---
title: "Nearly a Year After Listing, Has Bestore's 'Premium' Strategy Paid Off?"
description: "From its 'cloud listing' at the start of the year to frequent appearances in hit web dramas like 'The Long Night', Bestore has been anything but low-key in 2020. However, as competitors like Three Squirrels and new niche brands rise, Bestore faces challenges including product quality issues and difficulty increasing profits despite revenue growth. The question remains: how far is Bestore from achieving its 'premium snack' dream?"
author: "财经新媒体"
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published: "2021-01-08"
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# Nearly a Year After Listing, Has Bestore's 'Premium' Strategy Paid Off?

> From its 'cloud listing' at the start of the year to frequent appearances in hit web dramas like 'The Long Night', Bestore has been anything but low-key in 2020. However, as competitors like Three Squirrels and new niche brands rise, Bestore faces challenges including product quality issues and difficulty increasing profits despite revenue growth. The question remains: how far is Bestore from achieving its 'premium snack' dream?

**Click to read the original article for details**
From its 'cloud listing' at the start of the year to frequent appearances in hit web dramas like 'The Long Night', Bestore has been anything but low-key in 2020.
With Be & Cheery's 'sale' to PepsiCo, competition in the snack track has officially entered the second half. However, as new brands in niche snack segments like Wang Bao Bao and Wang Xiao Lu rapidly rise, Bestore, which is ahead, faces multiple dilemmas such as product quality scandals and difficulty increasing profits despite revenue growth.
How far is Bestore, which aspires to be a 'premium snack' brand, from this 'dream'?
**-01- After listing, why is performance not 'good quality'?**
Starting with the 'cloud listing' at the beginning of the year, 'Tanglang Finance' has compiled that Bestore has been making continuous new moves in 2020.
First, it advanced its 'multi-brand' strategy. Bestore officially announced two new brands in May and August: 'Bestore Xiaoshixian' and 'Bestore Feiyang'. The former focuses on the children's snack track, while the latter targets the healthy meal replacement track. Currently, several products from both brands have been listed on Bestore's Tmall flagship store.
Second, it accelerated supply chain upgrades. During the CIIE, Bestore signed strategic cooperation agreements with six global food companies, including France's Lesaffre, US-based Cargill, and New Zealand's Theland. This will boost its supply chain upgrades globally.
Third, it increased brand exposure. Whether in the hit web drama 'The Long Night' earlier this year or in the recently popular 'Legend of Fei' and 'The Story of Yanxi Palace', viewers can see protagonists holding Bestore snacks.
However, despite these continuous new moves, Bestore's performance has been somewhat unsatisfactory.
According to the disclosed Q3 report, in the first three quarters of this year, Bestore achieved operating revenue of 5.529 billion yuan, a year-on-year increase of 1.29%; net profit was 264 million yuan, a year-on-year decrease of 16.15%.
In comparison, competitor Three Squirrels, although facing the same dilemma of 'increasing revenue without increasing profit', clearly has an advantage over Bestore. According to its Q3 2020 financial report, revenue for the first three quarters was 7.231 billion yuan, up 7.7% year-on-year; net profit was 264 million yuan, down 10.62% year-on-year.
Behind Bestore's fervent new moves and not-so-fervent performance, there are many issues worth noting.
From the macro environment, the first is the impact of the pandemic.
Unlike Three Squirrels, which has only recently begun to focus on offline expansion, Bestore has solidly started from offline. From its first store in Wuhan in 2006 to now, Bestore has over 2,000 stores across nearly 13 provinces. The store sales this year have inevitably been affected by the black swan of the pandemic.
In terms of store numbers, in Q1, 52 new stores opened and 51 closed; in Q2, 139 opened and 106 closed; in Q3, 229 opened and 110 closed.
Although the number of new store openings increased significantly from Q3, the number of closures also increased. This indicates to some extent that the overall offline market has not fully recovered.
Meanwhile, new brands targeting niche snack segments are posing new threats to comprehensive snack brands like Bestore.
This year is undoubtedly the best year for niche brands. Yuanqi Forest, Wang Bao Bao, Wang Xiao Lu, Mo Xiaoxian... countless brands focusing on single categories have risen. They have gained high attention and sales in the very categories where Bestore has performed mediocrely.
Once consumers develop daily consumption habits like buying braised snacks from Wang Xiao Lu, meal replacement oatmeal from Wang Bao Bao, and cookies from AKOKO, then the consumption scenario for comprehensive snack brands like Bestore will truly be reduced to 'gift-giving during festivals'. This is clearly not what Bestore expects.
From an internal perspective, there also seem to be many issues.
On one hand, selling expenses continue to rise, while R&D expenses have not kept up. According to the latest Q3 report, Bestore's selling expense ratio was 21.99%, up 2.87 percentage points from 19.12% in the same period last year. R&D expenses were only 7.957 million yuan, less than one-fifth of selling expenses.
On the other hand, 'Tanglang Finance' found that quality control issues persist. As early as 2019 when the prospectus was disclosed, Bestore was criticized for not listing food safety issues. Since snacks are products with high daily consumption frequency, safety issues are of great concern to consumers. If this problem is not fundamentally solved, it will definitely affect sales.
