Author丨Nei Sanjun
Editor丨Tangerine
So far in 2023, snack food has become one of the hottest segments in the FMCG industry, bringing opportunities to companies in it, but also giving rise to many difficult choices and transformations.
With the change of consumption environment, ordinary consumers have to tighten their pockets, in such a wave of "consumption downgrade", except for a few real twilight categories, many categories of snack foods, such as baking, butchers, candy, nuts, etc., most of the sales have not fallen but risen.
When the consumption of snack food has become the mainstream way for many consumers to comfort their lives, snack food has also entered a rare stage of development in which a hundred flowers bloom.
However, for some snack food companies that have been established for many years and have relatively stable business ideas, the terminal selling price must be lowered, the product quality that cannot be reduced, and the company's consideration of revenue, profit, market share and many other performance returns...... Their 2023 can be called "difficult".
The competitive landscape of snack foods has changed again
In the past two years, the rapid store opening and large-scale model of low-price product portfolio + franchise chain channel leverage have allowed snack mass stores that have been rooted in offline and have been unknown to develop rapidly. Simple and crude customer acquisition methods have allowed discounters to quickly take away the market of brands such as BESTORE, Three Squirrels, and Laiyifen, and the progress of digital tools, enterprise management capabilities and supply capabilities has also made it possible to quickly appear large-scale stores.
Especially for these leading large enterprises, they have been focusing on the boutique and experience under the trend of consumption upgrading for many years. When the logic of low prices is changing, they have to choose to follow their own strategic paths to accelerate adjustment and seek a way out.
It needs to be admitted that behind the rise of snack stores, there is its own "time, geography, and people".
For consumers, the consumption concept of "you don't think I'm poor, I don't think you low" gradually occupies the high ground of discourse; for brands that do not have a sufficiently mature distribution system, the collapse of KA channels over the years has not collapsed, forcing them to quickly find new shipping channels; not to mention, in the dealers "bursting" more and more common last year, many head manufacturers not only turned a blind eye to the channel channeling, and even did not hesitate to disrupt their own price system, sacrificing the interests of dealers, and took the initiative to sign supply contracts with snack stores.
Nowadays, the snack store industry has run out of several leading enterprises, and the founders are not shy about talking about their scale advantages and capital advantages publicly.
Although, for such a trend, there are also some different voices in the market. For example, some companies in the "tide" do not have good profit margins, and even some companies that do not disclose their operating data are rumored to be quietly subsidizing their losses in order to seek greater scale and even listing opportunities.
Entering 2024, this contest between "spoilers" and "defenders" has entered the second half.
On the one hand, snack wholesalers still belong to the retail industry, and the retail industry can never be monopolized. Even though Ali e-commerce was in full swing back then, Pinduoduo still found the right incision and killed it. What's more, the retail industry does not have network effects, in other words, the value of a product or service in this model increases with the number of people who use the product or service.
However, investors have requirements for capital returns, and early franchisees are gradually entering the end of the first return cycle, and even many small and medium-sized "players" have begun to close their stores or franchisees to make ends meet. It seems that hard discounts are a stopgap measure based on changes in consumer trends, but they are not the ultimate "cure", and there is not much time left for snack stores to run wildly in the market.
On the other hand, after a short period of price reduction in the second half of last year, traditional snack food companies have finally gradually explored their own set of playing methods and achieved certain results.
For example, BESTORE handed over a "passing" annual report for 2023 and the first quarter of 2024 for resuming scale growth after a significant price cut.
In this wave of the so-called "channel revolution", BESTORE, Qiaqia and other enterprises were not only not defeated, but were forced by the market to better themselves. Among them, BESTORE, which is most directly challenged by snack mass merchandisers, is particularly worthy of attention and analysis in its strategic transformation and promotion under the impact.
Reversing consumer perceptions in balance
After the "cost reduction", BESTORE is gradually groping for a new "balance point".
Recently, BESTORE released its 2023 annual report and 2024 first quarter report. Among them, in 2023, the company will achieve operating income of 8 billion yuan and net profit attributable to the parent company of 180 million yuan. In the first quarter of 2024, the "second half of the competition" mentioned above, BESTORE achieved an operating income of 2.451 billion yuan, an increase of 2.79% over the same period of the previous year, resuming scale growth, and BESTORE returned to "everyone's shop" to actively make profits to consumers, achieving a net profit attributable to the parent company of 62.4828 million yuan.
Regarding this achievement, Yang Yinfen, chairman of BESTORE, believes that the primary purpose of BESTORE is to win back more consumers, improve BESTORE's procurement scale and bargaining power, so as to obtain long-term, sustainable and efficient supply chain capabilities, and provide consumers with more "high quality-price ratio" products.
"Good quality and low price" is the eternal pursuit of consumers, and products with excellent quality and beautiful prices will never be eliminated. Reducing prices is easy to say, but it is not an easy task. The real difficulty lies in the fact that enterprises are "ruthlessly squeezing water" for themselves. In order to achieve the strategic goal of "price reduction without quality reduction", BESTORE has promoted many specific measures on the business side.
In order to achieve effective cost reduction, since last year, BESTORE has not only promoted supply chain cost reduction and established a digital supply chain cost management system, but also promoted the cost reduction of logistics and built a smart warehousing system to achieve double improvement in production capacity and efficiency. It is understood that in 2023, BESTORE stores will achieve an increase in the efficiency of shippers and sub-packaging, with a year-on-year increase of 24.9% and 25.6% respectively, and the rate will also drop significantly, with a year-on-year decrease of 21%.
At the same time, in order to ensure quality, on the raw material side, BESTORE continued to monitor 27 food raw materials throughout the year, gave full play to the advantages of the supply chain source, and promoted the direct procurement of resources at home and abroad.
