If 2023 saw a general cooling of consumption, the snack track was a different story. Over the past year, snack discount chains represented by Snacks Busy, Zhao Yiming Snacks, and Snacks Youming rapidly rose, becoming hot commodities. They further squeezed the living space of snack specialty brands that had dominated the track for years, forcing brands like Bestore and Three Squirrels to proactively transform and enter the snack discount track. In addition to these two major competitive forces, fresh-made snack categories represented by Panda Momo and Xueji Roasted Nuts also caught the attention of capital. Driven by these three major business formats, the all-round competition in the snack track has become impossible to ignore. Based on this, the author has specially reviewed the important events in the snack category in 2023. We note that the current snack track has entered a period of intense horizontal competition, mainly reflected in store scale, layout density, and supply chain. In the future, major brands will enter 'face-to-face competition,' making close-range competition inevitable. Mergers, acquisitions, integration, and upgrades may become new development trends.

Snacks Busy and Zhao Yiming Snacks Merge On November 10, the snack discount store brands 'Snacks Busy' and 'Zhao Yiming Snacks' completed their merger. Yan Zhou, founder of Snacks Busy, will continue to serve as CEO of Snacks Busy, and Zhao Ding will continue to serve as CEO of Zhao Yiming Snacks, while Yan Zhou also serves as chairman of the group company. After the strategic merger, the two companies will maintain their personnel structures, retain their respective brands and independent operations, and strengthen complementary advantages and strategic synergy in product supply chain, brand building, and regional layout. As of now, Snacks Busy has over 4,000 stores, and Zhao Yiming Snacks has over 2,500 stores. After integration, the two will have nearly 7,000 stores, securing the top position in China's snack track. It is worth noting that as early as the evening of October 16, Bestore issued an announcement stating that its wholly-owned subsidiary Guangyuan Juyi would transfer all 3% equity in Zhao Yiming Snacks for 105 million yuan, with the transferee being Hei Yi Capital. Regarding the clearance of Zhao Yiming Snacks equity, Bestore responded that the transaction was based on its own operational development needs and to improve asset operation efficiency, and the company will continue to expand its layout in the bulk snack business in the future. However, after the merger of Snacks Busy and Zhao Yiming, Bestore's subsidiary filed a lawsuit against Zhao Yiming on November 27, believing that Zhao Yiming deliberately concealed major company matters and infringed on minority shareholders' right to know. The court has accepted the case. Guangyuan Juyi believes that the merger of Zhao Yiming with its largest industry competitor constitutes a major change in the company's business policy and investment plan, and Guangyuan Juyi has the right to know. Overall, the merger indeed rapidly increased their overall scale in the snack track, further consolidating their leading position, which is beneficial to the IPO process. However, Zhao Yiming currently faces litigation, and if judicial investigation procedures follow, it may affect the listing application process.

Wanchen Biology Integrates Its Four Snack Brands On September 12, 2023, Wanchen Biology announced that its four snack chain brands, Hao Xiang Lai, Lai Youpin, Lu Xiaochuan, and Ya Di Ya Di, would be merged and renamed 'Hao Xiang Lai', and on this basis, accelerate synergy and integration in brand image, market development, operations, digitalization, and culture. Wanchen Biology started with the mushroom business and entered the snack track through acquisitions in 2022. Subsequently, its snack business continued to rise, while the edible fungus business was gradually weakened. Before the merger of the four brands, 'Hao Xiang Lai' had about 1,700+ stores in 62 cities nationwide, and 'Lai Youpin' had about 1,000+ stores in 68 cities. 'Ya Di Ya Di' had 400+ stores, mainly covering Jiangxi, Chongqing, Shaanxi, Fujian, and Sichuan. 'Lu Xiaochuan' had 230+ stores, covering Jiangsu, Shanghai, Fujian, and Guangdong. After the merger, Wanchen's store count reached 3,300+, jumping into the top tier of the snack track. Leveraging this scale advantage, Wanchen will achieve supply chain consolidation, gaining greater cost advantages in procurement, product selection, logistics, and engineering. However, the four brands were originally quite different. How to coordinate development after the merger and how to manage franchisees uniformly remain issues for Wanchen Biology to consider. Looking at the entire snack industry, Wanchen's merger undoubtedly accelerated the integration and reshuffling process of the track. Entering the second half of the snack discount track, the future will face more intense competition.

