---
title: "Leisure Food: Selected Segments in a Trillion-Yuan Market"
description: "The trillion-yuan leisure food market continues to grow at over 12% annually. Sub-sectors such as leisure braised products, baked goods, and nuts are growing fastest, while concentration remains low, offering significant headroom for consolidation."
author: "杨默曦、马莉"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2019-09-16"
categories: "Consumer & Categories"
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citation: "杨默曦、马莉. “Leisure Food: Selected Segments in a Trillion-Yuan Market.” New Distribution, 2019-09-16. https://xinjignxiao.com/en/articles/leisure-food-selected-segments-in-a-trillion-yuan-market-2b192f8c/"
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# Leisure Food: Selected Segments in a Trillion-Yuan Market

> The trillion-yuan leisure food market continues to grow at over 12% annually. Sub-sectors such as leisure braised products, baked goods, and nuts are growing fastest, while concentration remains low, offering significant headroom for consolidation.

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**The trillion-yuan leisure food market continues to grow at over 12% annually.**
The trillion-yuan leisure food market continues to grow at over 12% annually. Frost & Sullivan defines leisure food as food consumed during leisure time, with main categories including roasted nuts, leisure braised products, candied fruit, bread and pastries, puffed food, and biscuits.
According to Frost & Sullivan, domestic leisure food sales reached 1,029.7 billion yuan in 2018, with a CAGR of 11.8% from 2013 to 2018.
In terms of sub-industry compound growth rates, leisure braised products, baked pastries, and nuts and seeds grew fastest, with CAGRs of 20.0%, 12.8%, and 11.0% respectively from 2013 to 2018, indicating rapid growth; puffed food, biscuits, and candy and chocolate grew slowest, with CAGRs of 8.5%, 5.1%, and 1.1% respectively, having entered maturity.
In terms of industry concentration, the CR5 for leisure braised products, nuts and seeds, and baked pastries—which have lower concentration—were 21.4%, 17.2%, and 11.3% respectively, leaving ample room for future consolidation.
For puffed food, candy and chocolate, and biscuits, the CR5 were 69.4%, 47.5%, and 30% respectively, indicating high concentration. Foreign leaders have already captured market and channel advantages, leaving limited room for further consolidation and creating high entry barriers.
**Leisure Braised Products**
Sichuan cuisine drives spicy flavor popularity + traditional braised food shops brand + braised snacks = high industry growth
The leisure braised products industry is growing fastest, with low leader concentration. In 2018, the retail market size reached 91.1 billion yuan, up 18.8% year-on-year.
By the end of 2018, Juewei and Zhou Hei Ya, relying on nationwide chain business models and replicable operating strategies, held leading positions, with CR2=13.1%. Their advantages are clear, but non-chain mom-and-pop shops still occupy a large market share.
**From a category perspective: Leisure braised products have the advantage of moving from category to platform.**
Braised flavors ensure similar taste and recognition, and can be based on different raw materials. Chain brands like Juewei have already differentiated into braised vegetables, soy products, and seafood products.
**From a taste perspective: Spicy addiction drives growth in leisure braised products.**
When eating spicy food, the body secretes endorphins, a morphine-like substance, producing pleasure to soothe the pain of spiciness, leading to spicy addiction.
Addictive attributes can drive repeat purchase rates. We believe that spicy food dining, represented by hot pot, will remain a leading indicator for braised product prosperity, and the industry will maintain high growth.
**From a channel perspective: Direct operation + franchising balances brand image and scale expansion.**
Juewei stores are mainly franchised, with growth driven by rapid store openings (800-1,200 per year). By the end of 2018, Juewei had 9,915 stores nationwide, with direct stores accounting for less than 2%. Although gross margin is only 42%, store expansion is fast and expense ratios are low. Zhou Hei Ya uses a fully direct-operated model to ensure high quality and high price, with a gross margin of 57.5% in 2018.
In 2018, Zhou Hei Ya had 1,288 self-operated stores, a net increase of 261, but due to weak per-store revenue growth, revenue fell 1.07% and net profit fell 29.09% due to rising costs.
Ziyan adopts a more moderate model: after establishing brand image through direct operations early on, it gradually opened regional agency. Based on rapid expansion through franchising, Ziyan quickly penetrated various market levels. Currently, Ziyan has about 3,000 stores, of which about 1,400 were self-operated stores built before the first half of 2016.
