Yangtze River Business Daily News ● Yangtze River Business Daily reporter Shen Yourong
In 2023, many industries such as automobiles and leisure snacks will be crazy involuted, and industry participants will not have an easy time.
On the evening of April 25, BESTORE (603719. SH) disclosed its 2023 annual report as scheduled. The company achieved operating income of 8.046 billion yuan, and the net profit attributable to shareholders of the parent company (hereinafter referred to as "net profit") was 180 million yuan.
According to the first quarter report of 2024 disclosed on the same day, in the first three months of this year, the company's operating income was 2.451 billion yuan, a year-on-year increase of 2.79%, and it is expected to return to the growth track.
In recent years, the frenzy of mass selling snacks has struck, and the terminal price war has been filled. In the face of new changes, BESTORE actively responds, on the one hand, embraces changes and innovates, and on the other hand, reduces prices without reducing quality, and adheres to the original intention of "quality of conscience, everyone's shop".
Embarking on the road of high quality-price ratio, BESTORE brings the industrial chain to reduce costs and increase efficiency, so that the company and the industrial chain can grow in value.
Take the initiative to make profits and temporarily put pressure on performance
The changing situation in the leisure snack market has put pressure on the "swimmers" in it.
As a leading enterprise in the industry, BESTORE takes the initiative to admit that it is currently in a relatively "painful" stage. According to the annual report disclosed by the company, in 2023a, the company will achieve an operating income of 8.046 billion yuan, a year-on-year decrease of 14.76%, and a net profit of 180 million yuan.
In terms of products, BESTORE mainly sells roasted nuts, dried fruits, meat snacks, vegetarian delicacies, sweets and pastries and other products. In 2023, the operating income and operating costs of the products of the above-mentioned categories will decline to varying degrees, and the gross profit margin will rise and fall, and the company's overall gross profit margin will be 27.88%, an increase of 0.21 percentage points year-on-year.
Throughout the history of global economic development, there will be cycles in any industry. The same is true for an enterprise, which will inevitably experience a start-up period, a period of rapid development, a period of adjustment and accumulation, and a period of secondary take-off.
In the leisure snack industry, it is not only BESTORE that is experiencing the pain of the cycle, but the entire industry is under pressure.
In the first quarter of this year, BESTORE's operating income was 2.451 billion yuan, a year-on-year increase of 2.79%, returning to the growth track, and the net profit was 62.4828 million yuan, down 57.98% from 149 million yuan in the same period last year.
For the growth of operating income and the sharp decline in net profit, BESTORE explained that the main reason is that the company has adjusted the prices of some commodities, and the gross profit margin has declined, and the current government subsidies have been affected by the rhythm, which has led to a decline in net profit.
In a word, it was BESTORE that took the initiative to make profits that led to a decline in net profit.
In November 2023, BESTORE will carry out the largest price adjustment since its establishment 17 years ago, with an average price reduction of 22% and a maximum reduction of 45% for more than 300 top-notch and popular products.
The price reduction does not reduce the quality of the good road
In the face of the rapid changes in the leisure snack industry, BESTORE embraced the changes, and more than 300 products were reduced in price, but at the same time, they insisted on "price reduction without quality reduction".
In 2023, under the involution of the industry, a batch of snacks will expand rapidly, and various snack collection stores and discount stores will soar. More critically, the overall consumption scale of the domestic snack market has not shown the expected prosperity.
Snacks are "scuffle", and many brands are frequently complained. For example, when you buy a product that has expired for one month, the product bulges and deteriorates, the baby squid eats plastic bands, and the iron nails eat in food. On the black cat complaint platform, the above-mentioned similar complaints, snacks are very busy, wives and adults all exist.
In the face of drastic changes in the industry, BESTORE re-examined itself and decided not to fight a simple price war, but to blindly fight a price war, which will only affect the healthy development of the entire industry. BESTORE is fighting the battle of "quality-price ratio" - price reduction does not reduce quality.
The quality-price ratio is a technical job, how to fight the battle of "price reduction without quality reduction" of BESTORE?
The core of the competition between enterprises is the competition in the supply chain. Only by mobilizing the entire supply chain to comprehensively improve quality and efficiency can we truly provide users with products with high quality-price ratio.
The advantage of BESTORE is that the company is the owner of the industrial chain. As a well-known head brand, the company dominates the entire industrial chain, from raw material planting, procurement, product research and development to production and sales.
BESTORE "squeezes water" from the supply chain and operation management costs, which is completely different from the methods of mass selling snacks. The company completes the lean management through cost control, production efficiency, business efficiency, etc., so that the participants in the industrial chain can become participants, contributors and beneficiaries of cost reduction and efficiency increase.
