---
title: "First-Generation Internet Celebrities Struggle, Aggressive New Products Strike Back: Who Will Dominate the 600-Billion-Yuan Snack Market?"
description: "In late April, snack companies released their first earnings reports of 2021. From April 21-26, Liangpin Shop, Three Squirrels, Qiaqia Food, Yanjin Shop, and Ganyuan Food published their Q1 reports, marking the first performance review for A-share snack companies. A year ago, Liangpin Shop's listing allowed internet snack leaders to compete with established traditional players. Now, the sector shows clear divergence and trends, with internet brands climbing, traditional players differentiating, and new entrants rising."
author: "郝乐乐"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2021-05-04"
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# First-Generation Internet Celebrities Struggle, Aggressive New Products Strike Back: Who Will Dominate the 600-Billion-Yuan Snack Market?

> In late April, snack companies released their first earnings reports of 2021. From April 21-26, Liangpin Shop, Three Squirrels, Qiaqia Food, Yanjin Shop, and Ganyuan Food published their Q1 reports, marking the first performance review for A-share snack companies. A year ago, Liangpin Shop's listing allowed internet snack leaders to compete with established traditional players. Now, the sector shows clear divergence and trends, with internet brands climbing, traditional players differentiating, and new entrants rising.

In late April, snack companies welcomed their first earnings season of 2021.
From April 21-26, Liangpin Shop (known as the "first high-end retail stock"), Three Squirrels (an internet-born brand), and traditional snack company Qiaqia Food, along with Yanjin Shop and Ganyuan Food, successively released their Q1 2021 reports. With this, almost all A-share snack companies have submitted their first performance reports of 2021.
Remember this time last year, Liangpin Shop's listing allowed the once-watched and questioned internet snack leaders to compete on the same stage with well-established large traditional snack companies.
**Looking at the divergence and trends in the domestic secondary market snack track a year later, one is struck by the replacement and upgrading in China's leisure snack industry, as well as the ups and downs of snack companies due to product and channel changes.**
Especially after the baptism of the pandemic, it has a unique flavor.
**-01-**
**Internet Celebrities Climbing**
In the past two years, the internet snack track has been extremely popular in the capital circle.
G Capital backed Three Squirrels, and Hillhouse Capital entered Liangpin Shop. The three horses of "well-known investment institutions, differentiated brand positioning, and channel reshaping" ran in parallel, successfully pushing Three Squirrels and Liangpin Shop into the A-share market.
In July 2019, Three Squirrels rang the bell on the Shenzhen Stock Exchange. At the issue price alone, founder Zhang Liaoyuan, who directly held over 40%, saw his wealth exceed 2.5 billion yuan. In February last year, Liangpin Shop's debut saw 15 consecutive limit-ups, a spectacle still impressive today. Based on its market value at listing, it brought a 45-fold paper gain to its backer, Capital Today.
Compared with traditional snack companies like Want Want and Qiaqia, is asset-light internet snacks just a flashy capital narrative? This question has now been preliminarily answered.
According to the 2020 annual report, Three Squirrels led the A-share leisure snack brand sector with revenue of 9.794 billion yuan, followed by Liangpin Shop with 7.894 billion yuan. In terms of revenue alone, representatives of internet snacks seem to have proven their strength.
The impressive revenue is attributed to the original traffic accumulation of the two brands.
In 2012, the internet-born brand Three Squirrels, with its "pure online + high-end nuts + cute pet IP" model, immediately attracted capital eager to catch the trend.
At that time, Li Feng, who was still at IDG, and Xu Xin, who had already invested in Liangpin Shop, successively contacted Zhang Liaoyuan, offering a total of over $21 million in financing. The capital darling Three Squirrels lived up to expectations, achieving sales of 7.66 million yuan in that year's Double 11.
**In 2014, less than two years after its founding, Three Squirrels' revenue approached 1 billion yuan. By 2015, this figure doubled to 2 billion yuan, a year-on-year increase of 121%.**
Born on the internet and still relying on e-commerce for 90% of its channels, Three Squirrels is undoubtedly the biggest winner of the online traffic dividend.
