Cover news reporter Han Jianwen
Recently, three squirrels, a leading leisure food company, released its 2023 annual financial report, which shows that the company's revenue was 7.115 billion yuan, and the net profit attributable to shareholders of listed companies was 220 million yuan, a year-on-year increase of 69.85%, and the non-net profit was 102 million yuan, a year-on-year increase of 148.72%. As the first complete annual report of the three squirrels since the implementation of the "high-end cost-effective" strategy, the industry has paid great attention to it, but how to deeply understand the specific impact of "high-end cost-effective" and "high-end cost-effective" practice on the three squirrels in recent years, the cover news of this issue of "dialogue with the head of consumption" column guest is Pan Daowei, Secretary of the Party Committee of the three squirrels, listen to how Pan Daowei deconstructs and analyzes the "high-end cost performance", behind this seemingly contradictory concept, what is the secret of the continuous growth of the net profit of the three squirrels.
Pan Daowei, Secretary of the Party Committee of the Three Squirrels
Background:
When the brand no longer brings a premium
How to make both business and consumer "profit" at the same time?
Rewind to 2012.
At that time, when buying goods offline, there was actually a long circulation link, and each link increased the price layer by layer, and the channel efficiency was extremely limited. Most of the nut products have the characteristics of regionalization, and due to the very high markup rate, a national brand has not yet been formed. That year, the three squirrels took advantage of the Internet, innovated the sales model, connected the supply side and the consumer side with a network cable, and quickly started online.
In 2019, Three Squirrels was successfully listed, and its revenue exceeded 10 billion yuan that year. Pan Daowei said, "It only took seven years, which is very fast, but looking back, there is a regret that it did not quickly enter the supply chain and channels with the advantage of scale." ”
In the whole year of 2022, under the superposition of various factors, the three squirrels almost fell by 3 billion, entering the "darkest moment", and reform is imminent. At that time, the internal and external doubts about the three squirrels were not small, but fortunately, Zhang Liaoyuan, the chairman of the three squirrels, was a person who was good at thinking and diligent in research, Zhang Liaoyuan knew that it was impossible to solve many practical problems in the development of the enterprise through the way of "headache and foot pain", and the three squirrels had taken a lot of detours, and they must make up their minds to break the old and establish the new.
Therefore, in Pan Daowei's eyes, the three squirrels did two "particularly correct" things at that time.
The first thing is that three squirrels are involved in the production and manufacturing of the core category of nuts. As soon as this decision came out, there was a wave of skepticism internally: many people thought that the three squirrels were just an online sales company, and they did not have the genes to make it to an advantage. In fact, the nut industry in the past development is relatively extensive, many enterprises are from the "front shop back factory" small workshop development, the three squirrels themselves have the scale, in the entire capacity utilization is confident; in addition, the three squirrels built almost from scratch, do not need to consider the past equipment and plant iterative upgrading caused by the loss, sunk cost is low, so the three squirrels have the confidence and determination to do automated, intelligent, digital factory.
The second thing is the general strategy of "high-end cost performance". In the past, brands did not pay attention to cost performance, because in the traditional circulation era, the key value of the brand lies in the brand premium and brand trust, and in the current new consumption era, it is difficult to adapt to the market demand by relying on the brand premium. Specifically, in the context of strong consumer demand, the three squirrels had a high sales conversion rate by virtue of their Internet celebrity attributes, personalized services, and better offline store locations, and the path of relying on brand premiums to achieve growth was feasible at that time. However, in recent years, especially during the epidemic period, it is necessary to maintain the overall operation, and it is not feasible for brands to continue to rely on the so-called "premium". Pan Daowei said that after experiencing the pain of the skin, the three squirrels came to a conclusion, that is, "in today's era, the brand is not to bring premium, but to 'kill' the premium, which is also the value of its own brand." How to coordinate the interests of consumers and enterprises, "high-end cost performance" is the answer given by the three squirrels.
Practice:
It is based on the premise of "total cost advantage".
Overall optimization from the perspective of full link and all elements
At the end of 2022, the three squirrels clarified the company-level core strategy for the first time - "high-end cost performance".