Furthermore, the development of new brands is uncertain and worrying.
Bestore's two main new brands this year are 'Bestore Feiyang' focusing on health and 'Bestore Xiaoshixian' targeting the children's market.
In the health market, the entire meal replacement industry is somewhat 'overheated'. Since WonderLab's meal replacement shakes became popular, countless brands have tried to enter.
Three Squirrels and Be & Cheery, which are in the same track as Bestore, have already launched meal replacement products. Among competitors from different tracks, besides Wang Bao Bao, Yuanqi Forest is also worth noting; this brand, which started with zero-calorie sparkling water, has set its sights on the entire light meal market.
To stand out among these brands, Bestore faces significant challenges.
In the children's market, compared to snacks with broader appeal, children's food has higher safety requirements. However, given the frequent product quality scandals, it is hard to say how many parents are willing to pay for Bestore's new brand. Without positive word-of-mouth, breaking out remains difficult.
**-02- Is 'premium snacks' really a false proposition?**
Although it has been listed for less than a year, Bestore has been shouting its 'premium' slogan for a long time.
However, whether in terms of current market performance or user reputation, there is still a gap between Bestore and 'premium snacks'. This actually raises a new thought: Is premium snacks really a false proposition?
First, for snacks, compared to Bestore, which started with multiple categories, brands focusing on a single category seem more likely to develop towards premiumization.
For example, Zhong Xue Gao, which has been extremely popular in the past two years, also claims to be premium and has the slogan of being the 'Hermès of ice cream'.
Because it focuses only on the specific category of 'ice cream', it is easy to achieve 'unique appearance', 'exquisite ingredients', 'thoughtful after-sales', and 'strict quality control'. As long as consumers can feel the product quality and service, it is not particularly difficult for the brand to establish a premium market image.
From the reviews on Zhong Xue Gao's Tmall flagship store, whether from 'new customers' or 'returning customers', the evaluations are positive. The taste also justifies its high price.
But for Bestore, which has thousands of SKUs, the above is probably only relatively easy to achieve in terms of appearance. From the increasingly 'cumbersome' packaging boxes during the annual New Year shopping festival, it can be seen that Bestore has put a lot of effort into packaging. But relying solely on this to complete the transformation to 'premium' is hard to convince.
Second, in terms of categories, Bestore does have products like nuts and seafood that are relatively high-priced and suitable for a premium line. But these products still account for a minority of the entire brand, and they cannot support the title of 'premium brand'.
Even for existing categories, Bestore has not yet made consumers fully assured. Public information shows that between 2016 and 2017 alone, Bestore was repeatedly exposed for food safety issues.
At the end of 2016, the Chengdu Food and Drug Administration's sampling results showed that Bestore's enoki mushrooms (spicy flavor) sold in Sichuan were unqualified.
In January 2017, the China Consumers Association's '2016 Double 11 Online Shopping Product Quality Test Evaluation Report' showed that the sodium content in the 'Bestore' imported snack gift box on Taobao exceeded the allowable error range.
In March 2017, because products processed by two suppliers commissioned by Liangpin Industry did not meet food safety standards, the Hubei Food and Drug Administration issued an 'Administrative Penalty Decision' with fines totaling 642,800 yuan.
In 2017, the Hubei Provincial Food and Drug Administration found during food sampling that a batch of raw cashews repackaged by Hubei Bestore exceeded the mold limit.
Of course, any food industry cannot escape food safety issues. Bestore itself has strengthened improvements from the supply chain end, but it will take time. Before product quality control and quality meet consumer satisfaction, the 'premium' that Bestore wants may have to wait.
Third, the transformation of consumer mindset will be a long-term issue.
Whether it is Bestore, or competitors Three Squirrels and Be & Cheery, consumers' demands for these brands are mostly 'low price, high quantity'. On their Tmall flagship stores, the best-selling products are basically 'snack gift boxes', with prices maintained at around 50-60 yuan.
It is undeniable that the 'snack gift boxes' of these brands sell well. Most consumers are willing to 'pay' for a large pile of snacks at a relatively reasonable price. But if Bestore insists on moving towards premiumization, price increases are inevitable. With severe homogenization of products with competing brands, such price increases are likely to be hard for consumers to accept.
In fact, choosing to use 'premiumization' to distance itself from competitors and highlight brand differentiation is not a wrong starting point for Bestore. According to the '2020 Snack Market Research Report', in the 2019 Tmall platform data ranking, Bestore, Three Squirrels, and Be & Cheery firmly occupied the top three positions.
Behind this achievement, Bestore, which entered the online market latest, has actually made the most progress. Additionally, although the current offline market has not yet recovered to pre-pandemic levels, the pandemic will eventually pass, and a full offline recovery is only a matter of time. At that time, Bestore, which has been deeply cultivating offline channels for over a decade, will have more opportunities than its competitors.
From the two new sub-brands launched this year, Bestore's ambition in the premium market is clear. But before that, improving product quality to reassure consumers, strengthening product R&D to highlight brand characteristics, and listening to consumer opinions to further optimize products are all essential topics for Bestore before realizing its 'premium dream'.
Source: Tanglang Finance (ID: TanglangFin), Author: Tu Lin
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