Multiple Snack Discount Brands Receive Financing In 2023, snack discount brands became the hottest commodities, attracting significant attention from capital and the market. In addition to the rapid increase in store numbers, multiple brands frequently received financing. The author has compiled the financing situation in this track this year. In February, Zhao Yiming Snacks completed a 150 million yuan Series A financing led by Hei Yi Capital with Bestore following. Notably, this was also the brand's first financing, and the scale of over 100 million yuan is quite rare in the snack track, confirming the brand's strong appeal to capital. In March, the new specialty snack brand Xiaoxin Henmang received a Series A financing of 10 million yuan, invested by Longxing Fund Management Co., Ltd. In May, Snacks Youming completed a Series B+ financing led by Xinwang Fund under New Hope, with Jia Yu Capital following. According to Tianyancha APP, this is already the brand's fifth round of financing in over two years, with previous investors including Yunlu Capital, Kaifu Fund, Xinxian Capital, etc. In August, Snacks Busy announced a strategic investment of several million yuan in Qiahuo Puzi. In addition, Snacks Busy also successively invested in regional brands such as Wang Foufou in Henan and Xixi Snacks in Shaanxi. In November, Xiaomiao Henmang, a snack supply chain service provider, received 8 million yuan in angel round financing, and Lingzhiwu, a snack retail chain brand operator, received 75 million yuan in angel round financing. On the 10th, the snack discount store brand 'Snacks Busy' and 'Zhao Yiming Snacks' completed their merger. In December, the snack brand Meishihao Mang successfully received 10.5 million yuan in angel round financing with its innovative model, and in the same month, Xiaoling Dashi, a snack brand under Changsha Xiaoling Youpin Supply Chain Co., Ltd., received 9.5 million yuan in angel round financing. It can be seen that the current snack track has formed three obvious levels. The first level is mostly concentrated around 2,000 stores, such as Snacks Busy and Zhao Yiming Snacks, which are leading brands and are expanding nationwide. The second level is mostly around 500-1,000 stores, mostly regional layouts, and is accelerating expansion through mergers and acquisitions. The third level is below 500 stores, mostly small regional brands with lower visibility. From a financing perspective, in recent years, capital has shifted from pursuing technology companies with high technical barriers but long growth periods to the snack track, which has greater public attention and rapid growth. After all, this track has low entry barriers, a strong consumption base, and rapid upward momentum. With the help of capital, major snack brands will quickly expand their store numbers and occupy a larger market share. However, as more players enter, the snack track enters a period of intense horizontal competition. In the future, who can laugh last will compete not only on scale but also on density, quality, service, and other comprehensive factors.

Zhongbai Warehouse Supermarket Opens Snack Discount Store On May 20, the leading Zhongbai Warehouse Supermarket opened its first Xiaobai Snack Shop discount store on Huanhu Middle Road, Dongxihu District, Wuhan. The store is about 100 square meters and mainly sells a large number of private label and fast-moving snacks, including over 1,100 SKUs, with leisure food as the main focus, cigarettes, alcohol, and beverages as supplements, and dry food as a complement. All product prices are lower than similar products in surrounding convenience stores. Zhongbai also stated that it will promptly expand product quantities and types based on user feedback. As early as November 2016, the trademark 'Xiaobai Snack Shop' was applied for registration by Zhongbai Warehouse Supermarket Co., Ltd., and the brand belongs to Wuhan Xiaobai Supply Chain Management Co., Ltd., a wholly-owned subsidiary of the warehouse supermarket company. Xiaobai Snack Shop first appeared in Zhongbai Warehouse's Wuhan Beihu store and later appeared as a store-in-store format in nearly 120 warehouse supermarket stores and community supermarkets under Zhongbai. Until October 2022, Xiaobai Snack Shop completed the batch introduction of existing stores in the community supermarket format, and to date, it has opened 5 new Xiaobai discount stores, covering the three towns of Wuhan. In recent years, Zhongbai Group has actively sought change, strengthening its competitiveness by opening franchises and promoting diversified business formats. By opening Xiaobai snack discount stores, Zhongbai can strengthen supply chain channels and product power construction, achieve a thin-profit, high-volume profit model, and thus provide new business perspectives and innovative paths for future development.