From 2015 to 2019, Three Squirrels achieved a compound annual growth rate of 32.8% through its online business. During this period, its revenue rose from 2.04 billion yuan to 10.2 billion yuan.
In contrast, Liangpin Shop, which originated offline as a "chain snack collection store," touched the internet as early as 2012 when e-commerce rose, but in terms of model disruption and capital frenzy, Liangpin Shop, with its strong offline genes, has always been at a disadvantage compared to Three Squirrels.
Fortunately, Liangpin Shop's current channel distribution is relatively balanced, allowing it to maintain decent profits during the e-commerce dividend retreat.
Data shows that Three Squirrels' revenue reached a peak of 10 billion yuan in 2019, but its marketing expenses correspondingly climbed to a peak of 2.3 billion yuan that year, nearly ten times that of five years earlier. High online customer acquisition costs directly reduced Three Squirrels' net profit by 21.43% that year, and this situation of increasing revenue without increasing profit continued into 2020.
In contrast, Liangpin Shop, with almost equal online and offline revenue contributions, currently has sales expenses only half of Three Squirrels'. Its restrained marketing and customer acquisition efforts allow Liangpin Shop to achieve net profit comparable to Three Squirrels despite revenue being 24% lower.
Moreover, Liangpin Shop, which balances its channels, continues to expand its brand and product categories.
To build a more differentiated competitive barrier, Liangpin Shop has made comprehensive upgrades from its logo to scenarios in recent years. The spokesperson evolution from Huang Xiaoming to Wu Yifan signals its brand positioning of embracing youth and going high-end.
In sync with this is Liangpin Shop's "multi-brand" strategy. Entering 2020, Liangpin Shop announced two new brands, "Liangpin Xiaoshixian" and "Liangpin Feiyang," in May and August respectively. The former focuses on the children's snack track, while the latter targets the healthy meal replacement track.
As of Q1 2021, Liangpin Shop's children's snacks and fitness snacks segments have achieved certain growth. Among them, terminal sales of children's snacks exceeded 80 million yuan, a year-on-year increase of 60%, and fitness snack sales revenue initially reached 30 million yuan.
In addition, in March this year, Liangpin Shop launched two products for sugar-control groups such as fitness white-collar workers, pregnant women, and diabetics, as well as students aged 6-18: probiotic daily nuts with no added sucrose and a high-calcium version.
Deeply cultivating the needs of segmented groups undoubtedly adds more growth narratives for Liangpin Shop.
Facing Liangpin Shop's dual efforts in channels and products, Three Squirrels clearly feels the pressure. So since the end of 2018, Three Squirrels, which had been walking on one leg, began to study shifting to offline.
After two and a half years of effort, Three Squirrels now has over 1,000 offline stores, and the proportion of offline revenue has gradually increased to 33.37%. This is one of the reasons why Three Squirrels' net profit in Q1 2021 increased by 67.57% year-on-year to 315 million yuan, almost exceeding the entire previous year. In 2021, Three Squirrels plans to open 800-1,000 new alliance stores.
In terms of branding, Three Squirrels is also focusing on new products. In April last year, Three Squirrels announced plans to invest 42.2562 million yuan of its own funds to set up four subsidiaries, mainly engaged in infant food, instant food, pet food, and custom wedding gifts.
The 2020 annual report shows that all four companies officially launched in September of that year. Among them, "Xiaolu Lanlan," which focuses on infant food, achieved revenue of 54.9493 million yuan in 2020, while the other three brands combined achieved revenue of 21.1624 million yuan.
And as of the first quarter of this year, Xiaolu Lanlan's omni-channel revenue has reached 79.13 million yuan, almost on par with Liangpin Shop's children's snacks terminal.
As of press time, Three Squirrels has a market value of 22.7 billion yuan, and Liangpin Shop has a market value of 21.2 billion yuan, ranking at the forefront of the A-share snack track.
The two brands complement each other and follow each other closely, keeping the internet snack track still climbing upward.