The so-called "high-end cost performance", its essence is based on market demand-oriented, consumer-centric, innovation-led, through the integration and reorganization of the whole link, all elements, to achieve "shorter links, more advanced tools, more collaborative organization", to achieve the whole category, all channels in the transaction of the whole link of the total cost of the leading basic conditions, to achieve higher quality products, more differentiated, more affordable prices, and at the same time superimpose brand power, so that consumers can feel the new value of the brand again. In view of the "total cost advantage", Pan Daowei explained that from the perspective of financial model, the positive addition of raw material costs, processing and manufacturing costs, circulation costs, middle and back office management costs, promotion expenses and other links will show the terminal price of three squirrels; Therefore, if "high-end cost performance" wants consumers to have a perception, it must "reduce costs and increase efficiency" to reflect the price power, and to reflect the price power, it is necessary to analyze and examine the cost items of all links from the perspective of the whole link and all factors.
Pan Daowei specifically introduced that in the practice of the "high-end cost-effective" strategy, the three squirrels mainly make efforts in the following links: raw materials, processing and manufacturing and delivery to consumers, and gradually move from the sales end to the manufacturing end and the planting end, connecting the first, second and third productions, and effectively promoting the quality and efficiency of the entire industrial chain.
In terms of primary raw materials, Three Squirrels continues to guide market demand to the supply chain through large-scale procurement and technology empowerment, integrate production, supply and marketing, and realize the direct procurement of high-quality nut raw materials from around the world. At present, the company has carried out comprehensive cooperation with the world's largest summer fruit farm, cranberry farm, pistachio farm, pecan fruit farm, etc., and has established nut raw material supply bases in Yunnan, Guangxi, Northeast, Anhui, Jiangsu, Xinjiang and other places in China with joint suppliers, driving the development of China's nut planting industry and promoting the localization of nut raw materials.
Three squirrels domestic macadamia nut planting base
In terms of secondary manufacturing, the three squirrels have fully entered the independent manufacturing process of the nut category, and have built an automated production line upgrade for categories such as "gift package packaging, daily nuts, macadamia nuts, pecans, and pistachios". Taking the daily nut factory as an example, it has independently built 38 fully automated production lines, basically realized the unmanned material contact of the whole chain, greatly improved the production efficiency, and built the first integrated production and logistics model in the industry, which greatly shortened the distance from production to delivery under the efficient collaborative empowerment of channels, goods and logistics, and successfully created "seven-day fresh" products. In 2023, the overall output value of Three Squirrels (Wuwei) Health Food City will reach 7 billion yuan, successfully realizing the resource agglomeration of the whole nut industry chain and becoming the largest shell nut processing industry cluster in the country, making the "high-end cost performance" more confident.
In terms of tertiary delivery, Three Squirrels comprehensively upgraded the logistics delivery model in combination with channel strategy adjustment, actively explored the origin warehouse and cloud warehouse model on the basis of its own warehousing business, and cooperated with many upstream suppliers to promote direct delivery from factories to further reduce costs and increase efficiency. In addition, on the channel side, the three squirrels also have many measures to promote the implementation of "high-end cost performance". Online, Three Squirrels changed the way of traffic, promoted the new e-commerce strategy of "integration of product and sales", focused on opening up the integrated operation system of users, platforms and supply chains through digitalization, and continued to create a product matrix of "rich, fresh, high-quality and low-price". At the same time, focusing on single product operations, Tmall's flagship store achieved double-digit growth in July last year, the Jingdong platform gradually stabilized, and Douyin focused on vertical operations, with the overall growth rate continuing to lead, driving the overall online growth to achieve rapid growth. Offline, in addition to actively transforming into a "private label community snack store", in the distribution sector, with the promotion and implementation of the "high-end cost-effective" strategy, during the 2024 Goods Festival, the hot sales of three squirrel gift boxes/gift bags in offline distribution channels far exceeded expectations. At the same time, the company gradually expands daily sales, reorganizes the product system, and creates a benchmark terminal.
