#记录我的2024#今年财报季, there is a track that has sparked heated discussions in the market, this is the snack track, many snack companies have shown their report cards, but most of them are not ideal, and even play the discount card, but the results do not seem to be optimistic, what is the problem with snacks?
First, the price reduction can't pull the snack industry?
According to a report by Jiemian News, BESTORE released its 2023 annual report, disclosing the company's financial status in the past year. In 2023, BESTORE has carried out a series of large-scale price reduction measures, but this has not achieved small profits and quick turnover. BESTORE achieved revenue of 8.046 billion yuan last year, down 14.76% from 9.44 billion yuan in the same period last year, attributable net profit of 180 million yuan, down 46.26% from 335 million yuan in the same period last year, and non-net profit of 65 million yuan, down 68.82% from 209 million yuan in the same period last year.
Coincidentally, according to the interface survey, not only BESTORE, but also the entire snack industry is experiencing pains. For example, Three Squirrels will increase profits but not income in 2023, and its annual report shows that the company achieved revenue of 7.115 billion yuan last year, a year-on-year decrease of 2.45%, and a net profit attributable to the parent company of 220 million yuan, a year-on-year increase of 69.85%. This is the fourth consecutive year of revenue decline for the three squirrels since 2020, with declines of 3.72%, 0.24%, and 25.35% from 2020 to 2022, respectively. And the increase in profit is also achieved on the basis of a 68.61% plunge in 2022.
According to the report of Dahe Finance Cube, in 2023, the domestic snack industry will go crazy. Not only is the main body of market competition expanding rapidly, but all kinds of small princes have risen up, and various snack collection stores and discount stores are soaring. More importantly, due to the economic environment of the previous year, the overall consumption scale of the domestic snack market did not appear as expected by industry enterprises. On the contrary, young consumers' pursuit of "cost-effective" is extremely high-pitched. As a result, a group of crocodiles in the snack circle seem to have been forced into the shallow pond in the dry season, and the competition for food is becoming more and more cruel.
At the end of 2023, iiMedia Consulting released the "2024-2025 China Snack Collection Store Market Analysis and Development Trend Report", pointing out that the competition of snack collection stores is becoming fierce, the number of "horse racing" mergers and acquisitions of various brands is increasing, and the number of stores is growing, and as of October 2023, the number of snack collection stores in China has exceeded 22,000.
According to the data released by the 36Kr Research Institute, the overall price of mass merchandising snack collection stores is about 30% cheaper than that of ordinary supermarkets by virtue of the advantages of supply chain and upstream premium rights. Some people in the industry pointed out that the snack store model is a "revolution in efficiency" launched by the traditional distribution model, focusing on parity, meager profits, complete, as many as 1,000 brands, taking goods from the source, reducing intermediate turnover links, and improving the efficiency of commodity circulation, so as to achieve ultra-low prices.
2. What's wrong with the snack shops?
As an important part of the consumer goods market, the snack industry has always been loved by consumers. However, in recent years, despite the fact that snack companies have adopted price reduction strategies to attract consumers, the overall sales growth has not increased as expected, and even faced a downward trend, what is going on?
First of all, the snack industry is experiencing the evolution from high-end to low-end in the process of consumption upgrading. From the perspective of industrial development, the snack industry has indeed experienced a significant transformation process from high-end to parity in the context of consumption upgrading.
In the early stage of consumption upgrading, with the improvement of people's income level and quality of life, consumers' demand for snacks has gradually shifted from satisfying the basic taste to pursuing quality, brand and experience. During this period, high-end snacks met the pursuit of high-quality life of some consumers with their exquisite packaging, unique taste and high price positioning, so they occupied a place in the market.
However, with the deepening of consumption upgrading, consumers' consumption concepts have gradually become rational and pragmatic. They began to pay more attention to cost-effectiveness and practicality, and the demand for snacks has gradually shifted from pursuing high-end brands to seeking affordable and high-quality products. This transformation has made affordable snacks begin to be favored by the market and gradually occupy the mainstream position of the market.
