---
title: "Snack Stores Are Busy, FMCG Manufacturers Are Panicking!"
description: "“Now many are proactively coming to discuss cooperation, including top-tier brands, and they bring their CFOs—sales directors are useless, as it ultimately involves cost accounting,” said a founder of a snack discount store brand about upstream manufacturers. In 2017, Snack Busy appeared on the streets of some Hunan cities. “Selling snacks at low prices—can that be a good business?” “Just a passing fad!” Many were pessimistic, including upstream FMCG brands. But the market is like this: consumers are the real players with the final say..."
author: "任文青Andy"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2023-08-22"
language: "en"
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---

# Snack Stores Are Busy, FMCG Manufacturers Are Panicking!

> “Now many are proactively coming to discuss cooperation, including top-tier brands, and they bring their CFOs—sales directors are useless, as it ultimately involves cost accounting,” said a founder of a snack discount store brand about upstream manufacturers. In 2017, Snack Busy appeared on the streets of some Hunan cities. “Selling snacks at low prices—can that be a good business?” “Just a passing fad!” Many were pessimistic, including upstream FMCG brands. But the market is like this: consumers are the real players with the final say...

“Now many are proactively coming to discuss cooperation, including top-tier brands, and they bring their CFOs—sales directors are useless, as it ultimately involves cost accounting,” said a founder of a snack discount store brand about upstream manufacturers.
In 2017, Snack Busy appeared on the streets of some Hunan cities.
“Selling snacks at low prices—can that be a good business?”
“Just a passing fad!”
Many were pessimistic, including upstream FMCG brands.
But the market is like this: **consumers are the real players with the final say.**
A year later, Yan Zhou, founder of Snack Busy, wrote on his social media: “A year ago, when Snack Busy was just starting, some ‘big-arm-and-leg’ brands in the industry said we would be gone like a gust of wind! A year later, the wind is still blowing, even stronger, but the difference is that our so-called ‘big arms’ have started to follow our wind...”
Perhaps even Yan Zhou didn’t expect that with more and more peers joining—Snack Youming, Zhao Yiming, Love Snacks, Snack Youxuan, Haoxianglai... the list could go on, plus earlier ones like Laopo Daren and Tangchao—hard discount snack stores have developed to a point where they can disrupt the entire upstream and downstream of the industry chain.
Five years have passed, and the wind continues, growing fiercer.
At this point, many FMCG manufacturers suddenly realize: **hard discount snack stores are like an elephant in the room that can no longer be ignored.** Rapid expansion and aggressive growth—in 2023, snack stores are busier than ever, while FMCG manufacturers are increasingly panicked.