Outcome:
It's not just net profit that has risen sharply
Comprehensive verification of "high-end cost performance" has achieved results
With the disclosure of the 2023 annual performance report, the report card of performance growth against the trend has made many media give the judgment of "three squirrels out of the darkest moment". In this regard, Pan Daowei said that through the continuous growth of the three squirrels in the second quarter, third quarter, fourth quarter and the first quarter of 2024, the three squirrels have verified that the basic plate of the three squirrels' "omni-channel + all-category" operation has gradually been formed, which brings the team full confidence, not a breakthrough brought by a single channel, nor the achievements created by a factory, but under the traction of the business model of "high-end cost performance", the enterprise channel structure, product and sales thinking, organizational philosophy, Tremendous and profound changes have taken place in enterprise management. "This change can even be said that the three squirrels of today and the three squirrels of the past are not the same company, which is the most vibrant change for the three squirrels team. ”
Exterior view of Wuwei Three Squirrels Health Industrial Park
In fact, in addition to the verification of performance results, since the implementation of the "high-end cost-effective" strategy, the changes of the three squirrels from the outside to the inside can also be seen through some external phenomena. Externally, including the "new battlefield" of short videos, the overall in-depth independent manufacturing of the supply chain, etc., the changes in these products and channels are visible to the public; the internal aspect of the company, in the past, Internet companies because of flat management, each department in the organization is functional, there is no "leader" concept, but the "high-end cost-effective" strategy is very clear: market-oriented, consumer-centric, so the three squirrels emphasize the "integration of quality and sales" All the results are oriented to the market and consumers, which constitutes the corporate values of the three squirrels that have been deeply rooted in the hearts of the people - synergy.
In the interview, Pan Daowei repeatedly used the word "amazing" to describe the three squirrels. He believes that business is the basic function of an enterprise, and without business, there can be no sustainability, but in addition to business, the three squirrels have a lot of in-depth thinking about the contribution of the whole society and the development of the industry. In 2017, the Xinhua News Agency published "From "Fool and Melon" to "Three Squirrels" - Two "Reform Business Cards" to Witness China's Development and Changes"; In 2021, the "Three Squirrels" Party Committee was awarded the title of "National Advanced Grassroots Party Organization", and Pan Daowei himself was elected as a representative of the 20th National Congress of the Communist Party of China, becoming one of the youngest party representatives in the Anhui Provincial Delegation at that time. Since its establishment in 2012, Three Squirrels, as a private enterprise, has continuously met the growing needs of the people for a better life with the help of the dividends of the era of Internet technology application, with delicious snacks and joyful experiences, and contributed to the high-quality development of China's economy and society.
When it comes to why the three squirrels can fully and thoroughly implement the "high-end cost-effective" strategy, Pan Daowei believes that the core element is the entrepreneurial spirit, which is greatly related to the business pattern of the founder Zhang Liaoyuan and the concept he conveyed to the company. Pan Daowei said that not long ago, there was a saying within the company - "everything that is lost will come back in another way". The loss of 3 billion was the misfortune of the three squirrels, but fortunately, the three squirrels suffered a little earlier than others. In addition, he believes that the three squirrels have a strong enterprising spirit, and can change rapidly in the face of the adjustment cycle and market opportunities, and gather the strength of the whole company to win this battle, and the three squirrels can succeed because they have enough, firm and thorough determination. He gave an example, in the past, when the cost of the middle and back office of the three squirrels was high, the team told Zhang Liaoyuan that a certain channel could not be done during the financial model calculation process, because of the high logistics costs, high amortization costs of the middle and back offices, and large labor costs...... Zhang Liaoyuan said that no matter what happens now, all the business models will be measured according to the new rate standards, and everything will start from scratch, which is a strong determination. "I can't make up my mind, many actions seem to revolve around cost performance in form, but they are not thorough, and when I am determined, many actions will change in synergy. The action and entrepreneurial spirit of an enterprise have a strong correlation with the number one position of the enterprise. ”
Thought:
How to make consumers feel "high-end cost performance"?
Price power x quality power x brand power
Pan Daowei bluntly said that "high-end cost performance" is not a consumer word, not a user word, nor a corporate slogan. Consumers don't need to know what "high-end cost performance" is, they only need to feel the presentation of "high-end cost performance" on the result side, that is, "price power x quality power x brand power".
The price power is based on the concept of the three squirrels of the whole link and all factors, and the cost is restructured and examined, so as to truly achieve the integration, reorganization and optimization of the whole link and all factors, so that the price makes consumers feel excited. Quality power relative to price power, is the consumer "later knowledge" indicators, through the overall raw material checks, adhere to product standards, including three squirrels independent manufacturing, double C certified testing factory, the use of leading X-ray machine and other equipment...... A series of measures to maintain the stability and reliability of product quality. Brand power is the mental influence of the three squirrels when consumers buy nut products, and the superposition of price power, quality power and brand power constitutes the presentation of the three squirrels' "high-end cost performance" on the result side, which is what consumers can intuitively feel.