**-02-**
**Traditional Differentiation**
**Increasing offline presence and category expansion continue to attract capital attention to internet snacks, but they are not a panacea for all snack companies, such as Lai Yifen.**
Founded in 2001, Lai Yifen can be considered the originator of physical leisure food chain brands. Its production is outsourced to OEM factories, it seeks a wide range of categories, relies on self-built channels for sales, and mostly uses small and medium-sized street stores as its business model, which became a template for many subsequent internet-born snack brands.
The problem is that it missed the rhythm of the times.
As early as 2011, Lai Yifen sensed the arrival of the e-commerce era, successively developing PC and mobile sales channels and launching a CMS system, but with complete hardware, Lai Yifen did not pay attention to the "soft power" of online marketing and after-sales service.
Negative reviews such as untimely delivery, mismatched goods, and no after-sales service have long occupied the top of the comment sections. The poor shopping experience has kept Lai Yifen's e-commerce flagship store fans at only a fraction of Three Squirrels and Liangpin Shop.
**The neglect of online channels caused Lai Yifen to miss an epoch-making upward channel, and correspondingly brought unbearable cost pressure, which was particularly severe in the pandemic-stricken 2020.**
Financial reports show that in 2019, Lai Yifen's sales expense ratio was as high as 33.1%, while Three Squirrels and Liangpin Shop were only around 20% in the same period. Most of Lai Yifen's sales expenses are wages, social insurance, and rental property fees, with online system operating costs accounting for only about 2%, closely related to the company's heavy offline sales model.
The laziness in channel construction has kept Lai Yifen's performance lukewarm. From 2017 to 2019, Lai Yifen achieved revenues of 3.64 billion yuan, 3.89 billion yuan, and 4 billion yuan, with revenue growth falling from 12.35% to 2.86%; net profits were 101 million yuan, 10.109 million yuan, and 10.3707 million yuan, respectively, nearly zeroing out over three years.
It is worth mentioning that a considerable portion of these profits came from government subsidies.
In 2018 and 2019, Lai Yifen recorded government subsidies of 24.82 million yuan and 21.5656 million yuan, respectively. In 2020, this figure approached 30 million yuan.
Since last year, Lai Yifen, eager to save itself, has chosen to increase investment in branding.
In 2020, Lai Yifen launched the "Fresh Snacks" strategy, which mainly interprets "fresh snacks" through five major standards: fresh raw materials, fresh technology, fresh packaging, fresh delivery, and fresh production and sales. At the same time, Lai Yifen also hired top celebrity Wang Yibo as its image spokesperson to further expand brand awareness.
Unfortunately, the heavily invested sales expenses do not seem to have converted into actual sales.
As of press time, Lai Yifen has still not released its 2020 annual report. But according to the company's performance forecast, Lai Yifen expects a loss of up to 78.49 million yuan in 2020.
Lai Yifen is stagnant, but that does not mean traditional snack companies are collectively dim. The best example is Qiaqia Food, a snack giant from the 1.0 era.
In 1998, Chen Xianbao, the "father of Popsicle," targeted the melon seed business popular in his hometown of Anhui. After a new process of boiling with spices and herbs, "Qiaqia Melon Seeds" was born. Wrapped in a red kraft paper package, Qiaqia stood out from peers that mainly sold in bulk. Shortly after entering the new millennium, Qiaqia, mainly selling melon seeds, staged a high-speed growth curve with sales exceeding 1.5 billion yuan.
After 2010, Qiaqia melon seeds experienced the baptism of "internet thinking" and the fierce impact of e-commerce. Even its main single-product strategy of melon seeds has not changed, but today, this somewhat old traditional company still firmly ranks first in offline sales scale and market value, maintaining strong profitability.
Financial reports show that in 2020, Qiaqia Food's operating revenue was 5.289 billion yuan, ranking third in the A-share snack track. Its net profit attributable to the parent company was as high as 805 million yuan, nearly a quarter higher than the sum of Liangpin Shop and Three Squirrels' net profits. In Q1 2021, Qiaqia Food's net profit was 198 million yuan, lower than Three Squirrels' 315 million yuan but still higher than Liangpin Shop's 102 million yuan.