Jiajiayue's Yueji·Haosnacks Opens First Store in Jinan On April 28, the first store of Yueji·Haosnacks, a leisure snack chain brand under Jiajiayue Supermarket, officially opened in Yantai, Shandong. The brand is positioned as a one-stop, extreme cost-performance retail collection store, directly cooperating with manufacturers and covering over a thousand categories, fully leveraging Jiajiayue's resource advantages in the supply chain and consumer insight. Since then, Jiajiayue quickly launched stores in different scenarios, ranging from 90 to 400 square meters, and subsequently opened franchising. As of November, Jiajiayue had opened 10 new stores in Weihai, Qingdao, Jinan, Yantai, Binzhou, and other regions in Shandong. Thus, the number of Yueji·Haosnacks stores reached nearly 20. Jiajiayue was formerly the Weihai Sugar, Wine, and Food Supply Station in Shandong. In 1995, Jiajiayue underwent its first transformation in history, changing from a traditional wholesale enterprise to a modern chain enterprise and officially developing modern chain retail characterized by the 'self-service' consumption model. In 2001, Jiajiayue took the first step in cross-regional chain development and officially launched the 'Jiajiayue' brand. On December 13, 2016, Jiajiayue successfully listed on the Shanghai Stock Exchange and opened a new development pattern. After more than 20 years of development, Jiajiayue has become a leading retail enterprise with multiple business formats and regional expansion. With intensified industry competition, Jiajiayue is under attack from all sides, having to deal with traditional competitors like Yonghui and new retail representatives like Hema. Therefore, as one of the industry's trend followers, Jiajiayue naturally cannot miss the hottest snack track. However, in this sub-category, snack discount brands like Snacks Busy and Zhao Yiming Snacks, and high-end snack brands like Bestore and Three Squirrels have already occupied most of the market share. Although Jiajiayue, as a chain enterprise, has certain supply chain advantages, its user mindshare is relatively low. How to accelerate store expansion and consolidate consumer awareness in the future remains a difficult point to overcome.

Three Squirrels' First National Snack Stores Open In June, Three Squirrels stated on the investor interaction platform that the first batch of its private brand community snack stores officially opened in June and franchising has been opened. The first store in Wuhu, Anhui, covers about 200 square meters and has over 400 SKUs, including nuts, dried fruits, bread, baked goods, meat, and braised products. In addition to the snack category, the store also has a dedicated area for baby products under the Xiaolu Lanlan brand and interactive leisure areas. In December this year, Three Squirrels opened 17 more community snack stores, bringing the total number of stores nationwide to over 150, mainly distributed in Anhui, Jiangsu, Zhejiang, and other regions. Different from other bulk snack collection stores, Three Squirrels' snack stores are based on its core nut brand advantages and supply chain capabilities for full-category development, removing product premiums to provide users with high-end, cost-effective snacks across all categories. This measure precisely aligns with the 'high-end cost-effectiveness' strategy mentioned in Three Squirrels' 2022 annual report. In fact, in the current 'red ocean' of the snack discount track, Three Squirrels is also actively responding to changes to seek new life. The newly developed private brand community snack stores are exactly the new growth curve Three Squirrels is seeking. Three Squirrels was established in 2012. With its internet genes, it quickly rose through the dividends of e-commerce channels. In July 2019, Three Squirrels landed on the Shenzhen Stock Exchange with the title of 'First Stock of National Snacks', and in the same year, its annual transaction volume exceeded 10 billion yuan, becoming the first leisure snack enterprise in China to reach the 10 billion scale. Before this, Three Squirrels had explored offline store layouts. In 2016, Three Squirrels opened its first store in Wuhu, Anhui, and by 2020, it had expanded to over 600 stores. However, excellent performance on online channels does not mean the same success offline. Affected by the pandemic, offline channel traffic continued to decline, and consumers became increasingly rational. Three Squirrels had to proactively close loss-making stores. In addition, the e-commerce dividend period gradually disappeared. As a traffic-driven brand, Three Squirrels' revenue growth continued to decline, falling nearly 25% in 2022, and it closed 117 directly-operated stores and 387 franchise stores. This 'cutting off the wrist' was both a heavy blow and an awakening for Three Squirrels. Following the trend of bulk snacks, Three Squirrels continues to upgrade its supply chain, restructure its offline store system, and promote the transformation and layout of community snack stores. Under a series of cost reduction and efficiency enhancement strategies, Three Squirrels achieved a net profit attributable to the parent company of 170 million yuan in the third quarter, a year-on-year increase of 81.42%; after deducting non-recurring gains and losses, the net profit was 85.5735 million yuan, a year-on-year increase of 198.85%. However, the market believes that such data relies more on profit recovery brought about by squeezing R&D expenses. Facing the newly emerging bulk snack brands and the previous competitor Bestore, which are all focusing on 'price' wars, the test for Three Squirrels may just be beginning.

