---
title: "40 Years of Turbulence: How Can Snack Foods Win This Era?"
description: "Over 40 years of turbulence, China's snack food industry has reached a trillion-yuan market. From 'eating enough' and 'eating well' to 'pleasing oneself' and 'benefiting oneself', the changing times have eliminated struggling players while opening new space for rising newcomers. So what era are snack brands in now? In terms of category development, the era of 'one cookie ruling them all' is long gone, and post-pandemic snack categories are becoming more refined and functional. In terms of channels..."
author: "FBIF"
publisher: "New Distribution"
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published: "2022-12-28"
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# 40 Years of Turbulence: How Can Snack Foods Win This Era?

> Over 40 years of turbulence, China's snack food industry has reached a trillion-yuan market. From 'eating enough' and 'eating well' to 'pleasing oneself' and 'benefiting oneself', the changing times have eliminated struggling players while opening new space for rising newcomers. So what era are snack brands in now? In terms of category development, the era of 'one cookie ruling them all' is long gone, and post-pandemic snack categories are becoming more refined and functional. In terms of channels...

Over 40 years of turbulence, China's snack food industry has reached a trillion-yuan market. As tides rise and fall, countless food brands are changing with the times.
From "eating enough" and "eating well" to "pleasing oneself" and "benefiting oneself," the constant changes of the era have eliminated struggling practitioners and opened new space for rising newcomers.
So what era are snack brands in now? From a category development perspective, **the era of "one cookie ruling them all" is long gone**, and in the post-pandemic period, snack categories are becoming increasingly refined and functional. From a channel development perspective, in 2022, online and offline growth rates converged, **the online dividend period has disappeared**, and omni-channel growth faces challenges. From a macro perspective, although consumption is positive in the long term, repeated pandemic outbreaks bring many **uncertainties**.
In this article, we will think along with NielsenIQ's sharing: as the times change, how can brands seize changes and opportunities to achieve more efficient growth?
### **Forty Years of Turbulence: The Four Eras of Snack Foods**
It is undeniable that sugar runs through the entire snack industry. People went from needing sugar, to pursuing "more refined sugar," to hoping for "more than just sugar," and now to focusing on "reducing sugar and sugar substitutes." Changes in people's demand for sugar have also driven snacks into four different stages.
In an online forum, NielsenIQ summarized the four eras of snacks (the Awakening Era, the Pioneering Era, the Disruption Era, and the Splendid Era), allowing us to see industry changes through the development of the times.
**1. Awakening Era 1990-1999**
In the "Awakening Era," the planned economy exited the historical stage, and the market economy became dominant. For the food industry, one major impact of policy and economic changes was **more market-oriented sugar control.** Therefore, the categories that rose in the snack track were also closely related to sugar, mostly biscuits and candies.
In the sales channels of that time, retail department stores flourished. At the same time, with policy support, Taiwanese and domestic enterprises brought many big single products that "ruled" the snack market of the Awakening Era.
**2. Pioneering Era 2000-2009**
From 2000, the snack category entered the "Pioneering Era." At this stage, residents' income further increased, and their consumption concepts changed, **beginning to expect higher-quality, higher-tech products.** In this stage, the main development in the snack category was still candies and biscuits, but products with more complex manufacturing processes, such as wafers and filled biscuits, developed rapidly.
Wafers and filled biscuits developed rapidly. Image source: unsplash
At the same time, in terms of channels, many foreign large chain supermarkets entered China. The expansion of foreign "hypermarkets" also attracted more foreign companies to make efforts in the Chinese market. Companies like Mondelez and PepsiCo became major drivers of the snack track at that time.
**3. Disruption Era 2010-2019**
From 2010 to 2019, China's economy rose rapidly, and the snack industry also ushered in the "Disruption Era." Consumers paid more attention to national trends, and their demand for snack categories increased. They were no longer satisfied with sugar supplementation but also hoped to obtain **healthy, nutritious growth and better taste.** Therefore, traditional Chinese snack categories such as nuts and preserved fruits, and braised cooked foods became the protagonists.
In terms of channels, traditional large channels began to shrink, community-based small-format businesses developed, and near-field consumption such as convenience stores gained attention. At the same time, e-commerce rose, driving the rapid development of local brands.
