Text: Wang Huiying
Edit/Midnight
Not long ago, after the issuance of the 2023 annual report of the three squirrels that grew against the trend, when talking about the performance target for 2024, the three squirrels firmly gave four words "return to 10 billion".
This sentence is not said on a whim, but deliberately. The confidence behind this comes from the three squirrels who have returned to the upward channel of growth.
On April 16, Three Squirrels released the first quarter report of 2024, which showed that the company's revenue in the first quarter was 3.646 billion yuan, a year-on-year increase of 91.83%, and the net profit was 308 million yuan, a year-on-year increase of 60.80%.
Behind the double increase in revenue and net profit, the three squirrels have experienced a year-long "darkest moment". But as Zhang Liaoyuan, the founder of Three Squirrels, mentioned in his video account, Three Squirrels "suffered" a little earlier than others, and also woke up a little earlier: put forward the strategy of "high-end cost performance", build a factory from 0 to 1, control quality from the source, carry out "Shake + N" omni-channel construction, and grasp the supply chain layout of "one product and one chain......
Under the traction of the "high-end cost-effective" strategy, every step of the three squirrels bet has a solid foundation, which is to accumulate momentum for growth and lay the foundation for the realization of the overall goal of "returning to 10 billion yuan and becoming stronger in the whole country" in 2024.
In the past year, the three squirrels have done a lot of difficult and correct, difficult and valuable things, and surprised the market again and again. We see that the three squirrels are different, but it is not so much that the three squirrels "overthrow" the past, but that they have found their energetic selves.
In the future, based on Zhang Liaoyuan's judgment of the "era of structural innovation in the nut industry", how will the three squirrels help the industry to develop sustainably and with high quality, is there an answer?
1. Charge up and jump, three squirrels rebuild the "squirrel"
After a year of accumulation, the three squirrels finally ushered in the harvest time.
On April 16, Three Squirrels released the announcement of the performance report for the first quarter of 2024, ushering in a "good start" for 2024.
According to the financial report, the three squirrels will achieve double growth in revenue and net profit in the first quarter of 2024. Among them, the company's annual revenue was 3,645.6 million yuan, compared with 1,900.5 million yuan in the same period last year, a year-on-year increase of 91.83%, and the company's revenue growth rate hit a new high since its listing.
In the first quarter of this year, the net profit attributable to shareholders of listed companies was 308.3 million yuan, compared with 191.7 million yuan in the same period last year, a year-on-year increase of 60.8%. The net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses was 263.3 million yuan, compared with 136.5 million yuan in the same period of last year, a year-on-year increase of 92.84%. Basic earnings per share was 0.77 yuan.
Under the guidance of the general strategy of "high-end cost performance", the three squirrels continued the results of the transformation in 2023 in the first quarter of this year, and the revenue and profit achieved the highest growth rate in history, which undoubtedly gave the three squirrels a good start in 2024.
It is worth noting that, as mentioned by the three squirrels in the financial report, "superimposed mental category gift packages are sold in all channels during the New Year's Festival", and the good performance in the first quarter is inseparable from the help of the seasonal "New Year's Festival".
Based on consumers' high-end mentality of nut health, superimposed on the current pursuit of "cost performance", the nut gift box is the "hard currency" for users to visit relatives and friends during the New Year. According to Wired Insight, during the 2024 Goods Festival, the three squirrels distribution channels launched 8 nut gifts, with prices ranging from 39 yuan to 238 yuan, in addition to the launch of nut roasting sharing gifts, daily nut gift boxes, national baking gifts, etc. During the Chinese New Year Festival, the three squirrels gift box/gift bag products sold well in all channels of offline distribution, and the distribution of a full range of standard gift boxes/gift bag products was sold out across the board.
The report also shows that the development of multiple financial indicators of the three squirrels in the first quarter is improving. Among them, the balance of monetary funds at the end of the period was 708 million yuan, while the beginning of the period was only 327 million yuan. In addition, the accounts receivable of Three Squirrels at the beginning of the period was 594 million yuan, which decreased to 469 million yuan at the end of the period, the inventory decreased significantly from 1.388 billion yuan at the beginning of the period to 467 million yuan at the end of the period, and the accounts payable decreased from 1.548 billion yuan at the beginning of the period to 624 million yuan at the end of the period.