Ai Snacks Launches Three Mergers and Acquisitions In September, Ai Snacks, a bulk snack chain brand from Changsha, wholly acquired Guizhou Hu Weihong Snacks and renamed it. With this, Ai Snacks' total store count exceeded 1,200. This was another M&A move following Ai Snacks' controlling stake in Chengdu local bulk snack chain brand Dinosaur and Teddy in August. Subsequently, Ai Snacks acquired the local Shaanxi brand Snack Pop in October. Ai Snacks was founded by Tang Guangliang, a veteran in the retail industry with 16 years of experience in the FMCG industry. He previously founded the convenience store 'Happy Hui', the FMCG website 'New Gaoqiao.com', and the community group buying platform Kaola Select. During the community group buying 'war' in 2020, Tang Guangliang established the bulk snack chain brand 'Ai Snacks' in Changsha, based in Hunan and Hubei provinces, and gradually expanded nationwide. It is currently laid out in Sichuan and other provinces, with a goal of creating 3,000 stores in 3 years. As of now, Ai Snacks has over 1,400 stores. Compared to other brands that mainly rely on franchising for rapid expansion, Ai Snacks expands through 'franchising + M&A'. In July 2023, Ai Snacks announced that it would open franchising to 20 provinces and cities nationwide and set high subsidy policies for regions such as Hubei and Sichuan. Subsequently, Ai Snacks began its acquisition pace, successively acquiring Dinosaur and Teddy, Hu Weihong Snacks, and Snack Pop. Tang Guangliang stated that by the end of 2023, if it does not become the regional number one, it will be difficult to develop to 800+ stores, and it will face pressure from financing, franchising, partners, and other parties. Therefore, Ai Snacks' accelerated M&A is also to prepare for the second half of the game. On the one hand, acquiring regional brands is more efficient than self-operated stores or franchising. On the other hand, after increasing scale, the brand will have greater bargaining power, thereby reducing supply chain costs. As for how the second half will unfold, it may still revolve around intense competition in dimensions such as 'price, product, scale, and density'.

Fresh-Made Snacks Become a Major Trend The excitement in the snack track is not limited to bulk snacks; fresh-made snacks have also risen alongside them. Different from snack discount stores that sell long-shelf-life pre-packaged products, the fresh-made snack track, characterized by short shelf life, freshness, and health, has become an emerging force that cannot be ignored. Among them, freshly roasted snack brands led by Xueji Roasted Nuts and Panda Momo have successively attracted capital attention. Xueji Roasted Nuts was founded in Jinan in 2002, focusing on the R&D, production, and sales of nuts and roasted seeds. Currently, it mainly expands through a model of direct-operated stores + partner joint operations, with its store count maintained at over 400. In 2022, Xueji Roasted Nuts won a 600 million yuan Series A financing. Capital believes that Xueji is the first brand in the traditional roasted goods category to achieve product innovation, brand upgrade, and national expansion. Panda Momo was established in 2021, positioning itself as 'fresh snacks'. It opened its first store in Changsha in June 2022. As of now, it has signed contracts for over 100 stores in Hunan, Jiangxi, Guizhou, Beijing, and other places. During the store opening process, Panda Momo has tested different store formats in different regions, including community stores, shopping mall stores, county stores, and township stores in first- and second-tier cities. Fresh-made snacks are upgraded from traditional street-side roasted goods stores, mainly selling short-shelf-life fresh roasted nuts and other products, with shelf life mostly calculated by days to ensure the best taste period. However, this model is still in a development stage of 'big water but not big fish', with SKUs averaging around 100-500 and average customer spending around 50 yuan, and no brand has reached the scale of a thousand stores. Even the current leader, Xueji Roasted Nuts, maintains only about 800 stores. As the entire snack track enters a period of stock competition, we believe that the fresh-made snack format, which freshens snack categories and has healthier nutritional attributes, will become the next model with ten thousand stores. Compared to other models, fresh-made snacks have three major advantages: fresher hit products, upgraded product taste, and healthier attributes. First, fresh-made snacks mainly use seasonal ingredients, and the sales model of making fresh and clearing promotes the freshness and limited nature of snacks, making them naturally traffic-attracting. Second, due to stronger fresh food attributes, fresh-made snack brands require higher standardization of production processes, and the entire process needs careful polishing, resulting in upgraded product taste. Third, fresh-made snack brands mainly focus on roasted nuts, which have high nutrition and protein characteristics. Overall, although there are no thousand-store brands internally, fresh-made snacks, which fit the current trends of categorization, segmentation, and health, are expected to become one of the next high-growth models in the leisure snack market. In the future, the snack track will inevitably face pressure in price systems, user composition, supply chain, and other aspects. In the author's view, when competition is unavoidable, only the 'deep' can win in a narrow encounter.

