As Children's Day approaches, the snack industry is witnessing new developments as brands compete fiercely. Recently, Beijing Business Today reporters found that snack companies are launching new products and signing celebrities in rapid succession. Although domestic snack brands operate independently, they are following similar paths. Industry insiders believe that domestic snack brands still lack independent innovation capabilities and need to build brand influence through continuous innovation, as imitation and trend-following will not lead to significant progress.

-01- Brands Spar Without Yielding The snack industry has been buzzing lately, with brands announcing new developments one after another and riding on each other's popularity. Bestore (Liangpin Shop) is promoting three children's lollipop products, while Be & Cheery (Baicaowei) has formed a partnership with a traffic star. Be & Cheery announced Zhang Zhehan as its brand ambassador and launched a star-customized daily nuts product. Collaborating with traffic celebrities can indeed help brands expand their influence and boost corporate visibility. Before its listing, Bestore signed Wu Yifan, and Wang Yibo also endorsed the Laiyifen brand. Competition among companies is always tit-for-tat. Taking the children's snack segment as an example, it has also seen a collective rush by domestic snack brands. In May last year, Bestore launched "Liangpin Xiaoshixian," and Be & Cheery quickly followed with the "Tong An'an Little Friend" series, positioned as "beneficial supplements beyond regular meals" for children. In response to competitors' moves, Three Squirrels and Laiyifen also announced their plans in the children's snack sector. The market's restlessness is not only fueled by "big players" but also by new brands joining the fray. The healthy snack brand Shiyanshi, founded in 2019, has completed a Pre-A round of financing worth tens of millions of yuan. Not long ago, the snack brand "Snack Busy" also announced the completion of a 240 million yuan A-round financing. In the "tit-for-tat" among brands, it is certain that competition among domestic companies and brands in the trillion-yuan snack market is intensifying. Sub-segments such as children's snacks, fitness snacks, and healthy snacks are gradually becoming key marketing terms for domestic snack brands. Data from the China Children's Industry Center shows that in 80% of families, children's expenditures account for 30%-50% of household spending, with an average family expenditure on children of 17,000-25,500 yuan. The annual children's consumer market is approximately 3.9 trillion to 5.9 trillion yuan. Among children's daily consumption, snacks are a significant expense. According to data from the National Bureau of Statistics, with the deepening of the two-child policy, it is expected that the number of children in China will continue to increase, and the corresponding children's snack market is expected to reach a scale of hundreds of billions of yuan. Qiu Yue, head of Tmall's leisure snack category, previously said in an interview: "The children's food market has a capacity of over 600 billion yuan, with healthy snack demand approaching a market size of nearly 100 billion yuan. However, the industry lacks representative children's food brands, which presents a huge business opportunity."

-02- Competing with Imports, Domestic Brands Need to Grow Domestic snack brands are not only engaged in push-and-pull competition among themselves but also have to contend with the erosion of imported snacks. Comparing sales data, imported snacks hold a strong position in the market. Public data shows that in 2020, Orion's total sales were approximately 12.826 billion yuan, with China accounting for nearly 49% of total sales, about 6.28 billion yuan. In contrast, in 2020, Three Squirrels and Laiyifen had annual revenues of 9.794 billion yuan and 4.026 billion yuan, respectively. The "2020 China Imported Food Industry Report" released during the third China International Import Expo pointed out that in 2019, China's food imports reached 90.81 billion USD, a year-on-year increase of 23.4%, with a net increase of 17.24 billion USD compared to 2018. In 2019, China's annual food imports were 90.81 billion USD, up 23.4% from the previous year. Over five years, China's food imports continued to grow rapidly. Compared to 2015, the total in 2019 increased by 3.6 billion USD, exceeding 90 billion USD, with a five-year compound annual growth rate of 9.2%. Moreover, high-margin baby food is also dominated by overseas brands. The "2019 CBME China Maternal and Infant Industry Survey Report" released by CBME China showed that the baby snack industry is mainly dominated by imported products. For example, for puffs, imported products contribute about 90% of sales. In the brand rankings of various baby snack sub-categories, imported brands dominate, with few domestic brands. In competition, imported snacks remain invincible. Comparing the operations of domestic and foreign snack brands, Wen Zhihong, partner at Hejun Consulting and head of chain operations, said in an interview with Beijing Business Today that foreign companies have strong brand operation capabilities, and their current advantage is built on deep market cultivation with hit products. In this regard, Yang Hongchun, chairman of Bestore, also pointed out that the international brand approach of creating super single products is worth learning for domestic companies, and it is a path that domestic snack companies must take. Competition in the food industry is not about marketing and sales, but about raw materials and manufacturing. Additionally, domestic snack brands still need to improve in areas such as industry standards, health, and safety. The "White Paper on the Children's Snack Market Survey" pointed out that China's children's snack industry still faces problems such as lack of standards, non-standard food labeling, market chaos, and low trust in domestic brands. Foreign children's snack standards are strict; for example, Japan has strict regulations in the children's food manufacturing industry covering quality, hygiene, raw materials, nutritional composition, and the materials and specifications of packaging containers. However, in China, apart from regulations on infant formula and complementary foods, there is no concept or standard for children's snacks.

-03- Breaking Free from Imitation, Building Brand Characteristics "After the snack industry reaches a certain scale, it must expand in sub-segments," said Zhu Danpeng, a Chinese food industry analyst. In his view, developing sub-markets is a necessary path for brands to achieve diversified and differentiated development. Domestic leading snack companies can reap market dividends in areas such as children's snacks and healthy snacks. With Children's Day approaching, domestic snack companies are about to usher in a new wave of consumption. According to Pinduoduo's 2020 Children's Day consumption data, in the 15 days before Children's Day, 39.1% of adult users purchased nostalgic snacks, nostalgic school uniforms, and other "nostalgia-exclusive" Children's Day gifts, with "nostalgic snack gift boxes" having the highest order volume. Furthermore, according to Nielsen's "Top 10 Characteristics of China's Consumer Market in 2018," 82% of Chinese consumers are willing to spend more on healthy food and beverage products, far higher than the global average of 68%. According to Nielsen's 2020 report "In-depth Analysis of Changes and Opportunities in China's Retail Industry under the Epidemic," after the pandemic, consumers' attention to public health will increase, requiring food safety strategies to be upgraded, enhancing traceability, and increasing standardized pre-packaged product configurations. Health, plastic reduction, and premiumization have also become trend keywords. It must be mentioned that when brands successively attack a track, they inevitably fall into "involution." Lai Yang, executive vice president of the Beijing Business Economics Association, analyzed that there is a situation of mutual imitation of new models in the domestic snack industry, but competition among enterprises has always relied on unique brand characteristics to break through. Merely imitating and following trends will lay hidden dangers for brand development. Lai Yang further emphasized that foreign snack brands can develop long-term because they create their own unique competitiveness and establish brand value, with independent R&D technologies and products in their fields. Foreign brands also combine their unique core genes with products in long-term innovation, rather than following trends to expand a certain business. This also reminds snack companies to enhance their awareness of intellectual property protection and establish product competitive barriers in long-term development. Additionally, Zhu Danpeng stated that the craftsmanship and supply chain of domestic snack brands have initially possessed the ability to compete with foreign brands. The brand tone of domestic snack companies still needs long-term polishing, and brand accumulation is the key to future success.

Source: Beijing Business Today Tips will be paid 400-2000 yuan upon adoption.