**Baking Industry**
**Tea drinks drive baking consumption upgrade; optimistic about short-shelf-life products**
Per capita baked food consumption is far below the world average, indicating great growth potential.
In 2018, the baked food market reached 223.7 billion yuan, up 15% year-on-year. In terms of per capita consumption, mainland China's per capita baked food consumption was only 6.9 kg/year in 2017, far below the world average of 18.7 kg/year. Even compared to Hong Kong (12.4 kg/year), which has similar eating habits, there is nearly double the growth space.
As of 2017, CR5 was only 11%, compared to Japan's baking industry CR5 of 88%, indicating no clear leader has emerged.
By 2017, Toly Bread became the leader in the bread market and short-shelf-life bread segment, while Daliyuan held the largest share in long-shelf-life bread.
**By category: Products are becoming healthier, product structure is optimizing, and we predict strong future demand for short-shelf-life products.**
Under consumer health demands, baking product upgrades are trending toward low sugar, low fat, and freshness.
Additionally, the booming tea drink market is driving the baking market. New products like European-style bread are driving market growth, reflecting consumption capacity and upgrade demand.
In terms of product structure, according to Yibang Power Research Institute data, short-shelf-life bread and pastries are expanding share due to freshness and health advantages. However, because short-shelf-life products rely heavily on turnover and rapid innovation, scale effects are weak, so products with shelf life over 20 days still account for 93%.
**By channel: Store model and wholesale model each have merits.**
1) The central factory + wholesale model is represented by Toly Bread. By the end of 2018, Toly Bread had established production bases in 17 regions nationwide, deeply cultivating channels, and had built over 220,000 retail terminals nationwide.
2) The chain store model is represented by 85°C, with 580 stores in mainland China. The company has also upgraded its stores, adding coffee and beverage areas and rest zones, enriching its product mix.
The wholesale model relies on channel capability, with high turnover, large scale, low gross margin, and low expenses; the store model has high brand awareness, small scale, high gross margin, and high expenses. Each has its strengths.
**Nuts Industry**
**Occasional demand becomes daily; market space nearly doubled in past five years**
Nuts have strong health attributes and are expected to maintain 11%+ growth.
In 2018, the nuts and seeds retail revenue reached 89.35 billion yuan, up 12% year-on-year, with a CAGR of 11% from 2013 to 2018, nearly doubling market space in five years. Major leaders include Three Squirrels, Qiaqia, Bestore, Baicaowei, and Lai Yifen, with retail CR5=17.2% in 2018, indicating low concentration.
**By category: Demand for emerging tree nuts surges; category upgrades accelerate industry growth.**
Currently, the domestic nuts and seeds industry is mainly divided into traditional seed nuts (peanuts, sunflower seeds, pumpkin seeds, watermelon seeds) and emerging tree nuts (pistachios, hazelnuts, cashews, walnuts, pine nuts, chestnuts, almonds).
**By channel:**
1) At the end of traffic dividend, online competition structure is stable. E-commerce platforms began rapid development in 2010. Baicaowei and Three Squirrels entered Tmall in 2010 and 2012 respectively, mainly selling imported tree nuts.
Currently, online concentration for nuts is higher than offline. In June 2019, Taobao's top three nut sellers were Three Squirrels, Baicaowei, and Bestore, with online market shares of 33%, 15%, and 9% respectively. At the end of traffic dividend, new entrants face high traffic costs, creating strong entry barriers online.
2) Online companies are expanding offline to build brand power across channels. Facing high marginal traffic costs online, nut companies are moving offline, hoping diversified sales models enhance consumer purchase experience. Currently, Three Squirrels has over 80 offline stores. Baicaowei, which closed stores for seven years, is using Haoxiangni's 124 offline stores for offline promotion and opened its first offline direct store in Hangzhou in June 2019.
Traditional offline companies are moving online: represented by Qiaqia, traditional companies have opened Taobao stores, using daily nuts to open online markets. Lai Yifen and Bestore have also entered online.
**Puffed Food**
**Early start, slow growth; early movers have seized the initiative**
Puffed food with rich seasoning and crispy texture grows steadily. In 2018, the retail market size reached 41.1 billion yuan, up 7.6% year-on-year, with slowing growth.
