snack industry is ushering in great changes.

Roll to the low price

In 2023, mass selling snacks is still expanding rapidly.

In August 2022, Wanchen Group, which entered the snack snack track by acquiring part of the assets of the snack workshop, has successively acquired 5 snack brands within one year. In September this year, it merged with Laiyoupin, Haoxianglai, Dididi, and Lu Xiaoyu to become "Haoxianglai Brand Snacks".

This outsider more than a year ago has become a giant in a short period of time, posing a threat to Zhao Yiming, snacks are very busy and other large-scale snack companies. In October this year, Wanchen Group disclosed that the total number of stores is expected to exceed 4,100. In November, the information provided by Zhao Yiming and Snack was busy when they merged showed that the number of snack stores exceeded 4,000, and Zhao Yiming's stores were more than 2,600.

However, after the completion of this merger, Zhao Yiming's stores will reach nearly 7,000, becoming the first in the mass sales snack track. For the mass snack industry that takes the low-price route and is based on scale and efficiency, the number and scale of stores are the foundation of survival and development.

In fact, the mass-selling snack track, which has developed vigorously in the past two years, has entered a period of integration. Since the beginning of this year, there have been 9 integration-related events: in August, Ai Snacks controlled Dinosaurs and Teddy, in September, Ai Snacks acquired Hu Weihong Snacks, in October, Ai Snacks announced the acquisition of Snack Bubbles, and Hunan Snack Brand Snack Cabin announced the integration of Guangdong Snack Brand Snacks...

While the integration is accelerating, mass sales snacks have long become a force to be reckoned with in the leisure snack industry. Statistics show that in 2021, there will only be about 2,500 wholesale snack stores in the country, and the total number of domestic wholesale snack stores will be about 13,000 at the end of 2022, and according to estimates, the number of mass retail snack stores will reach about 25,000 by the end of 2023.

At present, we are entering the "fourth consumption era". In the future, under the expansion of residents' consumption demand for snack food, affected by the rapid growth of online channels, the mainland snack food industry has achieved the ultimate in cost-effective requirements, and one of the main advantages of mass sales snacks is low price.

Roll out internal injuries

While mass sales of snacks are developing rapidly with low-cost weapons, the survival pressure of leisure snack giants has doubled.

According to the financial report, in the first three quarters, a number of leisure snack brands fell into the predicament of declining performance, such as three squirrels achieved operating income of 4.582 billion yuan, a year-on-year decrease of 14.07%; Qiaqia Food's net profit attributable to the parent company was about 506 million yuan, a year-on-year decrease of 19.28%; Laiyifen achieved revenue of 3.002 billion yuan, a year-on-year decrease of 7.61%, and a net profit of 4.5428 million yuan, a year-on-year decrease of 93.57%.

Under the situation of low-price competition, the leisure snack industry with serious product homogenization is still seeking more breakthroughs in addition to volume packaging, volume co-branding, and volume marketing.

Data shows that in 2022, the market size of China's snack food industry will reach 843.7 billion yuan. Driven by factors such as the growth of per capita disposable income, the increasing abundance of consumption scenarios, the continuous introduction of innovative products, and the continuous expansion of sales channels, the market size of China's snack food industry is predicted to reach 928.6 billion yuan in 2023 and 1,009.3 billion yuan in 2024.

China's snack industry still has room for growth, and in order to win in this low-price competition, companies must make comprehensive changes in terms of channels, products, and supply chains. The direction of comprehensive change is also where the more refined intensive cultivation opportunities of the leisure snack industry lie.

2023 is also a year of innovation for casual snack giants.

"At present, what is in front of us is not only the question of how difficult it is to live, but also the question of whether we can live. On November 29, Yang Yinfen, one of the founders of BESTORE and the company's chairman and general manager, published an internal open letter announcing the launch of a new round of reform. At the same time, BESTORE implemented the largest price reduction in 17 years, with an average price reduction of 22% for 300 products.

At the performance briefing, 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, and online focus on core varieties to optimize the structure, create more popular models and broaden traffic entrances.

Enterprises such as BESTORE and Three Squirrels have taken advantage of the development of e-commerce to become China's leisure snack giants. At one time, while securing their own market share, they launched an attack on premiumization, trying to obtain higher profit margins and push up brand value.

With the changes in the economic situation and the shift in consumer preferences, BESTORE is the first to reduce prices, which may guide these casual snack giants to better adapt to the current era of low-price competition.

In 2022, BESTORE launched its own mass-selling snack brand, Snack Stubborn, and plans to take the lead in opening 500 stores in the Hubei market, the base camp of BESTORE, within this year. In addition, Three Squirrels launched a community snack store, and Jiajiayue founded the snack chain brand Yue Ji Good Snacks...

As Yang Yinfen said, the snack industry earns hard money, and the low price without profit support cannot be replicated, and it may face a knock-out period and a cooling-off period.

Even in the past two years, the mass snack track that has flocked to the capital and the snack industry inside and outside the snack industry, I don't know if it is because the capital is no longer patient, or everyone is not so optimistic about the industry's expectations, and is completing the process from entry, expansion to mergers and acquisitions, from blind to rational at eight times speed. BESTORE's lawsuit against Zhao Yiming is the result of the collision between blindness and reason.

In fact, companies have happened countless times in the Internet field, such as the merger of Didi and Kuaidi, Youku and Tudou, Meituan and Dianping, which is a wise move to reduce its own bleeding from the perspective of capital. It's just that the wholesale snack industry, which is striding forward, may be too busy to take into account the interests of minority shareholders and be too busy to ignore business ethics.

Changes in the leisure snack industry are imminent, and survival or destruction has become a common proposition for the industry.

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