Editor | Gou Gou Layout | Zhang Yuwei Bulk snack stores have grown wildly over the past year, attracting significant capital. Snacks Are Very Busy completed a Series A financing of 240 million yuan as early as April 2021; Zhao Yiming obtained a 150 million yuan Series A financing this year; Snacks Youming announced the completion of a Series B+ financing in the first half of this year... More than one industry practitioner told New Distribution that the current speed of store openings is equivalent to the speed of grabbing money. The "store opening wave" has triggered a series of chain reactions in the industry, bringing joy to some and sorrow to others. While snack stores are busy filling their money bags, beverage manufacturers have become "fish on the chopping board," crying without tears.

Beverages Bear the Brunt "The products we sell in our store are the most affordable on this street, but at the beginning, there were few well-known brands, and many customers came only out of curiosity," said Li Hong, a staff member at a snack store, pointing to the three cash registers in the store. "At that time, one or two cash registers were enough." Bulk snack stores focus on "good quality and low price," with a high proportion of white-label products. Years of brand education have led consumers to habitually purchase big-brand products. Although white-label products are cheap, they lack brand recognition and naturally have relatively less traffic. "Later, the company adjusted its product mix, increasing the proportion of low-priced well-known beverages and snacks, and repeat customers grew. Now, big-brand products account for 50% of our store," Li Hong continued. This is the now well-known strategy of using "low-priced essential beverages & big-brand snacks" to drive traffic. In this strategy, beverages, being essential and high-frequency, naturally bear the brunt. Many customers who come in just to buy a discounted drink are attracted by the store's attractive displays, start browsing, and unknowingly buy more. A bottle of C'estbon water, priced at 2 yuan, sells for 1.2 yuan in snack stores, and some chain stores even sell it for as low as 0.8 yuan... A bottle of Oriental Leaf tea, priced at 6 yuan, sells for 2.7 yuan in snack stores... New Distribution surveyed the market and made statistics on some products, finding that beverages sold in snack stores are generally 60-70% cheaper than in traditional channels. Gradually, beverages have become a recognized traffic driver. Not only in Li Hong's store, but now in any snack store, beverages are prominently displayed. With traffic protection, bulk snack stores operate at high speed, adhering to the principle of "low gross margin, high turnover," and are thriving, but this has also plunged big-brand beverages into a "darkest hour." Originally, big-brand beverages relied on years of channel cultivation and brand influence to thrive in conventional channels without discounts. Now, as the "vanguard" of bulk snack stores, they attract a lot of traffic, but the consumers drawn by "brutal low prices" have also affected sales in traditional channels. A major beverage distributor once revealed to New Distribution, "Snack stores sell too cheaply; many products are priced almost the same as our purchase cost, seriously impacting business in supermarkets and convenience stores, and sales in nearby small stores have nearly halved." To survive, they had to join the price war. "We apply for funds from brand owners to lower the prices of best-selling beverages; whatever price snack stores sell at, we match it." Some distributors who cannot obtain funds may operate at a loss to maintain sales volume. The multi-party melee has led to unstable beverage prices at the terminal. Once consumers taste the sweetness of low prices, years of market education may be undone.

Sales Soar, Manufacturers Have No Choice Given such severe side effects, why are beverage manufacturers still willing to enter? Previously, first-tier manufacturers believed that as long as they insisted on not supplying snack discount stores and not joining the price war, they could continue to do well in traditional channels thanks to their brand influence. But this channel change is far more complex. Bulk snack stores, lacking direct support from first-tier manufacturers, have been ordering through various secondary channels such as distributors, and initially, few paid attention to this loophole. Meanwhile, snack stores gradually won over consumers with their high cost-performance, attractive in-store displays, and proximity, building momentum. The pandemic tightened consumers' wallets, further boosting the development of snack stores. Although ordering through scattered channels made supply unstable, as the volume they captured grew, it also drove manufacturers' performance to some extent, triggering a series of chain reactions. Manufacturers and distributors gradually became dependent on them due to sales pressure. Gradually, some manufacturers began to waver and compromise, choosing to cooperate with snack stores, and the erosion of traditional channels by snack stores intensified. Ultimately, the power lies with the terminals that directly reach consumers. If they don't join, their original sales will be taken by competitors; if they join, they face price chaos. A dilemma! Some best-selling brands, under pressure, chose to enter but did not treat snack stores as an important channel, handling it perfunctorily and failing to supply in a timely manner. Soon, the brand power these brands were proud of began to collapse in the face of the strong channel of snack stores. Snack stores have high traffic and fast turnover, and consumers' loyalty to snack brands is generally low; when a preferred brand is out of stock, they choose similar products. As a result, the sales of these best-selling brands are divided among other brands. Li Hong told New Distribution, "Now snack stores have abundant traffic, and it doesn't matter much whose products they sell. Not long ago, a well-known old brand, feeling the helplessness of traffic dispersion, began to actively treat our snack channels, even opening 'direct supply and door-to-door delivery' services for top snack stores to improve delivery timeliness." Some manufacturers have tried to resist. For example, a leading brand, after supplying snack store channels for a period, found that sales in other channels declined sharply and began to "cut off supply." The consequence of cutting off supply was that sales were cannibalized by competitors, and they eventually had to bow their heads again, reaching an agreement with snack stores to sell in cases. Since last year, many manufacturers have adjusted policies, launching channel-specific specifications. If stores refuse to replace products with these specifications, they stop supply to mitigate the impact on traditional channels. Snack stores' sales are soaring, making them a powerful channel. Manufacturers seem to have little choice but to follow the trend. Today, manufacturers have mixed feelings toward bulk snack stores: it's a pity to lose such a strong channel, but keeping it will disrupt the market price system.