Taking nuts as an example, as a raw material product, in the past, the directional procurement of raw materials of specified specifications led to high raw material procurement costs due to high grades, and now, on the one hand, the bulk nut raw material procurement will be included in the supplier direct procurement system, and at the same time, the raw material acquisition strategy will be changed, and the raw materials will be graded after the market is purchased, and different models and different grades of raw materials will be made into different types of products.
For example, macadamia nuts, on the one hand, the company through the joint construction of raw material base, the use of domestic macadamia nuts to replace imported raw materials, on the other hand, the different specifications of raw materials for the production of canned, bagged, comprehensive nuts and other different products, through the maximum use of raw materials, the price of each type of product dropped by 5 to 10 yuan.
Another example is light sweet dried mangoes, which are purchased from abroad for domestic processing, and by 2023, by supporting suppliers to build factories overseas, reducing the loss in the import and transportation of fresh fruits, and reducing the total cost, 112g of light sweet dried mangoes will be reduced from 16.9 yuan to 8.9 yuan, and the conversion price will be 39.7 yuan, which is much lower than the same type of products in well-known supermarkets.
The strategy of reducing prices without reducing quality has gradually been recognized by consumers. The company said that the customer flow of the store has increased significantly, the basket rate, sales volume and sales of 300 price-reduced single products have increased significantly, the sales volume of light sweet dried mango has increased by 275% year-on-year, and the sales volume of crispy crepes (original) has increased by 127% year-on-year.
Differentiation for continuous innovation
In pursuit of high quality and quality-price ratio, BESTORE takes its own road of differentiation.
In the snack industry, BESTORE is the brand with the most balanced online and offline development, which is also the biggest difference between the company and its peers on the channel side, and it is also the biggest advantage.
As of the end of 2023, the total number of BESTORE offline stores reached 3,293, a net increase of 67 stores over the same period last year. The annual offline store channel revenue was 4.294 billion yuan, a year-on-year increase of 4.02%.
For offline stores, Yang Yinfen, chairman and general manager of BESTORE, has emphasized that stores are the most important channel of BESTORE, and the improvement of store management and efficiency, updating and model optimization are the top priorities of BESTORE.
In April this year, BESTORE disclosed the 2024 action plan of "improving quality, efficiency and return", in which the company will strengthen the operation and management of stores with the two-wheel drive of product innovation and channel development, and will make great efforts in brand building, product diversification and service quality to improve customers' willingness to visit the store and consumer satisfaction. In the face of rapid changes in the market environment, the company will continue to introduce new ideas, new elements and new values based on the characteristics and needs of different customer groups, and update and optimize the store model.
In fact, BESTORE's stores have undergone new changes. Awakening the fireworks of stores with a younger experience, the store business actively explores new category models, tries to sell fresh goods in bulk, introduces high-frequency consumer goods such as coffee and short-term bread in stores for specific scenarios, and seasonally launches innovative small categories such as frozen products, grilled sausages and roasted sweet potatoes, which effectively increases the unit price and sales of customers in the current season.
For online business, BESTORE reconstructed new advantages, actively expanded emerging e-commerce channels, and achieved rapid sales expansion on instant retail platforms such as Meituan, Pupu and Yonghui.
Product innovation is also the biggest advantage of BESTORE. BESTORE "understands very well" consumers' requirements for snacks, that is, delicious, healthy, cost-effective, and emotional value, and unswervingly takes the route of high quality to provide consumers with a sufficient "sense of value".
In the second half of 2023, BESTORE will promote product upgrading with "good raw materials, good formulas, and good taste" as the anchor. From wild bamboo shoots with reduced salt and preservatives, crispy pancakes with 0 trans fatty acids that are not fried, and 2.0 versions of plums to create a "clean label" to toast with a 60-day shelf life without added preservatives, the company is looking for the best solution in terms of flavor and health.
As one of the drafting units of the General Requirements for Healthy Snacks, BESTORE advocates the concept of "five reductions" (i.e., "salt reduction, sugar reduction, fat reduction, oil reduction, and food additives reduction"), focusing on the two research and development directions of pure natural and healthy food products and reducing additive products in the production process, so as to make snack formulas more concise, low burden and healthier.
Chickpea bean skin, the R&D team experienced hundreds of failures, and finally realized the non-frying process, reducing fat by 30% and salt by 40%, redefining spicy strips. The product will be launched in May 2023, and stores in some cities will be out of stock, with sales exceeding 100,000 bags in July alone.
For the 18-year-old BESTORE, it is indeed ushering in the baptism of the coming-of-age ceremony.
All recessions are essentially replaced by lower-cost, more efficient models. Yang Yinfen, a BESTORE trader who came out of the price war, has a clear understanding of this.
"We are not afraid of being swept up, and what can't kill us will make us stronger. Yang Yinfen said.