--- title: "After the Hype: Snacks Face a New Round of Reshuffling and Breakout" description: "Over the past two years, Chinese consumers have achieved 'snack freedom.' From first- and second-tier cities to county towns and even rural streets, snack stores are everywhere, with prices getting cheaper. Even premium brands like Bestore and Three Squirrels have cut prices. But while the front end is bustling, the back end is struggling: price wars have squeezed profits, and the industry is facing a reshuffle." author: "侯恬" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2025-05-10" categories: "Capital, Earnings & M&A, Consumer & Categories, Retail Formats" language: "en" canonical: "https://xinjignxiao.com/en/articles/after-the-hype-snacks-face-a-new-round-of-reshuffling-and-breakout-6d3aef22/" markdown: "https://xinjignxiao.com/en/articles/after-the-hype-snacks-face-a-new-round-of-reshuffling-and-breakout-6d3aef22.md" original_source: "https://mp.weixin.qq.com/s/JTQ6Itf7jsmMuQ4iRduCvg" translation: "https://xinjignxiao.com/zh/articles/%E7%83%AD%E9%97%B9%E8%BF%87%E5%90%8E-%E9%9B%B6%E9%A3%9F%E5%B0%86%E8%BF%8E%E6%9D%A5%E6%96%B0%E4%B8%80%E8%BD%AE%E7%9A%84%E6%B4%97%E7%89%8C%E4%B8%8E%E7%AA%81%E5%9B%B4-6d3aef22.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/after-the-hype-snacks-face-a-new-round-of-reshuffling-and-breakout-6d3aef22/" citation: "侯恬. “After the Hype: Snacks Face a New Round of Reshuffling and Breakout.” New Distribution, 2025-05-10. https://xinjignxiao.com/en/articles/after-the-hype-snacks-face-a-new-round-of-reshuffling-and-breakout-6d3aef22/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # After the Hype: Snacks Face a New Round of Reshuffling and Breakout > Over the past two years, Chinese consumers have achieved 'snack freedom.' From first- and second-tier cities to county towns and even rural streets, snack stores are everywhere, with prices getting cheaper. Even premium brands like Bestore and Three Squirrels have cut prices. But while the front end is bustling, the back end is struggling: price wars have squeezed profits, and the industry is facing a reshuffle. Over the past two years, Chinese consumers have achieved 'snack freedom.' From first- and second-tier cities to county towns and even rural streets, snack stores are everywhere. Not only are they ubiquitous, but prices are also getting cheaper, and even once high-priced premium snacks like Bestore and Three Squirrels have begun to cut prices. But while the front end is bustling, the back end is struggling. Under the price war, snack companies are in a tough spot. Bulk snack stores rely on low prices to drive sales, resulting in thin margins. As supply expands, other snack brands are forced into cutthroat competition, dragging down industry profits. Brands that failed to 'go downstream' in time can only watch their market share be eroded. The first to feel the chill were the head brands that once pursued a 'high-quality' route, such as Bestore. In 2024, Bestore reported its first loss since listing, with a net loss attributable to shareholders of 46.1 million yuan, a year-on-year decline of 125.6%. The main reason for the loss was price cuts, and the diversion of business to bulk snack stores also weighed on performance. Meanwhile, some leading channel brands are racing to the capital markets. In April, Mingming Henmang submitted a listing application to the Hong Kong Stock Exchange, becoming the largest applicant in the bulk snack sector. But the stage of price competition will not last forever. After rapid expansion, the per-store efficiency of the bulk model will also be affected. Signs indicate that the era of easy profits in the snack industry may be gone for good. The capital market's attitude toward the snack industry is also becoming complex, even facing directional choices. Except for a few players like Yanjin Puzi that insist on self-manufacturing and deep supply chain management, most snack companies appear to be flourishing, but they rely too heavily on various forms of 'burning money' models. In reality, they have fallen into the awkward position of 'if you don't cut prices, you die; if you cut prices, you die faster' and 'if you don't burn money, you die; if you burn money, you die faster.' Hot War The snack industry is engaged in an obvious 'hot war,' with brands either aggressively expanding by investing resources or being forced to cut prices to compete. These money-burning strategies are eroding corporate and industry profits. Bulk snack stores have become the most 'ferocious' competitor, holding strong channel momentum. Leveraging their positioning of cheap, large quantity, and full category, bulk snack stores have been rapidly expanding in recent years, hoping to achieve cost advantages through scale. Data from Mingming Henmang's official website shows that by the end of 2024, its national store count exceeded 14,000. Haoxianglai is even more aggressive, with over 12,000 stores to date, more than 80% of which opened in the past three years. According to industry estimates, by 2025, the number of bulk snack stores in China will reach 45,000, nearly triple the number three years ago. But expansion brings not only scale dividends. Most of the battlefields for bulk snacks are in lower-tier cities. Data shows that in Q1 2024, chain snack brands accounted for 67% of new store openings in lower-tier cities. While this aligns with consumer positioning, it also means lower average transaction values, naturally limiting profitability. Bulk snacks are capturing county towns. The industry is already highly homogeneous, and once scale competition begins, a price war is almost inevitable. The price war is not limited to bulk snacks; under the trend of rational consumption, premium snack brands have also been dragged in, leading to a collective decline in industry profits. Bulk snack stores mainly reduce terminal prices by eliminating middlemen, but that's not enough. Because there are many players in the track, low prices alone are not enough to attract consumers, so companies have to spend more on subsidies, store promotions, and discounts. The result is that the more aggressive the sales, the higher the marketing expenses, and the thinner the profits. This low-profit situation must be passed down to snack manufacturers that do OEM work. Premium snacks that once survived on 'brand premium' now have to lower their profiles. From offline price cuts to online promotions, more and more brands are shifting to a value-for-money route, or simply spending heavily on marketing to maintain brand awareness, resulting in thinner profits. Some old brands that gradually built up through supermarket channels are also seeing slower growth. The consequences of this melee include the rapid expansion of Mingming Henmang and Haoxianglai, but also financial pressure on several others forced to fight back, and even product-based companies