Channel Impact Has Just Begun "Snack stores haven't reached the white-hot stage yet. In the next 2-3 years, they will expand stores crazily. Once the store density reaches a certain level, market prices will continue to decline," predicted a distributor from Chongqing. There is no doubt that the bulk snack store format will continue to surge. Multiple institutions predict that snack stores could reach a scale of 100,000 stores. Currently, with only 10,000 stores, the market is already in turmoil. When the number multiplies, the impact will be unimaginable. The impact on channel pricing has just begun. Currently, only a small number of traditional stores and distributors are in a panic; although prices fluctuate, only a few face life-or-death situations. In the future, as bulk snack stores open more and more, their share of manufacturers' total sales will rise, and the market pricing system built over years in traditional channels will gradually collapse. Beverages, which account for a large proportion of sales in traditional small stores, are an impulse purchase. When snack store density is high enough, they are closer to consumers, and beverage sales in snack stores will continue to rise. More and more traditional stores will see their business eroded, even facing closure, while beverage distributors will be "sidelined," with a bleak future. The direct supply achieved by bulk snack stores is different from the direct supply of large supermarkets in the past. Large supermarkets' logistics and distribution models include self-operated, self-operated + third-party, and unified warehousing and distribution. Although it is direct supply, there are still opportunities for distributors. However, bulk snack stores are gradually realizing "direct supply with door-to-door delivery," leaving fewer opportunities for distributors. A leading bulk snack store brand also stated, "Although bulk snack stores will take away 50% of the business from traditional channels like supermarkets and mom-and-pop stores in the future, they will also stimulate the potential of traditional channels, stabilizing revenue by improving service and optimizing product structure." During market research in Chengdu, I personally experienced the impact of bulk snack stores on surrounding stores: in a shopping mall, a traditional snack collection store (Liangpin Shop) and a bulk snack store (Snacks Youming) were only 10 meters apart, but their foot traffic at the same time was vastly different. This is not a coincidence; financial data suggests the same scenario is likely happening everywhere. Liangpin Shop's operating revenue in the first quarter of 2023 fell 18.94% year-on-year. Liangpin Shop's anxiety is palpable, but it has also forced it to accelerate improvement. In July, Liangpin Shop opened a 1,200-square-meter superstore in Wuhan, far exceeding ordinary collection stores in size and offering more than 3,000 products, setting a new height for snack stores. The store not only features novel shelf displays but also enriches consumption scenarios. For example, its space is divided into 11 sections, making it the first domestic collection store that brings together fitness enthusiasts, mothers with babies, and the elderly around segmented scenarios such as snacks, coffee, sugar control, and fat control. It has transformed from a functional snack collection store into a large space store integrating consumption, experience, and appreciation, creating a new snack kingdom. The effect is also significant: within three days of opening, the "Snack Kingdom Store" attracted over 10,000 visitors and accumulated sales exceeding 760,000 yuan. In short, the future impact of bulk snack stores on traditional channels is irreversible, but it is not all bad; it will stimulate more market potential. After the brutal baptism, only the strong will remain. Regarding the impact of bulk snack stores on traditional channels, whether it is positive or negative, opinions vary, but it is undeniable that a group of laggards will be eliminated.

Final Thoughts The rise of bulk snack stores is a huge new opportunity for the snack sector, but for big-brand beverages and traditional channels, it is a difficult revolution, with inevitable winners and losers. The previously relatively comfortable environment will no longer exist. Big-brand beverages and traditional channels need to continuously unleash their potential and put themselves in consumers' shoes. Even without the squeeze from bulk snack stores, the survival of the fittest has always existed in the market; this channel's rise has merely accelerated market transformation.