These measures not only ensure the stable quality of BESTORE's products, but also achieve a higher cost performance.
For example, more than 100 million single products of fragrant iron brine iron eggs such as light sweet dried mangoes, the company previously purchased raw materials from overseas to domestic processing. In 2023, it will instead reduce the total cost by supporting suppliers to build factories overseas to reduce the loss in the import and transportation of fresh fruits. The conversion price of this product is 39.7 yuan, which is much lower than the same type of products in well-known supermarkets.
Another example is konjac shuang, it is a large single product that BESTORE breaks through the market price of similar products, BESTORE and the supply chain start from the source of raw material breeding, before and after four years of polishing, the national super-grade variety E konjac No. 1 into the planting belt of Pingwu County, Sichuan, and the fresh konjac is made into konjac powder and transported to Chengdu for deep processing, further optimizing the comprehensive cost from the source, production and logistics.
On the consumer side, the most perceptible thing is that the average price of more than 300 products on sale in BESTORE stores has been reduced by 22%, and the highest price has decreased by 45%, however, the basket rate, sales volume and sales of these single products have increased significantly. For example, the sales of light sweet dried mango increased by 275% year-on-year, the sales of crispy crepes (plain) increased by 127% year-on-year, the sales of bagged macadamia nuts increased by 39.1% year-on-year, and the sales of bamboo basket fish increased by 167% year-on-year.
It is not difficult to see that consumers' perception of the high price point of the brand is gradually being reversed.
Fight to the end, more solid than anyone
The more fierce the competition in the industry, the more correct the truth of "FMCG has no bells and whistles, only solid progress".
It is difficult for retail enterprises to achieve monopoly in the absolute sense, and most of them can only change one business cycle after another. What's more, in recent years, many artificially created retail formats, including new retail and community group buying, have almost no successful examples, which is even more reflective.
Therefore, continuing to do omni-channel intensive cultivation, and at the same time constantly identifying its own "blue ocean channels", is the work that a leading enterprise with long-term planning should do.
In fact, compared with the price reduction, what happened at the same time and in a low-key manner was the continuous opening of BESTORE offline stores, as well as the refinement and cultivation of emerging e-commerce, group buying business and other channels.
It is understood that in 2023, more than 500 new stores will be opened in the four core provinces of BESTORE throughout the year, and the quality monitoring of single-store operation will be implemented, the rent and engineering decoration will be significantly reduced, and the store stocking forecast model will be reconstructed, and the delivery satisfaction rate will be increased to 94.4%. By the end of 2023, the total number of BESTORE offline stores will reach 3,293, and the annual offline store channel revenue will be 4.294 billion yuan, a year-on-year increase of 4.02%.
Online business. In 2023, BESTORE will achieve rapid expansion in sales on instant retail platforms such as Meituan, Pupu and Yonghui, with sales exceeding 100 million yuan.
In terms of group buying business. BESTORE has developed 33 gift boxes and gift packages, including popular series, high-protein series, oriental good things series, biscuit series, children's snacks, and Xiaomengxian series, focusing on high quality and product differentiation, and the group purchase sales will reach 540 million yuan in 2023, a year-on-year increase of 25.17%, of which the healthy high-protein series will increase by 200% year-on-year.
From this point of view, whether it is the sinking distribution of the three squirrels or the omni-channel intensive cultivation of BESTORE, it is a specific measure for the head enterprises not to blindly follow and recognize the situation and move forward steadfastly.
Just as important as channel innovation is continuous category innovation based on "cost reduction and quality assurance".
It is understood that in 2023, the annual sales of BESTORE's new products will exceed 1.2 billion yuan, creating large single products with sales of more than 10 million yuan such as prunes and purple cashew nuts. At the same time, the company's gift box product line has achieved remarkable results, and the sales of annual gift boxes have increased by 25% year-on-year.
For the growth of new product business, BESTORE believes that when "cost performance" has become one of the core elements of consumers' purchase decisions, product differentiation is the key to gaining competitive advantage in order to continue to impress consumers and gain their loyalty.
The latest news about this is that in 2024, BESTORE will take the lead in proposing and advocating "five reductions" of healthy snacks (i.e., "salt reduction, sugar reduction, fat reduction, oil reduction, and food additives reduction") in the industry, focusing on the two research and development directions of natural and healthy ingredients and reducing additives in the production process, so as to make snack formulas more concise, low burden and healthier.
As the first casual snack brand to promote and practice healthy snacks, BESTORE plans to launch more than 140 upgraded healthy snacks this year, covering core categories such as pastry biscuits, vegetarian food, dried fruits and preserved fruits. Among them, the core products such as Huamei and Dongkui bayberry are all subversive innovations in traditional craftsmanship through technological breakthroughs, which not only add zero preservatives, but also further improve the flavor of the product.
Yang Yinfen, chairman of BESTORE, made it clear at the 23rd annual meeting that the company's current top strategy is to adapt to the new competitive environment and consumption environment, and change for the changes of consumers. At present and in the future, BESTORE will unswervingly take the road of quality development and make more products that consumers will never forget.
If BESTORE in 2023 is the "now" that was caught in the whirlpool of competition at that time, then BESTORE in the first quarter of 2024 is the "far away" that has been aimed at when we sat down at the time of major strategic decisions. The support behind this is definitely not "boiling", but the pre-emptive and refined layout of categories, brands and channels.
Judging from the past few months, snack foods will still maintain a stable overall growth trend in 2024. In this large enough market, both new and old entrants can find their own business model and survive. For all enterprises that make solid progress, operate steadily, and adhere to the original intention of "making the industry better", I believe that 2024 will be a "better year".