The three squirrels said that the reason for the good development of the above indicators is the hot sales of the 2024 Goods Festival, which makes the sales money quickly recovered and the inventory reduced.
What's more, the year-long adjustment and accumulation of energy injected "living water" into the growth of the three squirrels this quarter.
In the past few years, the black swan event of the epidemic and the quiet changes of snack channels have experienced the darkest moment for the three squirrels. The three squirrels, who have always believed in the "brand company" style of play, have encountered pressure from many aspects.
The environment has changed, so have the consumers, and the three squirrels must also change. In Zhang Liaoyuan's words, "changes in the external environment, changes in the e-commerce ecology and the rise of offline mass merchandising snacks have triggered changes in the company." ”
In March 2023, withstanding the pressure, the three squirrels finally determined the "high-end cost-effective" strategy in the groping, opening a strategic adjustment period to reinvent themselves, and the new strategy also brought significant improvements to the financial situation of the three squirrels.
Quarterly, in the past year, the performance of the three squirrels has rebounded step by step.
In the first quarter of 2023, Three Squirrels' single-quarter revenue was in a year-on-year decline;In the second quarter of 2023, Three Squirrels began to introduce high-end cost-effective goods, fully embraced new channels, and basically stabilized and flat;In the third quarter of 2023, Three Squirrels' revenue increased by 38% year-on-year, and the results of strategic adjustment began to appear;In the fourth quarter of 2023, Three Squirrels' revenue increased by 29% year-on-year, and then in the first quarter of this year, revenue increased by 91% year-on-year, officially entering the rapid growth channel.
Although the revenue of the three squirrels in 2023 fell by 2.45% to 7.115 billion yuan, 178 million yuan less than that in 2022, the company's performance grew against the trend in the third and fourth quarters of 2023, with a total contribution of more than 1 billion yuan, laying a solid foundation for the substantial growth of the 2024 Goods Festival.
Such sustained growth is not the achievement of a single channel of the three squirrels, but under the strategy of "high-end cost performance", the three squirrels have undergone profound qualitative changes from the inside out, from the organizational concept to the quality and sales thinking.
As Pan Daowei, Secretary of the Party Committee of Three Squirrels, mentioned before, "This change can even be said that today's three squirrels and the three squirrels in the past are not the same company, which is the most vibrant change for the Three Squirrels team." ”
Now the three squirrels have passed the darkest moment, and they are making great strides towards high-quality development with the business fundamentals of "all channels and all categories".
2. The strategy of "high-end cost performance" is the core of turning the situation around
The three squirrels are not short of highlights.
In 2019, the three squirrels knocked on the door of the capital market and reached the goal of 10 billion in revenue. Taking advantage of the e-commerce dividend, the three squirrels only took seven years.
Three squirrels go on the market to ring the bell
But looking back, running all the way, the three squirrels also have some regrets. In particular, the industry has intensified, and players have begun to compete for price, seemingly ignoring what consumers really want.
An obvious change is that consumers are returning to rationality and want things that are both quality and cost-effective.
In Zhang Liaoyuan's view, compared with consumption upgrading or consumption downgrading, rational consumption upgrading is more in line with the current consumer market.
In essence, this is a change in the overall supply and demand environment of the mainland, and China's retail industry is also undergoing a profound change in the whole supply and demand area, showing an imbalance between supply and demand as a whole. Specifically, there are multiple imbalances between aggregate supply and aggregate demand, and many markets are at a turning point where demand drives supply.
As a segmented retail track, the nut industry also needs to change. When the supply is more and more diversified and abundant, if you want to capture consumers, brands must dare to innovate and find a way to differentiate.
In March 2023, the three squirrels, who were at a low point, decided to reinvent themselves with "high-end cost performance". The so-called "high-end cost performance", its essence is to develop raw materials, manufacturing and delivery of three links, through the integration and reorganization of the whole link and all elements, so that "the link is shorter, the tools are more advanced, and the organization is more collaborative", so that consumers can truly feel the comprehensive strength of "price power x quality power x brand power".
