Scan the QR code in the image to register Few foods combine the contradictory attributes of 'high calorie' and 'healthy,' but nuts do. Given that China's nut consumption is far below that of developed countries like the US and Japan, the industry has huge growth potential. According to a previous forecast by the Qianzhan Industry Research Institute, the market size of China's nut and roasted seed industry will reach about 185.5 billion yuan by 2025. In 2015, Wolong's 'Daily Nuts' series became a hit, igniting competition in the domestic nuts industry: Qiaqia, which previously focused on sunflower seeds, gradually developed nuts as a second growth curve, even setting a strategic goal of 10 billion yuan in sales (including tax) by 2023; Three Squirrels, which seized the last wave of e-commerce dividends, expanded offline; and Bestore, which started offline, has embraced a 'premiumization' strategy to tell a new story. With Three Squirrels and Bestore successively going public, the early competition in the nuts industry has clearly come to an end. So, in the post-nuts era, where is the competition among brands heading? How much impact will the new consumption trend have on the competitive landscape of the nuts industry? First Battle of 'Involution': Probiotic Nuts? All industries are accelerating 'involution,' and nuts are no exception, especially as nut margins are declining. Food industry analyst Zhu Danpeng believes, 'On one hand, brand competition has entered a white-hot stage; since the snack industry has low barriers, many companies are engaged in price wars. On the other hand, the nut market, which is the main focus of the snack industry, is already very mature and transparent, and most ingredients are imported, with importers taking a large share of profits. If companies do not control upstream resources, their profit margins will be very low.' Given that nut margins are not advantageous, brands have to use all means to boost sales, and the 'involution war' is already on the verge of breaking out. The first area to 'roll up' is 'flavor,' with probiotic nuts being the hottest. After the pandemic, the public's health requirements have risen to a new level, and health-immune ingredients represented by probiotics are particularly popular. At the same time, the probiotic industry has promising prospects. Data shows that by 2025, the global probiotic industry output will exceed $77 billion, with the domestic market accounting for more than 25%. So, to align with the 'big health' trend, since last year, Qiaqia, Bestore, and Three Squirrels have all launched probiotic nuts. In terms of strain types, the 'involution' is not significant. For example, both Qiaqia and Three Squirrels use a probiotic called BC30. Their promotions also emphasize that this strain has 'higher activity than ordinary probiotics' and 'is supported by multiple clinical studies and international patents.' But in terms of the number of strains, there is a gap between brands. Qiaqia and Three Squirrels currently use a single strain, while Bestore uses multiple strains. It is understood that Bestore's probiotic daily nuts contain four strains: Bifidobacterium animalis BB-12, LGG Lactobacillus rhamnosus, Lactobacillus acidophilus, and Lactobacillus paracasei. Of course, the number of strains is not necessarily positively correlated with the final effect; it also requires consideration of whether there are conflicts between multiple strains and whether the functional activity of the strains can be maintained. In addition, to further enhance the differentiation of their probiotic nuts, brands have used various 'clever tricks.' For example, Three Squirrels and Bestore have both adopted a 'dry-wet separation' design on their packaging, claiming to achieve 'partitioned freshness locking' and avoid flavor mixing. Bestore has also segmented its products by 'ingredients' and 'target groups.' Those who want to lose weight can choose '0 sucrose,' those who want to supplement calcium can choose 'high calcium,' and stay-at-home moms and office workers can quickly find a suitable style. In short, from single strains to multiple strains, from dry-wet separation to style segmentation, probiotic daily nuts have completely 'rolled up.' But it is worth noting that because probiotic nuts are priced higher than ordinary nuts, they are more likely to be embroiled in the controversy of being a 'tax on intelligence.' The beneficial effects of probiotics themselves are scientifically supported. The World Gastroenterology Organisation (WGO) pointed out in 2011 that probiotics have 'strong evidence support' for alleviating diarrhea and constipation. In 2017, based on a large amount of medical evidence, the WGO again pointed out that probiotics can effectively prevent and treat digestive diseases. According to the 'Human Probiotic Intake Standard,' healthy people need to consume between 3 billion and 20 billion probiotics daily to maintain a good microecological balance. Based on the probiotic content disclosed on the product detail pages of the three major brands, taking each small bag of 25 grams as a unit, Three Squirrels and Bestore contain about 200 million probiotics each, while Qiaqia is slightly higher, with about 500 million per small bag. Although the probiotic content per small bag is still far from the daily intake for healthy people, considering that consumers also occasionally ingest probiotics from yogurt and other products, 'Mantis Finance' believes that the probiotic content set by nut brands is relatively reasonable. However, compared to the 'health benefits' touted by probiotic nuts, consumers seem to pay more attention to taste and quality. In terms of taste, the yogurt-like taste of probiotic nuts has been recognized by some consumers. In terms of quality, probiotic nuts, like ordinary nuts, face consumer scrutiny over 'size.' So, with the new probiotic nut product, how did the major brands perform in the end? From last year's annual results, in terms of revenue, Three Squirrels had a clear leading advantage, with total revenue of 9.794 billion yuan, followed by Bestore and Qiaqia with 7.894 billion yuan and 5.289 billion yuan, respectively. In terms of profit, the traditional brand Qiaqia was better, with net profit attributable to shareholders of 790 million yuan, while