Snack lovers are likely familiar with 'Daily Nuts,' a mixed nut snack. Since 2015, when Wolong introduced the 'Daily Nuts' category, snack brands like Three Squirrels, Be & Cheery, Qiaqia, and Bestore have followed suit, making it the fastest-growing snack category in recent years. According to data from the Prospective Industry Research Institute, the market size for 'Daily Nuts' exceeded 10 billion yuan by 2019 and is expected to surpass 20 billion yuan by 2021. Wolong, with its first-mover advantage, saw sales grow nearly six-fold in the second year after launch.

Following the success of 'Daily Nuts,' the snack industry recently welcomed a new category: Be & Cheery launched the first 'plant-based meat' snack in China. As a branch of the previously popular 'artificial meat,' plant-based meat is not a new concept, but its application in the snack industry creates a new category, much like 'Daily Nuts,' which simply mixed various nuts together—an old trick in a new bottle.

However, can plant-based meat take over the spotlight from 'Daily Nuts' and become the next hit snack category?

(Image source: Internet)

-01- The Snack Industry, Plagued by Homogeneity, Urgently Needs to Break the Deadlock

After Be & Cheery's 'marriage' with PepsiCo and Bestore's 'cloud listing,' along with Three Squirrels as the first snack stock, the 'Big Three' of the snack industry have all gathered in the capital market. Moreover, Alibaba has also entered the snack market, launching its own snack brand, Bonbater, on Tmall Supermarket.

The constant battles among snack giants, and even Alibaba's involvement as a platform, highlight the immense potential of the snack industry.

Indeed, according to statistics from international consulting firm Frost & Sullivan, from 2011 to 2018, China's snack industry experienced rapid expansion with a compound annual growth rate of 12.3%. In 2018, the market size reached 1,029.7 billion yuan, a year-on-year increase of 12.0%. It is expected to exceed 3,000 billion yuan by 2020 and maintain growth of over 10% in the next 3 to 5 years.

Behind the trend of snacks becoming a 'fourth meal' lies a trillion-yuan market, but it also faces severe homogeneity and intense competition, as reflected in the success of 'Daily Nuts.'

When the 'Daily Nuts' category was vigorously promoted by Wolong in 2016, Qiaqia quickly responded and entered the market within six months. Subsequently, Be & Cheery, Three Squirrels, Bestore, and COFCO all launched their own 'Daily Nuts' products. Although Wolong had a first-mover advantage, other brands still captured a portion of the market share.

According to grassroots research data, in 2018, Wolong led the 'Daily Nuts' market with approximately 30.8% share, followed by Qiaqia with about 15.38%, while Be & Cheery and Bestore each held 9.2%... Moreover, according to incomplete statistics, around 300 companies are currently producing 'Daily Nuts,' including Hema and Bianlifeng with their own private-label versions.

This means that for new snack categories, while the first brand may have some advantage, the low entry barrier and broad audience do not create a high barrier to entry. As soon as one brand benefits from a new category, other merchants will swarm in to share the pie.

Innovation has become an urgent need for the entire industry. In the competition among the three giants—Three Squirrels, Be & Cheery, and Bestore—whoever can sustain innovation will enjoy the largest share of the market.

-02- Will 'Plant-Based Meat' Be the Next Hit in Snacks?

In terms of category innovation, following Wolong's creation of 'Daily Nuts,' Be & Cheery has introduced 'plant-based meat' to the snack industry for the first time.

Before entering the snack sector, 'plant-based meat' had already appeared on the menus of Pizza Hut, McDonald's, and Starbucks. Domestically, tea unicorn Nayuki also launched three plant-based meat products, including the Future Burger and Green Star Burger, as well as Mexican minced meat rolls.

With the trend toward healthy eating, 'plant-based meat' could be a future dietary trend. According to predictions by U.S. market research firm MarketsandMarkets, the global market for plant-based meat substitutes was approximately $12.1 billion in 2019, with a compound annual growth rate of about 15.0%, reaching $27.9 billion by 2025.

However, compared to being added to restaurant menus, 'plant-based meat' entering the snack track might better penetrate consumers. On one hand, as mentioned, the homogeneous snack industry needs innovation; on the other hand, the main audience for snacks is young people born after 1990, who represent the new generation of consumption power.

Despite the vast market space for 'plant-based meat' and its ability to directly reach new-generation consumers eager to try new things, 'plant-based meat' cannot, like 'Daily Nuts,' become a lever for snack brands to shift the competitive landscape.

First, both are innovative categories, but 'Daily Nuts' is additive, while 'plant-based meat' is substitutive.

Compared to individually packaged nuts, 'Daily Nuts' simply takes a step: mixing various nuts together, packaging them in small single-serving bags, and renaming them 'Daily Nuts.' This shift from traditional large cans to mixed small packages allows consumers to satisfy their desire for variety without spending a lot on multiple large cans.

In contrast, Be & Cheery's 'plant-based meat' snacks are essentially meat substitutes. The two products currently on the market use plant protein ingredients, catering to those seeking 'vegetarian meat' with claims like 'taste close to real meat,' 'no cholesterol,' and 'no animal fat,' primarily targeting health-conscious consumers.

