On February 23, after six years of preparation, the snack brand "Bestore" finally went public, and on its first day of listing, it saw a 44.03% increase to hit the daily limit, with a total market value of 6.87 billion yuan. This brought the so-called "Big Three" of Chinese snack e-commerce—"Three Squirrels, Bestore, and Be & Cheery"—together on the A-share market. However, just before Bestore's listing, Be & Cheery, also one of the "Big Three," was sold by Haoxiangni to PepsiCo. In 2016, Haoxiangni acquired Be & Cheery for 960 million yuan, and on February 22, it sold 100% equity of Be & Cheery's parent company, Hangzhou Haomusi Food Co., Ltd., to PepsiCo for $705 million (approximately 5 billion yuan). Between buying and selling, Haoxiangni netted 4 billion yuan. For Be & Cheery, which was sold, this deal was also what it wanted.

-01- The Snack Market Under the Internet Three-Headed Pattern According to the "Snack Industry Development Report under Consumption Upgrade" released by the Ministry of Commerce at the end of 2018, the total output value of the snack industry will approach 3 trillion yuan in 2020. The snack industry has a large market size, but brand concentration is very low, and the market share of large enterprises is also low. Currently, no enterprise in the entire snack industry has absolute dominance. Looking at Taobao platforms, after the rapid online growth from 2017 to 2019, a top-three pattern has formed: Three Squirrels has an 18% market share, Bestore 6%, and Be & Cheery 11%. In 2019, the online growth rate of leisure snacks was 18%, and the era of high-speed online growth dividends is basically over. The future landscape is still highly variable: besides the "Internet snack" Big Three, Qiaqia Food, Lai Yifen, and Yanjin Shop are also each fighting for their own positions. In terms of channels, different brands have distinct layouts: Three Squirrels and Be & Cheery focus mainly on online channels; Bestore has online, franchise, and direct-operated stores; Lai Yifen mainly uses offline franchise stores; Yanjin Shop focuses on offline direct-operated supermarkets, supplemented by franchising; Qiaqia Food mainly uses offline channels such as distribution and key retail outlets. But in fact, from the development strategies of the "Big Three," differentiation is gradually being erased. On the channel side, offline direct-operated, distribution, and franchise stores are expanding simultaneously; online, both consignment and distribution models on e-commerce platforms are also advancing. On the product side, even Three Squirrels, which started with nuts, has begun transforming into a full-category player. In terms of category and channel, no company has formed a clear absolute advantage.

-02- New Hotspots Emerge, Snack Industry Needs Upgrading While the online snack giants are developing rapidly, problems such as homogenization, low-price competition, and low industry barriers still plague the entire snack industry. Bestore, which went public under the slogan "First Stock of High-End Snacks," should be well aware of this. If there is one characteristic of Bestore in the snack industry, it is more balanced development. It is also for this reason that both Today Capital and Hillhouse Capital mentioned this unique advantage when explaining their investment reasons. Compared with peers, Bestore's revenue from online, franchise, and direct-operated channels is relatively balanced, and its gross margin is at a medium level. Bestore submitted its IPO application in June 2018, and half a year later, it proposed the "high-end snack" strategy, which faced some controversy. However, judging from current results, this strategy has made Bestore stand out from many snack brands, giving it differentiated recognition and pricing power. Differentiated competition is a major direction for future industry development. And "fresh," "functional," "fun," and "quality" are becoming new trends in the snack category. With the continuous innovation of the snack industry and the increasing consumption capacity of consumers, snacks are no longer just a supplement to three meals, but are showing growth in health, IP, novelty, and other aspects. Consumers' escalating demands for snacks have given snacks more new meanings and roles. The leisure snack market is gradually showing new trends such as "eating for fun," "eating for quality," "eating for beauty," and "eating for peace of mind." This may also be an important reason why Be & Cheery actively joined PepsiCo. Over the years, Be & Cheery has supported Haoxiangni's financial data, but it has fallen behind in new retail and user awareness. As early as 2002, when Be & Cheery was founded, it developed in the form of offline stores. By 2006, it had more than 140 stores with sales of 150 million yuan. But in 2010, Be & Cheery closed all its stores and focused on online. By the end of 2019, Three Squirrels had 108 direct-operated stores and 278 franchise stores, while Bestore, which started offline, had thousands of stores, but Be & Cheery had only 10 stores. Under the trend of omni-channel operations, it is clear that Be & Cheery is struggling. Perhaps PepsiCo's brand power, influence, and global supply chain layout can open a new path for Be & Cheery's development.