In the past year, the three squirrels used "high-end cost-effective" to connect the primary, secondary and tertiary industries to reshape the entire industrial chain to improve quality and efficiency.
In terms of raw materials, Three Squirrels has cooperated with many international farms to promote the integration of production, supply and marketing, and also promoted the localization of nut raw materials; in terms of manufacturing, Three Squirrels has fully entered the independent manufacturing link of nut categories, and built an automated production line upgrade for daily nuts and other categories; In terms of delivery, Three Squirrels has comprehensively upgraded the logistics delivery mode in combination with channel strategy adjustment, and jointly promoted direct delivery from factories with many upstream suppliers.
Three Squirrels are directly sourced from raw materials around the world
In the past, due to the high price of nuts, the audience was limited, but now, after the "high-end cost-effective" strategy of Three Squirrels was proposed, it was intended to optimize the efficiency of planting, processing and sales, and promote nuts to become affordable and popular products with a leading advantage in total cost.
This is not an easy road, which will be questioned by internal personnel about the construction cost, and will also be scrutinized by the external market for the construction results, which puts a lot of pressure on the management of the three squirrels.
But Zhang Liaoyuan believes that all that is lost will be returned in another way. "Corporate culture is the cognition of a group, and it is the cognitive ability of a group of people to do one thing together. ”
The "high-end cost-effective" strategy of the three squirrels is a difficult but correct way, as long as there is no lack of determination to start over, the follow-up reform will come naturally.
On April 17, at the keynote report of the 17th China Nuts and Dried Fruit Food Exhibition, Zhang Liaoyuan once again analyzed the background of the "high-end cost-effective" strategy.
"The nut industry is in an era of structural innovation, it is not a single point and a single chain, but the whole chain, it is particularly in line with the concept of 'new quality productivity' put forward by the country at the beginning of the year, that is, to take innovation as the leading, through the whole chain, the whole factor superposition of the change to drive consumption, so that nuts can be eaten by everyone, and can be bought everywhere. ”
It can be said that the high-end cost-effective strategy is the key to the three squirrels to turn the situation around, which is explored by the three squirrels in the cycle stage, which is not only unique to the three squirrels, but also has the universality of the industry and is a new growth paradigm.
3. Channels and large single products are the two major "weapons"
When young, the three squirrels grow quickly.
The appearance of the three squirrels coincided with the rise of Ali Tmall, and the online nut category was in a window period, and the three squirrels that focused on innovative experience easily appeared at the top of the search results. As a brand focusing on e-commerce, Three Squirrels has seized the traffic and grown rapidly.
In 2014, the annual sales volume was 1 billion yuan, which took only 3 months in 2015, creating a miracle in the development of China's e-commerce industry.
At that time, the background was that there was a long circulation link for offline purchase of nut products, and each link increased the price layer by layer, and the channel efficiency was extremely limited, and the online price and efficiency attracted consumers.
However, the gameplay in the new era has changed, with the rise of Douyin and Pinduoduo, the live broadcast room, direct procurement and other channels have taken off, coupled with the addition of offline mass sales snack channels, a single channel cannot drive high growth.
Times have changed, and change is imperative. Players in the leisure snack industry, which has no most volume, only more volume, are thinking about a question: how can they seize new growth in the environment of weakening e-commerce dividends?
Channels and large items are the answer to the three squirrels after entering the prime of life.
The first is the channel, and the snack category is very dependent on the channel. Orient Securities Research Report pointed out that the leisure snack industry has the characteristics of consumption scenarios to promote demand, and it is highly dependent on channels. The data shows that 1990-2010 is the rise of supermarket channels, 2012-2018 is the rise of traditional e-commerce dividends, and new models such as live broadcast from 2018 to the present can drive the development of brands.
With the rise of short video e-commerce represented by Douyin, the three squirrels have once again seized the limelight.
In 2023, Three Squirrels proposed the omni-channel plan of "Douyin + N", that is, with Douyin as the core, to form an omni-channel collaborative system. At present, the three squirrels have built live broadcast teams in various sectors of Douyin, Tmall, Kuaishou, and JD.com.