**4. Splendid Era 2020-Present**
From 2020, the snack category entered the "Splendid Era." Under the impact of the pandemic, consumers' demand for snacks changed again. They are not satisfied with "eating enough and eating well" but also need **more functionality, more segmentation, and multiple scenarios.** Therefore, functional candies, meal replacement snacks, energy bars, cheese, and dairy products have gained higher attention.
During this period, new retail channels further developed, and O2O, Douyin e-commerce, video e-commerce, and community group buying emerged. At the same time, the development of these new channels also drove the rise of new brands in different snack sub-tracks.
Adapting to the times, categories continue to upgrade and develop. Image source: NielsenIQ
In the four eras of the snack industry, we can see that as consumer needs change, categories continue to upgrade and iterate, advancing toward more diversified and refined directions. At the same time, channel changes have also driven the development of different types of food companies.
### **Adapting to the Times, Riding the Trend for Growth**
Every transformation makes the market "evolve": some exit, some rise, and those who pass the test can gain higher market share. Brands that learn to follow the changes of the times can ride the trend for growth.
To adapt to the development of the times, one must first understand the current category situation in the "Splendid Era," especially the better-performing snack categories.
NielsenIQ analyzed the development of various snack categories nationwide over the past two years. Among them, chocolate has maintained growth for two consecutive years, and biscuits and crunchy snacks have performed well this year.
Development of various snack categories nationwide over the past two years. Image source: NielsenIQ
Secondly, to seize the most promising sub-tracks in the "Splendid Era," it is also necessary to know **what are the main driving factors in category growth.** NielsenIQ analyzed category growth rates across five dimensions: distribution, selling power, price increase/decrease, consumption upgrade, and new products.
The results show that **growth in snack categories is mainly driven by new products and price increases**, while distribution and selling power face challenges. Most snack categories are still in a consumption upgrade trend, but categories with higher sugar content (mint candies, pies/cakes) face obstacles in consumption upgrade due to the sugar reduction trend.
From the factors hindering growth, in the past two years, almost all snack categories have seen a decline in selling power, and the sell-through capability of offline single points has weakened (Note: single-point selling power: indicates the strength of sales efforts, reflecting the product's sell-through level, i.e., the level of pulling product sales at channel terminals through combined marketing means). The only category with obvious highlights in distribution driving is chocolate, which has been widely distributed in more lower-tier cities and small stores. NielsenIQ stated that in the future, the chocolate category can continue to develop distribution capabilities to address gaps in selling power. At the same time, brands can create "chocolate+" products to broaden their chocolate snack business, thereby further increasing penetration.
After understanding the driving factors that can help category growth, it is also necessary to address **the three major challenges currently facing snack categories: shelf space shrinkage, cost increases, and new product competition.**
**1. Shelf Space Shrinkage**
Currently, snack categories are being squeezed in offline shelf space, especially in large channels where the competition for shelf space is particularly fierce. Data shows that compared with 2021, the average number of single-point SKUs in the national snack category decreased by 3% year-on-year in 2022, while in large channels such as supermarkets and hypermarkets, the average number of single-point SKUs decreased by 13% year-on-year.
However, compared with large channels and convenience stores/small supermarkets, the number of single-point SKUs in grocery stores changed less, and categories such as chocolate and mint candies even gained shelf space growth. Therefore, in the future, **grocery stores will become a channel that snack brands need to focus on.**
Changes in single-point SKU numbers by channel for snack categories. Image source: NielsenIQ
**2. Cost Increases**
Rising raw material costs have also prompted manufacturers to raise prices or upgrade original product lines in various ways. NielsenIQ summarized three common ways of price increases and analyzed consumer market feedback.
**The first is shrinking packaging.** This method is used by some potato chip manufacturers, who reduce product specifications to lower costs. Since consumers are not very perceptive of specification changes, this has no direct impact on product sales.
**The second is product upgrade.** Some brands raise prices by upgrading ingredients, such as adding yam and purple sweet potato; others raise prices by adding Chinese-style tea flavors. However, it is worth noting that not many companies succeed in product upgrades, partly because they need to convince consumers that the upgrade is real, and partly because they need to gain consumer recognition of the price.
**The third is direct price increases.** Since today's consumers are particularly sensitive to price promotions, direct price increases are not recommended by NielsenIQ. NielsenIQ also pointed out that when brands directly raise prices, they mainly do so in single digits to maintain market share.