Tianfeng Securities research reports believe that Qiaqia Food's superior profit space benefits from reduced marketing expenses. In other words, the "saving money" strategy allows Qiaqia to release profit elasticity even under revenue pressure.
But the root cause may need to return to the essence of the snack industry.
Data shows that in 2019, online sales accounted for only 12.8% of the entire domestic leisure snack industry's sales channels. Although in the past decade, online channels seemed to more easily create hit products and new brands, the experience and purchasing habits provided by physical stores are incomparable to online stores.
And unlike Lai Yifen, which relies on OEM and aggressively opens independent stores, Qiaqia Food, with its deep accumulation, has stronger product development and operational capabilities, making its offline channel investments more precise.
Public information shows that Qiaqia Food is currently committed to implementing the "Nut Shop-in-Shop" plan, having already laid out over 200 stores, with an expected increase of 200-300 in 2021.
Not only that, Qiaqia Food also leverages its advantages in raw materials and supply chain to penetrate third- and fourth-tier cities and county markets, strengthen new channels such as To B, catering, and community group buying, and actively expand overseas markets.
Financial data shows that as of last year, Qiaqia Food's overseas market revenue share increased from 6.65% in 2019 to 8.9%, with that part of revenue growing by about 150 million yuan last year.
The quiet and deep traditional snack companies make the internet snack peers look flamboyant, showing that the true king is always the one who says little but acts decisively.
"Flowing water does not compete for the lead; it competes for being endless." Perhaps "shouting online, making money offline" is closer to the essence of the snack business.
**-03-**
**Rising Stars**
The battle among internet snacks is intensifying, and traditional snacks can still compete. Outside the A-share market, countless latecomers are freely swimming in the 600-billion-yuan blue ocean of leisure snacks.
For example, vertical upstarts that grew in the cracks of traffic.
In recent years, with the change in traffic allocation weight on Alibaba's platform, the concentration of ancient internet brands represented by Three Squirrels and Liangpin Shop has declined, and their market share has been continuously diluted.
Among them, the market share of the three giants Three Squirrels, Baicaowei, and Liangpin Shop fell from 35% in Q1 2020 to 23% in Q1 2020. The redistribution of large platform traffic has allowed many emerging brands to stand out.
In addition, many small brands are good at live streaming on short-video platforms like Douyin and Kuaishou, using social platforms like Weibo and Xiaohongshu for seeding and traffic diversion, and leveraging a large number of KOLs and KOCs for concentrated promotion. These new internet snack brands in vertical fields have been able to rise rapidly.
A typical example is "Xuanma," which focuses on egg yolk pastries. Xuanma opened its Taobao store in 2017. This brand, dedicated to innovation in the egg yolk pastry category and deeply tied to Li Jiaqi, set a record on Tmall with sales of 120 million yuan in half a year, with a single-product repurchase rate as high as 57.6%.
During the 2020 Double 11, Xuanma shipped a total of 5.3 million egg yolk pastries across all online channels, with sales exceeding 32.55 million yuan.
Capital always smells opportunity first. On July 23, 2020, Xuanma announced the completion of a 55 million yuan Series A financing round, led by Jinding Capital.
Another example is AKOKO, which mainly sells biscuit snacks. Founded in June 2016, it completed a 50 million yuan Series A financing in January 2018. From March to August last year, AKOKO's total sales reached 56.85 million yuan, a year-on-year increase of 306%.
Also worth mentioning is Wang Xiaolu, which is "all in on chicken feet." Since opening its Tmall flagship store in 2019, Wang Xiaolu's tiger-skin chicken feet, which are manually deboned, quickly stood out in the fiercely competitive braised snack track. Data shows that in the first month on Tmall, Wang Xiaolu's tiger-skin chicken feet sales exceeded one million yuan, with a monthly repurchase rate close to 30%.
In October 2020, Wang Xiaolu received financing from Jinding Capital and Challenger Capital. It is worth noting that the legal representative of Challenger Capital is Tang Binsen, founder of Genki Forest. Both companies have seized the historical opportunity of the rise of local new brands.