Three squirrels new e-commerce live broadcast room
In fact, the core platform Douyin and Three Squirrels are a typical "1+1>2" cooperation.
From the perspective of cooperation tonality, the two are platforms and brands with great content attributes. The Douyin e-commerce model drives sales with short video content, and Three Squirrels has many years of experience in content creation and operation by shaping the brand image of "Squirrel".
From the perspective of cost reduction and efficiency increase, Douyin and the three squirrels quickly established scale advantages through the matching of commodities and operations, so as to push the supply chain reform of the three squirrels through channels, and further realize the optimization of full-link and all-factor costs, so as to comprehensively enhance product competitiveness and quickly penetrate the supply chain.
From May 2023, on the Douyin channel alone, Three Squirrels has achieved a substantial increase of nearly 500% in a single month, and has been ranked first in brand sales in the food category on Douyin for a long time.
In the first quarter of this year, the scale growth driven by short video e-commerce drove the sales growth of all channels, and the focus on offline distribution was superimposed, and finally the company's outbreak of the New Year's Festival and the continuous growth of sales in February and March were realized. In the first quarter, of the omni-channel revenue of 3.646 billion yuan, the revenue of short video exceeded 1 billion yuan, and the proportion of revenue increased significantly compared with the same period last year.
Another key to traversing the cycle is the "big item" strategy. In the field of fast-moving consumer goods, especially in the snack industry, large single products have always been an important part that cannot be ignored. For brands, finding a large product with large core advantages and good prospects will undoubtedly improve product competitiveness.
In 2023, the cumulative sales of macadamia nuts for 10 bags of three squirrels at 19.9 yuan will exceed 50 million, and the monthly sales of canned daily nuts will exceed 25 million, ranking first on the list of canned nuts on Douyin.
The explosion of sales of many large single products surprised the management of the three squirrels. The emergence of popular single products is not accidental, the test is product quality, and the product quality test is the layout of the whole link of the brand, and it is also the key to continue to output popular products in the "involution" retail market.
For example, for snack products, Three Squirrels proposed the strategy of "one product and one chain", so that each product has an exclusive supply chain. This strategy hides the wisdom of the three squirrels' "reverse thinking": first, define the user value, make a judgment on the potential of the product based on the user feedback of the Douyin large-scale platform, and force the optimization of the supply chain, so that the "one product and one chain" can respond faster and more flexibly.
According to Zhang Liaoyuan's prediction, when a product can quickly reach a daily sales of more than 100,000, it may produce a large single product, and when the product reaches a monthly sales of 3-5 million, there is a potential of hundreds of millions.
Three Squirrels Daily Nut Factory
In terms of organization and values, the three squirrels have formed an organizational form of "integration of quality and sales" and the organizational values of "high synergy", and initially realized the structural reconstruction or upgrading of "business, supply chain and organization", so as to help the sustainable development of business.
The definition of "integration of product and sales" by Three Squirrels refers to focusing on the three key links of "product, market and channel" with a high degree of balance, realizing a market-oriented, consumer-centric and highly collaborative networked organization, and then delivering "high-end cost-effective" products to the market and consumers.
Of course, in the final analysis, the core of the three squirrels' fruitful results is still the traction of the "high-end cost-effective" strategy, adhering to the "full category, all channels" business model, and the "manufacturing of its own brand snack business" business model, to establish the brand positioning of "national snacks, national good price".
On the long road of innovation and development, there will inevitably be ups and downs and stumbling blocks. As the leader of the leisure snack market, the three squirrels have successfully passed through the cycle, giving a positive demonstration to the industry and making the market have greater expectations for the leisure snack industry.
After more than ten years of development, what remains unchanged is that the three squirrels are still the "squirrels" who are committed to providing consumers with high-quality products. What has changed is that in the prime of life, the three squirrels began to give full play to their retail genes and innovation advantages, penetrate into manufacturing, and grow to their own brands.
In the new year, the three squirrels also have a new goal for the future - to return to 10 billion. High-quality development and new quality productivity have become the theme of the times, standing at the node of reform and upgrading, the direction of the three squirrels is very clear, and there is a long way to go.
The practice of business is the process of constantly verifying the results, and the three squirrels are "following the trend".