First, on November 27, Bestore announced its largest price cut in the brand's 17-year history, reducing prices on 300 hot-selling products by an average of 22%, with a maximum reduction of 45%. Then, it openly clashed with snack discount chain Zhao Yiming Snacks, becoming embroiled in a lawsuit. All signs indicate that Bestore, once proud of its premium snack positioning, seems to have no choice but to humble itself and make changes to survive. Founder Yang Yinfen previously stated in an open letter: "Bestore must reduce costs and make prices affordable. If everyone thinks it's too expensive, we must change, or we will die." Beyond complaints about high prices, DT Business Observer is more curious: What exactly happened to Bestore? Why did the 'premium price' strategy work before but not now? Street-side snack store rides the e-commerce wave In August 2006, Bestore opened its first store across from Wuhan Plaza. Like most newly opened street-side shops, the initial Bestore store was only 30 square meters with just four employees. Its promotional approach was down-to-earth: Yang Hongchun, who recently stepped down as chairman, led staff in inviting passersby to free tastings at the entrance. In an era when consumers primarily bought snacks from neighborhood convenience stores and supermarket snack shelves, Bestore's snack collection store format, which brought "delicious snacks from around the world to customers' doorsteps," was a model innovation. At the time, the only similar brand was Lai Yifen, but its stores were concentrated in Jiangsu, Zhejiang, and Shanghai, while Bestore was in Wuhan. Both relied on offline channels, so they didn't compete directly. With this novel model, Bestore first gained recognition in Wuhan, then densely opened stores in Central China with Wuhan as the core. However, Bestore's real leap came through e-commerce. In 2012, Bestore established an e-commerce company. That year marked the first round of reshuffling among snack brands. On one hand, Baicaowei, which had entered online channels less than two years earlier, achieved online sales of 140 million yuan in 2012. On the other hand, traditional snack brand Want Want, still relying mainly on traditional channels, saw its market value peak at HK$170 billion in 2013, followed by three consecutive years of negative growth. Bestore, which bet on e-commerce in 2012, leveraged it to transform from a regional snack brand into a future industry giant. In 2015, Bestore's online sales exceeded 820 million yuan. In 2016, it won the top spot in the leisure snacks category on Double 12. According to Bestore's prospectus, from 2016 to 2019, online revenue as a share of main business rose from 33.69% to 48.58%. During the e-commerce takeoff phase, Bestore left behind Lai Yifen, which still relied mainly on offline channels, but also faced a new rival: Three Squirrels, which focused on e-commerce platforms. In 2019, Bestore's revenue was 7.71 billion yuan, while Lai Yifen and Three Squirrels had revenues of 4 billion yuan and 10.2 billion yuan, respectively. Bestore breaks through with 'premium' positioning In terms of revenue, before 2022, Three Squirrels consistently outperformed Bestore. As the second-place player, Bestore sought to differentiate its brand positioning by targeting specific demographics. Starting in 2015, Bestore marketed to specific groups through collaborations with variety shows and TV drama product placements. From "Dad, Where Are We Going? Season 3" to "Produce Camp 2019" and "Call Me by Fire," and from "Ode to Joy 2" to "Mr. Right" and "The Long Night," Bestore targeted its main consumer groups: young mothers aged 18-40 and refined white-collar workers. However, the awkward part is that these marketing methods were also used by Three Squirrels. For example, Bestore was featured in "Ode to Joy 2," but in "Ode to Joy 1," when the "Five Beauties of Ode to Joy" were trapped in an elevator, Yang Zi's character Qiu Yingying said, "I have my favorite Three Squirrels." Bestore needed a new story, one that would differentiate it from other brands. In 2019, when Three Squirrels went public with the title "First Stock of National Snacks," Bestore announced in January of the same year that it would reposition itself as a "premium snack" brand. To achieve "premium," Bestore first replaced its cartoonish logo with a simple text design. It also collaborated with fashion photographer Chen Man to shoot "snack blockbusters." In terms of store location, Bestore densely placed stores in shopping malls. According to a 2019 media interview with Chen Zhangwei, head of Bestore's development center: As of July 1, 2019, Bestore had over 800 mall stores, and 70% of the 200 new stores added in the first half of 2019 were located in shopping malls. For consumers, the most obvious manifestation of premiumization might be increasingly exquisite packaging and higher prices. We compared the per capita consumption of major snack brands. Before the price cut, Bestore's average order value was 56.5 yuan, higher than Lai Yifen, Three Squirrels, and others, ranking first among the above snack brands. Take Bestore's hot-selling "peeled fragrant sunflower seeds" as an example: before the price cut, a 120g bag sold for over 10 yuan, while a similar product, Qiaqia's white sunflower seeds, cost only 15.8 yuan for 500g. "A bag costs over ten yuan, and a casual purchase easily exceeds a hundred, but there's not much in a bag" might be the general impression of Bestore. This "premium" image, mainly reflected in high prices, exquisite logos/packaging, and upscale stores, did attract a considerable number of buyers initially. Nielsen research showed that as of October 2019, 47% of consumers