Bestore and Three Squirrels had 344 million yuan and 301 million yuan, respectively. This also reflects that between new and old brands, despite fierce competition, each has its own advantages. New brands quickly opened up the market with intensive traffic tactics, but old brands have maintained profitability through accumulated market experience. To maintain their leading positions in the nut market, 'Mantis Finance' believes that the 'involution war' between new and old brands will not end in the short term. At the same time, given the unstable epidemic situation in some domestic regions, driven by health demands, probiotic nuts will continue to maintain popularity for some time. The New Consumption Express May Not Be Easy to Board Last year, Perfect Diary and Genki Forest broke out of their circles, making new consumption brands a hot topic and making the entire industry feel the 'power' of the new consumption express. But 'breaking out of the circle' does not mean 'long-term popularity.' After the 'money-burning' traffic war ends, brands still need to continuously accumulate advantages in product, channel, and marketing to build hard strength, and only then can they truly gain a foothold in the market. This is also an important reason why Genki Forest still builds its own factories when launching new products, and Perfect Diary still invests heavily in R&D while marketing crazily. The nuts industry is the same. When the new consumption east wind blows 'indiscriminately' to all brands, those with hard strength are more likely to go further. This is a test for every brand. In terms of product, the difference between brands may not be significant. Taking the above probiotic nuts as an example, once a brand launches it, other brands can follow a 'follow strategy' and not fall behind too much. But in terms of channel and marketing, new and old brands have their own strengths. From a channel perspective, new brands are making strong efforts, but catching up with old brands still takes time. Among new brands, Three Squirrels, founded in 2012, is a brand 'rooted' online. Although diversified traffic tactics allowed Three Squirrels to quickly occupy consumer minds within just 7 years and successfully go public, as online traffic dividends gradually peak, opening offline channels has become an urgent task. Currently, Three Squirrels has two forms of offline stores: one is the 'feeding store' (directly operated), and the other is the 'alliance store' (franchised). According to data disclosed in its 2020 annual report, Three Squirrels has opened a total of 1,000 stores. Since the launch of its offline strategy in 2016, four years and 1,000 stores is not a bad speed. But the channel advantages of traditional brands are difficult for new brands to catch up with in a short time. Take Qiaqia as an example. As a traditional brand, it not only has 9 international standard self-owned factories globally, allowing it to control nut production quality independently, but it has also deeply cultivated channels for many years. Public data shows that Qiaqia currently has more than 1,000 distributors and 400,000 terminal sales points. At the same time, Qiaqia is also increasing its 'firepower,' preparing to move toward the goal of 'one million terminals and ten billion revenue' by strengthening digital management of distributors and terminal service efforts. From a marketing perspective, new brands have a slight advantage, but old brands are catching up strongly. Currently, judging from the number of followers on Tmall, new brands seem to have more 'insights' into traffic marketing than old brands. New brands almost all follow a strategy of 'building the brand through sales' during their development. This prompts them to invest a lot of funds and creativity in marketing from the very beginning. Again, taking Three Squirrels as an example, by personifying three cute squirrels, the brand becomes more personable and easier to leave a deep impression on consumers. Moreover, with its own IP, Three Squirrels can better 'show its skills' in marketing activities. For example, in the highly 'involuted' blind box marketing, Three Squirrels directly designed four squirrel-themed trendy toys—'Xiao Jian,' 'Xiao Mei,' 'Xiao Ku,' and 'Cai Jin'—based on its own squirrel IP. This not only 'rides on' the popularity of blind boxes but also brings a wave of attention to the brand. Of course, in recent years, traditional brands represented by Qiaqia have also accelerated their marketing efforts. Take the blind box marketing mentioned earlier. Last year, Qiaqia launched a co-branded snack blind box with RiCO, an IP under the top trend IP incubation company 'Finding Unicorn.' The gift box was officially sold on Qiaqia Food's Tmall flagship store, limited to 10,000 copies. It is reported that the blind box sold out within 1 second of being listed. In addition, Qiaqia also collaborated with Marubi to launch a 'melon seed face mask' and launched the 'I Am the Anchor' influencer incubation star plan. In summary, to catch up with the new consumption express, both new and old brands have areas where they need to 'make up lessons.' Three Squirrels and others need to cultivate their channel capabilities as a basic skill before more new brands emerge, to avoid being overtaken. Qiaqia and others need to take advantage of the new consumption east wind to enhance marketing capabilities to maintain their leading position in the nut market. Regarding competition among brands, Andy Grove, co-founder of chip giant Intel, proposed the 'taillight theory': when driving in fog, it is much easier to follow the taillights of the car ahead. But the danger of the taillight strategy is that once you catch up and overtake the car ahead, there are no taillights to guide you, and you lose the confidence and ability to find a new direction. Therefore, being a follower has no future; only by acting early can you strive for future victory. The same applies to nut brands. Whether it is the 'big health' trend or the 'new consumption' east wind, for brands, they play a role in 'adding fuel to the fire.' Only brands that truly establish themselves in the market, accumulate product strength, and dare to innovate will be the winners who laugh last. Source: Mantis Finance (ID: TanglangFin) Author: Tu Lin -END-