Efforts to omni-channel leisure snack industry out of "acceleration"

Recently, listed companies such as Three Squirrels, Jinzai Food, and Yanjin Shop have successively disclosed their 2023 annual reports and 2024 first quarter reports, and the overall performance of leisure snack companies has been outstanding. The scale effect has brought about the improvement of efficiency, and at the same time, the cost of the whole industry chain has been compressed, and the leisure snack industry has accelerated. In an interview with a reporter from the China Securities Journal, executives of a number of listed leisure snacks said that the overall downward movement of product prices will form a new balance between supply and demand. Facing 2024, omni-channel development will become the focus of the development of the leisure snack industry.

The performance is frequent

The performance of listed snack food companies is improving.

According to the first quarter report of Three Squirrels in 2024, the company achieved a total operating income of 3.646 billion yuan in the current quarter, a year-on-year increase of 91.83%, a net profit attributable to shareholders of listed companies of 308 million yuan, a year-on-year increase of 60.80%, and a non-net profit of 263 million yuan, a year-on-year increase of 92.84%.

In 2023, Jinzai Food will achieve revenue of 2.065 billion yuan, a year-on-year increase of 41.26%, and a net profit attributable to the parent company of 210 million yuan, a year-on-year increase of 68.17%. The company expects net profit for the first quarter of 2024 to increase by 80% to 100% year-on-year.

In 2023, Yanjin Shop will achieve revenue of 4.115 billion yuan, a year-on-year increase of 42.22%, and net profit attributable to the parent company will be 506 million yuan, a year-on-year increase of 67.76%. In the past six years, the average annual compound growth rate of operating income and net profit attributable to the parent company of Yanjin Shop has exceeded 30%. The company expects to make a profit of 150 million to 170 million yuan in the first quarter of 2024, a year-on-year increase of 34.48% to 52.41%.

In addition, the performance forecast of Wanchen Group, the parent company of the mass-selling snack store Haoxianglai, in the first quarter of 2024, shows that during the reporting period, it is expected to achieve revenue of 4.7 billion yuan to 5.1 billion yuan, a year-on-year increase of 516.9% to 569.4%, and a net profit of 65 million yuan to 75 million yuan, a year-on-year increase of 41.5% to 63.1%.

In an interview with a reporter from the China Securities Journal, Feng Wenji, secretary of the board of directors of Jinzai Food, said that the scale effect has brought about an increase in efficiency, and the superimposed cost has decreased, which has promoted the overall performance growth of the leisure snack sector.

"The leisure snack sector is a trillion-level market, but there are not many industry leaders, and there are very few tens of billions of enterprises. The market capacity is large enough to support the overall growth of the industry. Feng Wenji said that with the expansion of the volume, leisure snack enterprises will increase investment in technological transformation and automation upgrades, improve production efficiency and yield rate, and promote profit growth. In addition, lower raw material prices, packaging and freight costs amplified margin elasticity.

"Quality-price ratio" has become a key word

Related companies have implemented the strategy of "quality-price ratio", and leisure snacks have been sold cheaper. The so-called "quality-price ratio" means to reduce the terminal selling price on the basis of ensuring quality. Focusing on the "quality-price ratio" route, various leisure snack companies have given their own ways of playing.

According to Three Squirrels, the price of macadamia nut snack products produced by the company in 2023 will decrease by about 30% compared with 2022. The monthly sales of this product on the Douyin platform exceeded 10 million yuan.

At the end of last year, BESTORE, which takes the high-end snack route, announced that it will implement large-scale price cuts, and the price reduction products are mainly concentrated in 300 snacks with a high repurchase rate, with a maximum reduction of 45% and an average decrease of 22%.

Zhang Xuewu, chairman of Yanjin Shop, told a reporter from China Securities Journal that from 2022, the company's scale effect will gradually appear, and its products will gradually upgrade from "high quality + high cost performance under high cost" to "high quality + high cost performance above low cost".

Three squirrels put forward the strategy of "high-end cost performance". Zhang Liaoyuan, founder and CEO of Three Squirrels, told the China Securities Journal that the nut category is more expensive in consumer perception, and there has been an imbalance between supply and demand for a period of time. The three squirrels have lowered the price of their products through the strategy of "high-end cost performance", and the demand has gradually been released.

Zhang Liaoyuan said that in the past, from raw material processing to sales, and then to reach the terminal, the whole process was very bloated, and the distribution of profits in each link was more, resulting in higher product prices. "In 2023, the three squirrels have been optimized for the main links of the whole link. For example, through Douyin e-commerce sales, products are shipped directly from the factory to consumers, saving storage costs and removing many intermediate links. Zhang Liaoyuan said that in 2024, the three squirrels will carry out larger-scale and larger-scale centralized procurement at the raw material end to further reduce costs.

Yang Yinfen, Chairman and General Manager of BESTORE, said: "We will work with our supply chain partners to improve efficiency, reduce costs, and ultimately achieve affordable prices through technological innovation and digital tools. ”

Competition is intensifying

The three squirrels proposed to strive to reach the 20 billion yuan revenue mark in the next 2-3 years; While running out of acceleration, the competition in the leisure snack track is becoming more and more fierce.

The most intuitive competition is reflected in the price. In Zhang Liaoyuan's view, in the case of general profit growth, snack companies gain market share by cutting prices. In the long run, when the entire industry does a good job in the "quality-price ratio", the overall downward movement of prices will form a new balance between supply and demand. In this process, it is especially important to master omnichannel.

In 2024, making efforts to omni-channel may become the focus of the development of the leisure snack industry.

"On the basis of maintaining the advantages of the original KA and AB supermarkets, the company will focus on the development of e-commerce, snack stores, campus stores and other formats. Zhang Xuewu said.

"The wholesale snack channel has grown rapidly in recent years, and it is also one of our fast-growing channels. Omni-channel development is the only way for large single-item companies. Feng Wenji said.

The three squirrels put forward the distribution target of "one million terminals" in 2024, which will go deep into the terminal "capillaries". Zhang Liaoyuan said that the "high-end cost-effective" strategy should be deepened, on the one hand, the price should be lowered, on the other hand, the distribution network should be optimized, the middlemen should be reduced, and the organization should be reengineered.

The omni-channel effort to pursue precise delivery has put forward new requirements for the industrial chain layout and organizational capabilities of snack food enterprises.

Taking the three squirrels as an example, Zhang Liaoyuan introduced that consumers in various channels have different needs for the price and flavor of products. Three Squirrels promotes the "one product, one chain" strategy, making full use of large-scale platforms such as Douyin to locate user needs, and then locate product quality, and predict the affordability of the supply chain.