-03- New Battlefield with Capital Support In the future, the competition for market share in the leisure snack industry will remain fierce. With capital support or the backing of giants, the industry is expected to transition from a price-war stage to a stage of clear head groups and differentiated competition. Besides the comprehensive snack giants like "Three Squirrels, Bestore, and Be & Cheery," there are still kings in sub-sectors. For example, in the red date category, Haoxiangni holds absolute dominance, and in the spicy strip category, Weilong is undoubtedly the first. There are also emerging new consumer brands, such as the internet-famous cookie brand "AKOKO," the internet-famous potato chip "Single Grain," and the internet-famous instant oatmeal "Wang Bao Bao," among others. In the leisure food industry, where brand power is not the primary competitive factor, regional snack brands of all sizes across the country are also important components of the market. Consumers are not particularly loyal to snack brands; they are more influenced by factors such as taste, quality, fun, and shareability. With the integration of online and offline, consumers' access to product information is no longer single-channel, which also shortens the time from R&D to consumers for new products, and product life cycles are getting shorter. Many brands have tried to reverse-engineer from the consumer side to the production side, using consumer data analysis and extensive fan operations to decide product R&D and production. So we can also see that although the leisure snack industry market is huge, consumer brand awareness is weak, and regional brand development is obvious. In secondary sub-markets, new brands are springing up like mushrooms, and some of these niche brands are outstanding, continuously eroding the market. For the Big Three, the pressure is still enormous. How to use capital to play in this multi-trillion-yuan market still has a long way to go. Who will eventually break through and stir up this uneven market environment? The author is full of anticipation.

New Distribution invited Mr. Su Mu, CEO of AKOKO, to share his personal views: 1. Views on PepsiCo's acquisition of Be & Cheery Obviously, this is a good deal. Haoxiangni acquired Be & Cheery for 960 million yuan, and in less than four years, it netted 4 billion yuan, a five-fold increase. That's the absolute value gap. But for Haoxiangni, the gains are far more than 4 billion yuan. Be & Cheery has shown high growth since 2016, boosting Haoxiangni's overall stock price. Frankly, Haoxiangni's red date business itself doesn't have much imagination space. Because of Be & Cheery's business, Haoxiangni has more possibilities in the capital market. This kind of return is far more than 4 billion yuan. In fact, after Haoxiangni acquired Be & Cheery, it didn't provide much empowerment. With the listing of Three Squirrels and Bestore, Be & Cheery needs to respond to competition, and embracing "PepsiCo Foods" gives it more possibilities. I think Be & Cheery is also happy to see this deal. For PepsiCo, acquiring Be & Cheery enriches its category reach, including bakery, candy, biscuits, and nuts, giving PepsiCo Foods more possibilities in the big leisure snack track.

2. Future changes for Three Squirrels, Bestore, and Be & Cheery? The main battlefield for the online snack Big Three will definitely be "offline." We see Three Squirrels has been gradually developing its "feeding stores" and "squirrel alliance stores" since 2018, expanding offline through shop-in-shops and franchise models. After this change of ownership, Be & Cheery's strategic goal is clear: to use the boat to reach offline channels. Bestore, after its recent listing, can also gain capital support to further expand regional construction of offline digital stores. But from Bestore's current positioning, it seems somewhat puzzling. For leisure snacks, whether "high-end" is a pseudo-proposition is debatable. But maybe my understanding differs from their internal understanding. Snacks should be tied to scenarios or emotional satisfaction, not made into a very high-end image. Also, among the top ten best-selling products in Bestore's flagship store, you basically see products priced at 9.9, 12.8, 19.9 yuan, etc., which are very low. The overall price and quality presented by the snacks feel quite down-market. So this positioning may need to be re-confirmed. Bestore's strength lies in its chain operation capability in Hubei and other regions. In terms of performance output, it is more stable than Three Squirrels and Be & Cheery. The subsequent challenge is how to explain its high-end positioning. With capital support and increased public brand awareness, I think Bestore's future development direction may be offline, expanding its store-based genes more broadly, such as penetrating more in other regions, opening more stores, and expanding the new retail system. Build up the overall business volume. Online, it needs to build more brand momentum and industry status. Online sales scale and profit are probably not Bestore's main demands. It still needs to distance itself from Three Squirrels, which requires more online investment and preparation for long-term competition. What are your expectations and views on the future landscape of the snack industry? Welcome to leave a comment below to discuss with us.