in key first- and second-tier cities recognized Bestore as having "premium snack" characteristics. Why did people buy it? One explanation is that under the "premium" marketing, they genuinely believed in Bestore's quality and brand power. Another answer might be: it feels "face-saving" and suitable for gifting. On Xiaohongshu, there are many posts showing off receiving "Bestore" as company benefits, with titles and comments like: "Which direction should I kowtow to get a boss like this?" "Fairy company..." In 2022, Bestore's financial report noted that its corporate gift business revenue increased by 53.49% year-on-year, mainly driven by sales scenarios where products were used as "gifts." It was also in 2022 that Bestore's revenue surpassed Three Squirrels, becoming the leader in the leisure food industry. After becoming the 'leader' Bestore is not worry-free Sitting on the throne of the snack industry, Bestore is not worry-free. As described earlier, for consumers, Bestore's "premium" image is more concentrated in stores, packaging, and advertising than in the products themselves. From the production chain perspective, Bestore, which offers "all categories," essentially follows a "brand + channel" model. In its business process, Bestore uses an OEM model—the company is responsible for exploring product categories and developing new products, while processing is provided by certified suppliers. In 2022, Bestore had 1,655 SKUs across all channels and launched 603 new products throughout the year, but its R&D expense ratio remained below 0.6%. The founder of "Daily Dark Chocolate" shared in an interview that domestic snack brands using the OEM model commonly had a "shared supply chain" situation. When the same factory cooperates with different brands, once a hit product appears, it is quickly copied by others, eventually leading to product homogenization. In other words, Bestore's snacks are produced by contract manufacturers and then sold under its brand. Not only is it difficult to achieve differentiation in taste, but quality is also hard to guarantee. Last year, Bestore was trending on social media because a plastic paper was found in its mooncake product. As of December 14, 2023, there were 2,210 complaints related to Bestore on Black Cat Complaint. What's worse, Bestore, despite selling at high prices, has low profit margins. Compared with major listed leisure food companies in China, in 2022, Bestore's revenue was higher than Qiaqia Food, but its profit margin was almost only a quarter of Qiaqia's. Bestore's 'premium' products are not selling well In 2023, Bestore's situation became truly difficult. According to financial reports, in Q1-Q3 2023, Bestore's total revenue was 5.999 billion yuan, a year-on-year decrease of 14%; net profit attributable to the parent company was 191 million yuan, a decrease of 33%, with Q3 net profit attributable to the parent company at 2 million yuan, a decrease of 98%. The former "snack king" is now facing a life-and-death test. Where is the problem? First, e-commerce has stalled. Since last year, Bestore's online channel revenue has shown signs of weakness. In 2022, Bestore's e-commerce channel revenue was 4.698 billion yuan, a year-on-year decrease of 3.3%. By 2023, the e-commerce slowdown continued. The weakness in e-commerce is not unique to Bestore. Three Squirrels, which relies more heavily on online channels, is also struggling: in the first half of this year, Three Squirrels' revenue on Tmall and JD.com platforms decreased by 29.49% and 41.11% year-on-year, respectively. On one hand, the dividend period of rapid e-commerce development has passed, and slowing traffic growth is inevitable. On the other hand, with the development of the internet, information has become more transparent, and more people have learned that the "premium" Bestore is actually "factory-branded goods." If so, why not directly find the "same-source factory"? On Xiaohongshu, in the past 90 days, there have been over 4,500 posts related to "snack alternatives," "snack same-source," and "snack suppliers." Bestore, Three Squirrels, and Baicaowei are all frequent targets of "snack alternatives." In offline channels, Bestore faces the even more aggressive "discount snack stores." According to Zhaomen Canyan data, Zhao Yiming Snacks, which started in 2019, opened 1,441 stores in 2023 alone, nearly three times the number opened by Bestore. Both are snack collection stores, but discount snack stores, despite their controversial product quality, indeed have wider store coverage and lower prices. In previous interviews, Yang Yinfen believed that discount snacks "(with Bestore) have different business models, operating costs, brand positioning, and industry ecosystems." However, these "differences" do not seem to have avoided direct confrontation. Yang Yinfen admitted in a recent interview that Bestore's current difficulties are related to "the offline siege by discount snack stores within the industry." Final Thoughts On the surface, Bestore's decline is due to the failure of e-commerce channels, but in essence, it is the mismatch between price and quality. In the past, people would pay for "consumption upgrades," "brand stories," and "celebrity endorsements." Now, as the internet gradually eliminates information asymmetry, consumption returns to rationality, and with cheaper competitors emerging, fewer people are willing to pay for Bestore. In other words, in the snack race, a good story may not beat a consumer's heartfelt comment—"delicious and affordable." (Cover image source: @Bestore official Weibo) Text: Shi Youqi Data: Shi Youqi Editor: Zhang Chenyang Design: Zheng Shuya Operations: Su Hongrui Supervisor: Li Jingyu