In fact, 'Daily Nuts' is not cheaper than large cans of nuts. For example, COFCO's 960g can sells for 119 yuan, while 750g of 'Daily Nuts' costs 118 yuan. The convenience of the mixed 'Daily Nuts' solves consumers' convenience issues, making them less price-sensitive. However, as a meat substitute, 'plant-based meat' will always be compared to the price of real meat.

Second, with real meat above and bean products below, 'plant-based meat' snacks are in an awkward middle position.

Although 'plant-based meat' has the word 'meat' and aims to replace meat, it is essentially a bean product. While nutritionally, 'plant-based meat' may offer protein equivalent to or healthier than meat, in terms of taste, the lack of sufficient saturated fat may not satisfy Chinese consumers who primarily eat pork.

It is understood that Be & Cheery's current artificial meat products are mainly for consumers to try something new. Be & Cheery stated that if domestic consumers show a strong preference for such products in the future, they will increase development efforts. However, overall, the vast majority of domestic consumers still choose real meat products.

Moreover, in the snack track, spicy strips, also a bean product, have always been a favorite among young consumers, supporting Weilong's nearly 5 billion yuan market size.

In other words, for 'plant-based meat' to become a 'hot commodity' in the market, it must first achieve a taste comparable to real meat, be priced lower than real meat, and surpass the 'spicy strips that can conquer the world' in flavor.

This might be too difficult for 'plant-based meat.'

Finally, the current 'plant-based meat' lacks industry standards.

Although 'plant-based meat' has caught the new trend of healthy eating, China's 'plant-based meat' market is still in its infancy. It is possible that some manufacturers lacking product standard awareness may introduce low-quality 'plant-based meat' products with poor quality control and taste into the market.

A report from China Business Industry Research Institute also shows that currently, 'plant-based meat' in China is merely a vegetarian concept, not yet elevated to a technical level, and there is no truly 'plant-based meat' enterprise. Even if only playing with the vegetarian concept, there are certain counterfeiting issues.

Without relevant industry standards, reference points, and management mechanisms, counterfeiting is inevitable.

Moreover, given the current situation, the consumption scale of 'plant-based meat' is not sufficient to support mass production, let alone become a lever for snack brands to shift the competitive landscape. Rather, consumers' curiosity about 'plant-based meat' can bring some discussion to snack brands.

From these perspectives, 'plant-based meat' will mature in the market and be accepted by more consumers, but in the snack track, it is unlikely to become a major profit driver for snack brands.

-03- To Tap into the Trillion-Yuan 'Big Market,' Maybe Just a Few 'Small Moves' Are Needed

If 'plant-based meat' cannot become a hit snack category, what other tricks can brands use to solve the homogeneity problem in the snack industry?

Previously, 'cloud-listed' Bestore has been adhering to a high-end route, selling better products at higher prices. This approach can indeed attract a group of followers, but Pinduoduo's success also tells us that the real consumer market is 'outside the Fifth Ring Road.'

To solve the homogeneity of snacks, we cannot just focus on high-end positioning. After all, food itself has no distinction between high-end and low-end.

Looking back at the success of 'Daily Nuts,' we can still see that solving small consumer problems can bring big industry changes.

In the current snack track, there are a few small issues worth noting.

One is the issue of opaque pricing for bulk snacks sold by weight in stores.

Previously, a reader friend mentioned a problem in the reader group: after shopping at a mall, she won two 20-yuan vouchers for Bestore through a lottery. She carefully picked a few small cookies and small packs of beef, thinking the total would be well under 40 yuan. However, when weighed, the total was over 70 yuan.

'If my budget is only 40 yuan, facing this kind of weighing pricing, I would need to calculate the total price based on the weight of a small bag, which is too troublesome.'

Actually, solving this problem only requires a small change: setting up price zones. For example, Be & Cheery's store in Hangzhou Hubin Yintai has 400 SKUs, of which 200 are uniformly priced at 10 yuan, forming a '10-yuan zone,' differentiating from the market's bulk weighing model and helping consumers reduce the cost and burden of calculating prices with a simpler and more transparent selling method.

Another issue is the inconvenience of eating and storing certain categories.

Beyond shelled nuts, some nuts like pecans, walnuts, and macadamias are difficult to shell. Even 'clever' netizens have invented 'door-cracking walnuts' as a 'slick operation.' Although there are many nut-cracking tools now, it is still difficult to completely solve the 'hard-to-shell' problem.

In fact, whether it's pecans, walnuts, or macadamias, merchants only need to make the opening a bit larger, which might solve the inconvenience to some extent. Previously, Be & Cheery's 300-degree 'big opening' macadamias were well-received.

Beyond nuts, categories like dried fruit and puffed food have storage issues. After all, whether you open a bag of dried mango or potato chips, if you can't finish them at once, you have to find a way to clip the remaining food to prevent moisture from affecting the taste. But not everyone has a food clip handy when needed. If food manufacturers could provide them, or directly improve the packaging to be resealable, it might better win consumers' hearts.

After all, good user experience is a plus for increasing consumer loyalty in any industry.

In summary, in the snack industry characterized by product homogeneity and fierce competition, any effective innovation in any area will bring changes to the competitive landscape. If 'plant-based meat' cannot become the main force of category innovation, then other categories and entry points can be explored.

The giants are in place, the platform has entered, and the snack track is due for a shake-up!

Source: Mantis Finance (ID: TanglangFin) Author: Yi Buer

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