have seen their profits eroded. Bubble The intense competition in the snack industry is driven by capital market support. It could even be said that capital is leading a large-scale concentration of interests in China's snack industry. In 2020, the 'home economy' triggered by the pandemic led capital to flood into the leisure snack sector. That year, there were 49 financing events in the industry, with a total financing amount of 1.19 billion yuan, both up over 90% year-on-year. Suddenly, snacks became a hot commodity in the consumer sector. The heat continued in 2021, with 77 investment and financing events in the snack industry, totaling 3 billion yuan. That year, the bulk snack brand Snack Henmang received a single financing of 240 million yuan. In the following two years, industry financing remained at high levels compared to before 2019. The logic behind capital bets is simple and crude: replicate Mixue Bingcheng's 10,000-store model. As long as you open enough stores, you have a chance to become the next offline consumption entry point. This concept drove the explosion of snack store expansion and sent the valuations of multiple brands soaring. With the boost from the capital market, the pace of expansion in the snack industry accelerated, especially for bulk snacks. High-density store openings mean they can reduce costs through bulk purchasing, achieve lower retail prices, and gain a competitive advantage. The benefits of expansion are obvious, and its growth rate is particularly prominent in the industry, reminiscent of the previous money-burning tactics of internet companies to grab market share. But the underlying logic of the snack industry is completely different from that of the internet industry. Internet companies can sustain this logic because they naturally have strong network effects: the more users, the greater the platform's value, which attracts more resources and traffic, forming a positive cycle that eventually leads to monopoly and ensures future profits. The reality of the snack industry is far from ideal. Because it is highly fragmented, has low barriers to entry, and products are homogeneous, even if you initially grab a lot of market share with low prices, once the price advantage disappears, maintaining your leading position still requires further investment—such as continuously maintaining price competitiveness or developing higher-margin 'premium snacks'—all of which can lead to lower-than-expected returns after monopolizing the market. As a typical consumer industry, the competitiveness of snack companies depends more on brand building and channel control. But the problem is that in the eyes of consumers, whether a category tastes good is usually more important than the brand. As for channels, competitors and other capital can easily copy them and steal business with lower prices. The moat of the bulk snack industry lies in the competitiveness of product selection and supply chain, and in using efficiency to give back to all parties in the industry chain. This moat is real, and its value becomes more apparent after large-scale store deployment. But at the same time, this moat may be overestimated. The overestimation may be due to the successful experiences of Mixue Bingcheng and major milk tea brands stimulating practitioners, or it may be due to some companies' overconfidence in their product selection capabilities and supply chain control. Dilemma Snack brands are engaged in a seemingly effective market division—Bestore and Laiyifen focus on the high-end market, emphasizing health concepts and quality ingredients, with stores mostly in first- and second-tier cities, targeting middle- and high-income groups. Traditional mass-market brands like Qiaqia, Want Want, and Weilong, as well as Haoxianglai and Mingming Henmang, are taking the value-for-money route, with channels extending from first- and second-tier cities to third- and fourth-tier cities and township markets, emphasizing wide coverage and affordable prices. Although there is competition between the two sides, it has not yet reached the point of 'head-on confrontation.' Before 2020, this order was maintained decently: high-end brands relied on brand premium for stable profits, mass-market brands grew through channels and scale, and most snack companies maintained relatively stable performance. But in recent years, high-end brands have repeatedly been exposed for product issues, making the notion of 'you get what you pay for' untenable. People realize that so-called expensive snacks are largely a result of marketing. Under the trend of rational consumption, fewer users are willing to pay for premium snacks, and the entire industry's pricing system has been reset. Facing a rapid shift in customer base, high-end brands are forced to lower their prices. In early 2023, Three Squirrels took the lead in promoting 'high-end cost-effectiveness,' and Bestore also cut prices across the board at the end of the year. However, the market had already been taken by bulk snacks. When high-end brands reacted and entered the fray, they were already a step behind. In the face of fierce competition, quality products and reasonable prices become key to winning. The problem is that most snack brands rely on OEM, producing similar products, so they can only compete on price to win customers. The intense game and life-and-death struggle in the industry ultimately point to a core issue that is not complicated: after the channel war and store-opening war, whoever truly has control over product quality is the one qualified to talk about the long term. Additionally, like many retail industries, the differentiated positioning of snack brands also determines their survival space. The industry pattern of 'one superpower, multiple strong players' will not evolve into 'one superpower, no strong players.' The leisure snack industry will not move toward monopoly. Quality-oriented companies like Bestore can coexist with mass-market, value-for-money companies like Mingming Henmang. The key is to identify target groups, avoid homogeneous internal friction, and form unique competitive advantages. Returning to snacks as the most basic consumer category, success still depends on the simplest things—stable quality, reasonable prices, honest business practices, and win-win cooperation with consumers and the supply chain rather than monopolizing benefits. In the lower-tier market, which is the true 'Chinese market,' these are truths that never go out of style. --- ## Citation metadata - Publisher: New Distribution - Author: 侯恬 - Published: 2025-05-10 - Canonical: https://xinjignxiao.com/en/articles/after-the-hype-snacks-face-a-new-round-of-reshuffling-and-breakout-6d3aef22/ - Original source: https://mp.weixin.qq.com/s/JTQ6Itf7jsmMuQ4iRduCvg ## Copyright and AI use This article is sourced from New Distribution. 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