By the end of 2018, CR5=69.4%, indicating high concentration and entry barriers.
Currently, domestic puffed food raw materials include grains (corn, wheat, whole wheat, oats, rice), beans (snow peas, red beans, chickpeas), and tubers (potatoes, sweet potatoes, purple sweet potatoes). Leading companies gain market share by continuously launching new categories, flavors, and innovative marketing. Since new products are easy to follow, other companies often adopt follow-the-leader strategies, leading to high homogeneity.
**From a category perspective: Sub-segment leaders each hold high ground; high concentration creates brand-as-category impression, with strong user stickiness.**
Want Want built its first mainland factory in 1994. We estimate Want Want's rice cracker market share exceeds 60%. In 1993, PepsiCo introduced Lay's potato chips to China; now Lay's holds about 40% of the domestic potato chip market. Oishi dominates the wheat product segment.
On one hand, early start and mature development; on the other, under consumption upgrades, customers increasingly value health and quality, causing overall puffed food industry growth to decline, entering maturity.
In recent years, puffed food companies have driven revenue growth through multiple methods:
1) Raw material innovation: using other low-calorie raw materials to replace potatoes, such as cassava, taro, and yam. In August 2018, Qiaqia launched yam crisps, reaching peak monthly sales of 10 million yuan, and market response indicated better taste than potato chips, successfully creating a hit product.
2) Process innovation: launching non-fried baked puffed food, such as Lay's "Qingbei" and Orion's "Shuyuan".
**From a channel perspective: Consumer habits are fixed; leading brands have solid traditional channels.**
In domestic puffed food development, Lay's, Oishi, and Want Want have been in China for 25 years; Copico and Orion for over 10 years. They all formed strong consumer brand recognition early through supermarkets, convenience stores, and special channels, with solid offline foundations. Taobao's annual puffed food sales are less than half of nuts and seeds.
**Candy and Chocolate**
**Mature industry, foreign dominance, high concentration**
Industry growth is slowing, with high concentration and high barriers. In 2018, the retail market size reached 112.9 billion yuan, down 2% year-on-year, showing significant slowdown.
With rising health awareness and growing demand for quality consumption, daily demand for traditional candy is gradually decreasing.
According to a survey by China Industry Information Network, candy production fell from 3.62 million tons in 2014 to 2.88 million tons in 2018. International candy giants dominate the Chinese candy and chocolate market and have covered supermarket channels. By the end of 2018, CR5=48%, indicating high concentration and strong entry barriers.
**From a product perspective: Compound chocolate products are popular, and unit prices rise accordingly.**
In product innovation, creative products combining chocolate with nuts, fruits, and pastries—like Planet Cup, oat chocolate, and Snickers—have succeeded with labels like "nostalgic" or "hunger-relieving," significantly raising product prices.
**From a channel perspective: Supply-side decline reduces candy production; international leaders maintain stable share.**
Small and medium enterprises often use a distributor system, where manufacturers handle production and distributors handle sales and pricing. Limited by scale and brand power, this model fails to achieve sufficient channel coverage, and market share is gradually eroded. Industry leader Hsu Fu Chi (Nestlé) abandoned circulation channels, adopting a direct counter sales strategy focusing on KA hypermarkets, investing company funds to control terminal sales and maximize execution of sales strategies.
Other industry leaders like Alpenliebe mostly adopt a combination of distributor and direct sales, covering KA hypermarkets, regional A-class supermarkets, B-class supermarkets, C-class supermarkets, and convenience stores.
Alpenliebe uniformly regulates and manages product displays in stores, requiring KA hypermarket shelf presence of 98% or above. Strong brand effect and channel coverage ensure stable growth in lower-tier markets.
Leading companies often rise during high-growth cycles in niche tracks, enhancing market awareness through blockbuster products or sustained brand promotion, and continuously improving supply chain efficiency and technology application to expand categories, forming competitive barriers.
Source: Soochow Securities
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## Citation metadata

- Publisher: New Distribution
- Author: 杨默曦、马莉
- Published: 2019-09-16
- Canonical: https://xinjignxiao.com/en/articles/leisure-food-selected-segments-in-a-trillion-yuan-market-2b192f8c/
- Original source: https://mp.weixin.qq.com/s/_u15RPEU5nY5b39dyMAIoA

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