**New Channel, Explosive Growth**
“We make children’s electrolyte drinks; can you help connect us with snack store procurement?”
“Our soda sells well in the southwest; we’re already cooperating with a few snack stores—see if they’re interested?”
In the past month or two, requests to New Distribution to connect with snack stores have increased. The snack food industry has low concentration; besides a few well-known top brands, there are many regional small brands and white-label products.
“Super channels create super brands. We estimate that a series of small brands will rise with the explosion of snack stores,” said an industry insider.
In fact, for these small brands, super brands are a distant prospect; what they truly care about is current sales.
“Products are shipped directly to their warehouse, and we don’t worry about it afterward. Monthly sales reach millions, with no messy barcode fees, entry fees, display fees, anniversary fees... and payment is excellent—goods arrive, invoice arrives, and in principle we receive payment within 24 hours, at most within 7 days.”
**It’s not just regional small brands that dare not miss the snack store train; well-known brands are also on board.**
For example, Yanjin Puza increased cooperation with various snack store systems in 2021. In 2022, Snack Busy surpassed Walmart and Bubugao to become its largest customer. On July 7, the company released its semi-annual performance forecast, expecting net profit attributable to listed shareholders of approximately 240-250 million yuan in the first half of this year, a year-on-year increase of 86.29%-94.05%.
Other brands like Ganyuan and Jinzai have also benefited from the new channel.
These enviable numbers have alerted brands that had kept a distance from snack stores.
In early 2022, many well-known brands began adjusting strategies, setting up special teams to study how to respond to this explosive new channel.
In fact, their products had already appeared on snack store shelves.
In 2017, a large number of snack discount stores emerged. In the following two years, brand manufacturers tried to strictly control the problem of channel leakage and parallel imports. But sales were not large at the time, and it was indeed difficult to control, so snack stores could continue to sell their products at prices 30%-40% below market.
In a sense, this was forced.
In 2021, there were about 2,500 hard discount snack stores nationwide, with sales scale under 10 billion yuan. In 2022, there were 8,000-10,000 stores, with sales around 30 billion yuan. It is estimated that by the end of 2023, the number of stores nationwide will be between 22,000 and 25,000, with sales scale reaching 70-80 billion yuan.
The explosive growth has surprised everyone and is still continuing.
There is a consensus among industry insiders: **the total number of hard discount snack stores will reach over 100,000, and within two to three years, a single chain brand with 10,000 stores will emerge.**
This will be a terrifying number that no brand can ignore.
With the explosion of the new format, brands that originally built their own terminals have to respond hastily. Liangpin Puzi launched its sub-brand Snack Wanjia, while Three Squirrels began laying out community snack stores focusing on “high-end cost performance” to counter the offensive of snack discount stores.
Some brand manufacturers have chosen to enter directly, such as Panpan Food launching its own snack discount store “Linglingzui.”
Most brands are thinking about how to respond to this new channel. But for well-known brands with mature offline channels and single categories, this is a dilemma.

**Big Brands, in a Dilemma**
“Some brands embraced snack stores earlier, but the so-called ‘early’ was only last year. Most well-known brands started paying attention in the first half of this year and began direct cooperation; a few are still studying,” said an industry insider.
This is consistent with the statements of several leading snack store companies: the direct procurement rate from upstream has reached over 90%.
Brands that can bring their own traffic are definitely needed by snack stores. Initially, they sourced from distributors, but the core of hard discount snacks is low gross margin and high turnover—**direct upstream procurement is the instinctive impulse of this model.**
Of course, brand manufacturers are also proactively approaching snack stores to discuss cooperation. On one hand, sales are indeed large enough; on the other hand, rather than going through distribution channels, it’s better to manage it themselves.
At the headquarters of several leading snack store companies, we saw the same scene:
The reception room was full of people—some were franchisees, but more were sales representatives from manufacturers across the country. They held various new products and samples, queuing to have a few words with procurement staff, hoping to get their products on the shelves.
Among them were sales reps from well-known brands, but their products were not available in other channels.
This is the strategy many brands are adopting: **either differentiate in specifications and packaging, or choose products that are not sold much in other channels among their many categories.**
The main purpose is to minimize the impact on the price system of existing channels.
But can the impact really be avoided?
This is highly related to the manufacturer’s category. At least for water and beverages, it’s not feasible.
Water and beverages have always been traffic drivers for snack stores. A bottle of water that costs 2 yuan in regular stores sells for 1.2 yuan in snack stores, sometimes even less than 1 yuan. The category attributes determine that there is almost no room for differentiation through packaging specifications.
The bigger the brand, the more it resists snack stores disrupting its price system.
The problem is that if you resist, competitors will cooperate. How can you give up such a large market? **Under the temptation of absolute sales volume, persistence gradually crumbles.**
In a snack discount store, we saw a certain brand’s bottled water sold in whole boxes. Upon further investigation, we learned: initially, the manufacturer was very firm and did not allow low-price sales, but under sales pressure, they eventually agreed to sell at a low price in whole-box form.
For snack food brands, it’s easier to play with packaging and specifications, but it’s not entirely worry-free.
Brands with more categories have more room to maneuver, but if a brand’s sales rely on only one or two big single products, even with channel differentiation, the impact on existing channels is huge.
Many brands that sell more are actually selling the same standard products as in other channels. The better snack stores sell, the worse traditional distribution channels are hit.
“Snack stores sell too cheaply; many products are priced close to our purchase cost, seriously affecting business in supermarkets and convenience stores, and sales in nearby small shops have almost halved,” a major distributor revealed to New Distribution. “We apply to the manufacturer for fees to lower prices, so we sell at the same price as snack stores.”
Some distributors can’t get fees, so they have to maintain sales volume first, which means losing money.