NielsenIQ also proposed that consumption upgrades have different developments in different channels, and brands need to consider what categories should enter what channels.
NielsenIQ cross-referenced channels and snack categories, marking consumption upgrades in green and consumption downgrades in red. The chart shows that **different snack categories in grocery stores all show a consumption upgrade trend.** However, the consumption downgrade trend is obvious in large supermarkets and community stores. These channels are close to residential areas, and when focusing on daily consumption, people are more rational. In convenience store channels, categories with higher sugar content, such as traditional candies, pies/cakes, mint candies, and chewing gum, all show consumption downgrades.
Consumption upgrade/downgrade by channel and category. Image source: NielsenIQ
**3. New Product Competition**
Brands are now more cautious when launching new products. They no longer pursue the number of new products but focus on efficiency improvement. Data shows that although the number of new products decreased by 11.8%, **the efficiency of a single new product increased by 26%.** Therefore, this again verifies that new products are a positive driving factor for snack categories.
So what kind of new product counts as an effective launch? NielsenIQ pointed out that limited-edition new products are emerging one after another and have become a growth driver for new products. Among them, the best-performing sub-category in limited-edition crunchy snacks achieved a sales growth rate of 117.1% for a single new product. In the biscuit, candy, and chocolate categories, new product design is becoming increasingly competitive. Brands can judge feasibility by studying the flavor trends and distribution duration of limited-edition new products.
### **Finding the Way to Break Out from "People, Goods, and Places"**
Although the snack track is showing an overall recovery trend, brands have to face consumers' higher-level consumption needs, difficult-to-break category barriers, and omni-channel growth challenges. NielsenIQ chose to analyze from the three perspectives of "people, goods, and places" to help brands seize new opportunities in snack categories.
**1. People: Create Scarcity and Trigger Emotional Resonance**
NielsenIQ revealed that today's consumers are "the scarcer, the more they want." Interesting limited-edition concepts increased by 39% year-on-year, and brands are creating limited-edition flavors, limited-edition shapes, and limited-edition IP products. Among sub-categories with interesting limited-edition shapes, the sales share of crunchy snacks increased by 468.1%, and chocolate increased by 47.8%.
In addition, brands are also seizing young people's patriotic feelings to trigger emotional resonance. The promotion of national strength concepts in food and dairy beverages increased by 165%.
Changes in consumer demand. Image source: NielsenIQ
**2. Goods: Break Category Barriers and Cross into New Tracks**
Today's consumers have higher-level consumption needs. They not only need snacks to be fun and interesting but also need higher quality. NielsenIQ stated that as long as products meet consumer needs, they can bring greater share growth.
To upgrade products, brands can also break category barriers and cross into new tracks. Crossovers are also divided into "internal" and "external." Internal crossover is the collision of different levels within the same category. For example, creating a silkier inner core for wafers to collide with the outer crispy layer. Brands find it easier to do, and consumers find it easier to accept.
But to bring higher sales growth, it is also necessary to cross over externally, which can also be understood as "cross-industry crossover." For example, a chocolate brand collaborated with a dairy brand to create a low-temperature chocolate milk drink, achieving sales of 89.48 million yuan. Under the trend of the times, brands can consider more in the future how to cleverly integrate functional ingredients with snacks.
Break category barriers and cross into new tracks. Image source: NielsenIQ
**3. Places: Omni-Channel Integration Will Be the Industry Direction**
With changes in retail channels, the rise of new retail models, and the integration of online and offline, omni-channel integration is accelerating. Traditional retail giants that started offline are turning online, while national trend brands are moving from online, specialty, and direct-operated stores to offline and omni-channel.
NielsenIQ pointed out that adapting to the times and laying out omni-channel is crucial. On the one hand, the offline market is still the focus and needs to be consolidated as a stable volume. On the other hand, brands need to grasp new channel trends and increase layouts in O2O, Douyin live e-commerce, group buying, and group purchasing.
Online and offline integration, omni-channel integration. Image source: NielsenIQ
### **Conclusion**
Over forty years of turbulence, the snack industry has continued to change with the development of the times, bringing opportunities and challenges to many brands. Whether industry leaders or new brands, only those that grasp consumer needs, seize channel development changes, and break category barriers can win the era.


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