On the one hand, the rise of affordable snacks is due to the progress of production technology and the optimization of cost control, which enables enterprises to provide high-quality products at lower prices, and on the other hand, it is also inseparable from the rapid development of e-commerce platforms and the improvement of logistics and distribution, so that consumers can buy affordable snacks more conveniently.
Secondly, the popularity of snack discount formats has had a huge impact on the traditional model. Discount retail has gradually become a trendy phenomenon, and the impact of wholesale discount stores and snack mass stores on traditional snack companies in the channel:
On the one hand, the rise of discount retail reflects a shift in consumer shopping behavior. Under the influence of economic pressure, consumers pay more attention to the value of shopping and hope to get value for money through reasonable prices. Discount retail stores meet this demand and attract a large number of cost-effective consumers by offering products at affordable prices.
On the other hand, wholesale discount stores and snack mass merchandisers have achieved channel squeezing of traditional snack enterprises through innovative business models. These discounters often work directly with brands, bypassing distributors, to reduce costs and get lower purchase prices. At the same time, they have achieved rapid expansion and efficient operations through large-scale store layout and high-turnover operation strategies. This innovative business model gives discounters a competitive advantage in terms of price, variety and supply chain, which poses a challenge to traditional snack companies.
In addition, discount retail stores have also attracted the attention of more young consumers through precise market positioning and marketing strategies. The younger generation of consumers pay attention to fashion and individuality, and are price-sensitive, but pursue a balance between quality and price. Discount retail stores offer diverse, high-quality, and affordable items that meet the needs of younger consumers and gain market share.
Third, the involution of the track and even the vicious circle began to destroy the ecological foundation of the industry. In the case of the full involution of the track, snack companies are indeed facing huge competitive pressure, resulting in many companies choosing to compete for market share through discount price wars. However, this price war does bring a series of problems, one is that the discount price war has led to a significant reduction in the profit margins of enterprises. In order to attract consumers, businesses have to lower the price of their products, which often means sacrificing profits. In the long run, the profitability of the enterprise is seriously affected, and even losses may occur.
Second, the price war has weakened the innovation momentum of enterprises. Under the pressure of price wars, companies often devote more resources and energy to reducing costs and expanding production scale, while ignoring product innovation and quality improvement. This has led to serious product homogeneity in the market and a lack of differentiated competition, which has further intensified the fierce competition in the market.
Third, the price war may also lead to damage to the brand image of the enterprise. Frequent discounts and promotions can make consumers doubt the value of a company's products, reducing brand recognition and loyalty. In the long run, this will have a negative impact on the brand value and market competitiveness of the enterprise.
Therefore, the price war has intensified the involution of the market, and enterprises that rely too much on price competition often ignore the long-term investment in product research and development, quality improvement, brand building, etc., and gradually lose their retail advantages, falling into a vicious circle of "price reduction - profit compression - reduction of R&D investment - decline in competitiveness". This not only affects the survival and development of enterprises, but also may pose a threat to the healthy development of the entire industry.
Fourth, what should snack companies do? In the current market environment, snack companies are facing two major problems. On the one hand, there is the increased health consciousness of consumers, and modern people are paying more attention to healthy eating and becoming more and more picky about snack choices, which forces manufacturers to consider how to improve product formulations to reduce additives, sugar and fat content, while maintaining the taste and appeal of products. On the other hand, the increasingly fierce price competition in the industry requires companies to find effective solutions to avoid falling into a situation of disorderly competition.
Therefore, snack companies can consider the following aspects when seeking a breakthrough strategy: first, re-examine the product line layout to create new products that are both differentiated and meet the needs of healthy consumption, second, optimize supply chain management, reduce costs to ensure competitive advantage in a reasonable price range, and third, strengthen brand building and enhance consumer loyalty through emotional connection, cultural connotation and high-quality service. We can say that only by continuously promoting the transformation of products and markets and achieving breakthroughs in differentiation can it be possible to truly promote the development of the industry.
The most important thing for today's snack industry is to break the vicious circle of price wars, and only by really jumping out of this desperate cycle can it be possible to truly realize the differentiated competition of snack consumption, so as to drive the breakthrough of enterprises.