Three squirrels daily nut production workshop
In the current competitive market, product sales is still the core leader, enterprises must rely on channels to sell products, to the market to serve consumers to be valuable, then we need to be market-oriented, consumer-centric to listen to the voice of the outside. At present, in the snack food industry, the community-based mass snack track continues to be hot, which is both a challenge and an opportunity for the three squirrels. Zhang Liaoyuan once said that "those who win the community win the world", and the three squirrels and the snack wholesale brand are a "competition and cooperation relationship". Pan Daowei said that the family consumption scene of providing high-quality and high-price snack products with the community as a unit is about to become a new round of demand and continues to become the mainstream, and the corporate vision of "everyone can afford to eat and buy everywhere" of Three Squirrels is catering to this trend. It is understood that in June last year, the three squirrels were comprehensively upgraded to create a high-quality community snack store of its own brand. Compared with other mass snack stores, Three Squirrels' own brand community snack store takes its own brand as the core, is compatible with first-line brands, and integrates richer products, more friendly sales specifications, and a more quality-to-price shopping experience, which conforms to the current major changes in the circulation field of the whole China. So far, the three squirrels community snack store has opened more than 180 stores, and is currently expanding stores in Anhui, Jiangsu, Zhejiang and other provinces.
Future:
Efforts to build a "squirrel ecology"
From the perception of a group of people to a replicable industry paradigm
"High-end cost performance" is the three squirrels in the "dark cycle" groping and refining summary, but Pan Daowei believes that this should not be unique to the three squirrels, it has industry universality, is a new growth paradigm.
In order to intuitively understand the "high-end cost performance", Pan Daowei gave a case: in the past, all the costs that were included in the cost at the end of the three squirrels were called costs, covering production raw materials, processing and manufacturing, warehousing and logistics, marketing and promotion, and other losses, but now, in addition to the three squirrels, it is necessary to help the dealers of the three squirrels to reduce costs. In recent years, Three Squirrels has conducted in-depth market research to understand what kind of link the Three Squirrels products use to reach the final terminal outlets after arriving at the dealer's warehouse, and it is necessary to carefully analyze the cost structure. In the past, the cost of dealers will not be concerned, because the cost of dealers is not directly related to the profitability of the three squirrels in a sense, but in order to reflect the "high-end cost performance", all the whole link links must be studied and responsible for the whole link, and then optimized.
In fact, the above reflects the essence of "high-end cost performance" is the common cognition of a group of people, in addition to the internal employees of the three squirrels, there are also the partners of the three squirrels, the channel dealers of the three squirrels, and the owners of the three squirrels stores. From this perspective, "high-end cost performance" is not only a strategy or development model, but a culture, and the cognition and thinking of people in all ecosystems will change due to this culture. As Zhang Liaoyuan said, "Corporate culture is the cognition of the group, and the cognitive ability of a group of people to do one thing together." ”
Exterior view of the headquarters of three squirrels in Wuhu
"In the past, it was often said that the competition between brands was the competition between enterprises and enterprises, the competition between supply chains and supply chains, and now it is the competition between ecology and ecology. Pan Daowei said that the purpose of the three squirrels to put forward "high-end cost performance" is actually to establish a common cognition of "squirrel ecology" and jointly serve consumers.
Back to the formula of "high-end cost performance = price power x quality power x brand power", the left side is actually the common cognition of the three squirrels "squirrel ecology", and the right side is the perception established by the three squirrels to consumers.
Pan Daowei said that the "squirrel ecology" is still an idealized construction, and consumers' perception of "high-end cost performance" has not yet reached a deep stage, so the three squirrels still have a long way to go. "The practice of business is the process of continuously verifying results. In the future, the three squirrels will continue to return to their original intentions, through the reorganization of the whole link and all factors, use more "new quality productivity", and truly realize scientific and technological innovation through standardization, automation, intelligence, digitalization and other tools, so that the overall industrial efficiency will be greatly improved.
Finally, when asked about the performance target of the three squirrels in 2024, Pan Daowei firmly gave four words: "return to 10 billion". Will the three squirrels be able to complete the goal of 10 billion yuan this year? What is the long-term practical effect of "high-end cost performance" in the future? Can the "squirrel ecology" paradigm lead the industry change? I believe that time will give the answer to all questions.
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