**Channel Value Chain, Restructured**
Distributors with large scale, wide channels, and many categories can still support it, but for distributors with single channels and categories, the impact of snack stores is almost catastrophic.
On one side is sales volume, on the other is the price system and distributor interests. The stronger the brand and the more dependent on offline channels, the harder it is to choose.
“Now manufacturers tell us, ‘We’ve been through e-commerce and KA; we can get through this too.’ But we know this time is different. In the past, no matter what, terminal business was still there, and we had something to do. This time is different!” said a distributor.
What’s different?
In the traditional channel model, upstream brands are the engine, with layers of price increases and multiple handling, then given to retailers, with various fees like barcode fees, entry fees, display fees, etc., all ultimately paid by consumers.
Snack discount stores, by building their own warehousing and distribution systems and laying out terminal points, **have achieved “integration of distribution and retail,” effectively opening a highway between consumers and brand manufacturers.**
In this efficient model, distributors are not bypassed; they are internalized.
Some industry insiders call for manufacturers to protect distributors’ interests. But business is not a place for sentiment; business evolution has its own logic.
Brand owners are actually the ones who most want to maintain their channel network and existing price system.
**But in the game among brands, distributors, and retailers, the real decisive force is outside them—consumers.**
Whoever can help brands sell products to consumers has the say.
“Simply suppressing is unsustainable; merely controlling prices or changing packaging may not work either. We still need to look at the demands of the snack store industry.”
The brand owner’s thinking is simple: enterprises ultimately need sales volume.
Industry insiders reveal: a leading snack store company now ships 500 million yuan to stores monthly, with pure monthly growth of 60-80 million yuan.
Absolute sales volume means absolute influence.
Some leading brands made adjustments in the first half of this year, shipping goods directly from factories to snack store central warehouses—**this is the first time they have adjusted their logistics model for a single channel.**
Some foreign brands are still hesitant in cooperation, but in the view of those in the snack discount industry, it’s only a matter of time.
“Foreign companies are run by professional managers; their brand sales are not a concern, but their decisions rely heavily on market data. Once Nielsen data changes and they see the share of the bulk snack channel, they will definitely embrace it.”

#### **Final Words**
Since 2022, hard discount snack stores have accelerated rapidly. Some see low-price sales, some see franchise losses, but from an industry perspective, its real impact lies in the shock to the upstream and downstream of the industry chain—China’s modern food processing industry is undergoing a supply-side reform.

> **Why are snack discount stores so crazy?**
> **Not embracing them is impossible, but embracing them means facing price system disruption and the difficulty of maintaining traditional distribution networks—brands are in a dilemma.**
> **How are various brands responding? What impact does it have on the industry chain?**
> **Where should distributors go? What are the future challenges and opportunities?**

**From October 9-11, 2023, the “5th China FMCG Conference” will be held in Shenzhen. On the morning of October 10, we will organize a parallel forum themed “Snacks and Discount Stores.”**
At that time, founders of leading snack store brands, senior executives of first-line FMCG brands, major distributors, and industry deep observers will gather to have in-depth exchanges and discussions on topics related to “hard discount snacks,” and we welcome your participation!
The impact of hard discount snacks is still ongoing. **We have established a community themed [Snacks/Discount],** sharing the latest industry news and discussing development trends and responses. Add WeChat to apply to join the community.


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