Other vertical category leaders include "Single Grain" (promoting single-person chips), "Guzi Guzi" (focusing on mushroom crisps), "Yungeng Wuzuo" (focusing on brown sugar snacks), and "Daily Dark Chocolate" (a new internet-famous product in the chocolate track). With a wink from the platform, the brand sequence in the snack segmentation track changes completely.
In addition to vertical newcomers nurtured by platform traffic, there are also new snack brands emerging with the iteration of Gen Z consumer groups. The most representative is "functional snacks," which have been frequently seen this year.
**According to Tmall's "2020 Functional Snack Innovation Trends," functional foods are currently transitioning from "pan-function" to "burden reduction" and "strong benefits." Consumer demand is deepening, with "no burden" and "fitness meal replacement" being the main demand tracks, while sleep aid, immunity enhancement, and whitening and skincare demands are growing rapidly.**
In the meal replacement snack segment, brands like Wonderlab and ffit8 have launched low-calorie snacks. Among them, ffit8 launched a series of snack protein bars in flavors including cheese, chocolate, cookie, coconut, beef, banana, and salted egg yolk, successfully igniting the market.
There is also the star brand Wang Baobao, which focuses on snack cereal. The brand officially launched its products on Tmall in August 2018, with monthly sales growing from 2 million to 40 million yuan. Since the second half of 2019, Wang Baobao has become the No.1 cereal category on Taobao, driving a year-on-year growth of over 50% in Taobao cereal sales in 2019.
Wang Baobao's success is clearly inseparable from its combination of health and taste. This positioning of delicious, trendy, and guilt-free allowed Wang Baobao to surpass foreign brands like Quaker and Calbee during the 2020 Tmall 618 promotion, becoming the champion in the instant cereal category and securing a place in the meal replacement snack track.
Also worth mentioning is the trend of health supplements becoming snacks, which has been at the forefront this year.
The internet-functional brand BUFFX attempts to solve problems like sleep aid and eye care for young people with a single gummy. In less than a year since its founding, it has received three rounds of financing, with investors including Sequoia Capital China, GGV Capital, Black Ant Capital, and Plum Ventures.
Not long ago, meal replacement brand WonderLab also launched a new sleep gummy, also using food-grade GABA, and claiming each gummy has about 13.6 kcal, with 0 sucrose and 0 burden.
Sleep-aid snacks are showing an increasing presence among the 300 million Chinese people who have trouble sleeping.
Another popular category in the trend of health supplements becoming snacks is hyaluronic acid gummies.
On January 7 this year, the National Health Commission officially approved the request by Bloomage Biotechnology, a company engaged in hyaluronic acid R&D, production, and sales, to use sodium hyaluronate as a new food ingredient, allowing its addition to ordinary foods. The scope of use includes milk and dairy products, beverages, alcohol, cocoa products, chocolate and chocolate products, candies, and frozen drinks.
Shortly after, on January 22, Bloomage Biotechnology announced the launch of "Hei Ling," the first domestic hyaluronic acid food brand.
Then on February 3, well-known meal replacement brand WonderLab launched its first oral "hyaluronic acid sandwich gummy." It is reported that the core ingredient also comes from Bloomage Biotechnology's patented ingredient—HAPLEX®Plus sodium hyaluronate.
At the same time, many companies have launched or are launching oral hyaluronic acid products. The new trend in the oral beauty industry seems to be emerging, and capital enthusiasm has followed.
"2021 is definitely a big year for functional foods and health supplements," Liu Saige, investment manager at Panda Capital, said in a media interview. In addition to Panda Capital, Sequoia Capital China, GGV Capital, BAI Capital, IDG Capital, Black Ant Capital, Plum Ventures, and Jiayu Fund have all identified their targets.
**Each generation has its own brands. In the contemporary era that values health, function, fashion, and consumer segmentation, more and more brands are entering the snack track as category disruptors and cross-border innovators. They carry not only the use value of leisure and satiety but also the emotional value of stress relief and social interaction.**
**Under the reshaping of new players, the word "snack" may be given a new definition.**
Source: TideSight (ID: TideSight)
Tips will be paid 400-2000 yuan once adopted.


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