Bestore Implements Its Largest Price Reduction in 17 Years Facing fierce competition in the snack track, Bestore, which once focused on the high-end route, announced its first large-scale price reduction in 17 years on November 29. This price reduction is an important step after Bestore changed its leadership. On November 27, Bestore issued an announcement stating that it elected Yang Yinfen as chairman of the third board of directors. After the announcement, Yang Yinfen immediately issued an open letter to all employees, announcing that the member prices of over 300 products in Bestore stores would be reduced by an average of 22%, with a maximum reduction of 45%, mainly focusing on snacks with cost optimization without affecting quality and high repurchase rates. Currently, the price reduction reform is still in the first stage, mainly starting with the supply chain, and will later extend to more categories and national stores. Yang Yinfen stated that Bestore will launch a new round of reforms around the theme of 'strengthening business innovation and comprehensively improving operational efficiency'. The author believes that the urgency is mainly due to the intense competition in the snack track. Like Three Squirrels, Bestore also rose from the dividends of e-commerce channels. However, consumers will not always be loyal to the same brand, especially in the snack category. With the rise of various emerging bulk snack brands focusing on cost-effectiveness, Bestore's living environment is gradually worrying. Although it has made many changes before, such as opening Snack Kingdom stores, investing in Zhao Yiming Snacks, and opening its own bulk snack brand Snack Wanjia, Snacks Youming and Zhao Yiming jointly caught Bestore off guard, and Snack Wanjia's development has not been satisfactory. The difficulties facing Bestore are becoming more apparent. Therefore, 'price reduction' has become the most necessary and effective measure at present. However, Bestore, which focuses on the high-end route, has formed a deep consumer perception in the minds of users, and such an image is difficult to change in a short time. Whether the price reduction strategy will work may need more time to verify.

Lai Yifen Crosses into the Coffee Track In July, Lai Yifen, the 'first snack stock in China', officially announced the launch of its coffee brand 'Laika' and released a new brand logo. Its products include coconut coffee, latte, and other beverages. Currently, Laika has landed in over 500 Lai Yifen stores, covering East China regions such as Shanghai, Zhejiang, and Jiangsu. Lai Yifen was founded in Shanghai in 2002, focusing on the leisure snack track. As of now, it has 3,700 stores, with products covering 12 major categories including meat snacks, pastries and biscuits, nuts and roasted seeds, puffed food, instant food, seafood instant food, dried fruit and preserves, sugar, chocolate and jelly, fruit and vegetable snacks, imported food, and holiday gifts and creative products, mainly with its own brands and supplemented by入驻 brands. In October 2015, Lai Yifen was listed on the main board of the Shanghai Stock Exchange, becoming a leading brand in China's leisure snack industry. In fact, this is not Lai Yifen's first cross-border into coffee. As early as 2021, Lai Yifen had launched freshly ground coffee sales in its stores. After two years of running-in and upgrading, 'Laika' was officially launched. The reasons for entering the coffee track are, on the one hand, the intense competition in the snack industry, which forces enterprises to seek change to survive better. Lai Yifen hopes to transform from pre-packaged to freshly made and sold, and coffee fits its needs. On the other hand, coffee has been quite popular in recent years with good development prospects, and its users are relatively compatible with the snack consumer group, making entry logical. Previously, Laika mainly relied on existing Lai Yifen stores, laying out in a 'store-in-store' format. In September this year, with the launch of Lai Yifen's tenth-generation store image, Laika set up independent takeout windows to provide consumers with more convenient services and experiences. According to progress, in the future, Laika may launch independent stores, and at the product level, it will continue to launch more coffee-related products, such as freeze-dried coffee powder, coffee liquid, coffee-flavored cups, etc.

For Lai Yifen, this cross-border move has a significant empowering effect in terms of increasing customer traffic, rejuvenating the brand, and expanding marketing voice. However, in the author's view, although there is a large consumer demand in the coffee track, there are many brands entering, and it is also seriously 'involutionary'. Whether Lai Yifen can rely on its existing supply chain advantages to create more differentiated products to attract users remains unknown. In the future, Lai Yifen still needs to make great efforts to further meet consumers' demand for freshly made fresh coffee.

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