---
title: "The 30-Year Rise and Fall of China's Snack Industry"
description: "China's leisure snack industry has evolved over 30 years, with companies rising and falling through four eras: volume-driven, chain retail, online, and health-focused. The industry is now in a stable period where full-channel, diversified, and differentiated strategies are key to survival."
author: "辛夷"
publisher: "New Distribution"
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published: "2022-01-09"
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# The 30-Year Rise and Fall of China's Snack Industry

> China's leisure snack industry has evolved over 30 years, with companies rising and falling through four eras: volume-driven, chain retail, online, and health-focused. The industry is now in a stable period where full-channel, diversified, and differentiated strategies are key to survival.

Source: 观潮新消费 (ID:TideSight)

Looking back, one is struck by the realization that China's leisure snack industry has evolved for over three decades, with the development trajectories of snack companies undergoing several shifts.

Chicken chips, konjac toast, collagen gummies, seaweed fish crisps, protein bars, low-calorie milkshakes, tiger-skin chicken feet, egg yolk pastries, yogurt fruit granola... Contemporary young people are increasingly particular about what they eat.

Unlike the previous generation of White Rabbit candy and Oishi chips, even Three Squirrels, Be & Cheery, and Bestore are subtly "aging." New brands seize the psychology of the new generation of consumers who want to eat but fear gaining weight, carving out entirely new categories in uncharted territory.

According to iiMedia Research data, **since 2010, the scale of China's leisure snack industry has been expanding, reaching 1.12 trillion yuan by 2020, with projections of 1.1562 trillion yuan in 2021.**

The snack track is bustling with countless brands. Looking back, one realizes that China's leisure snack industry has evolved for over 30 years, with the development paths of snack companies undergoing several changes.

Behind this lies the step-by-step upgrading of Chinese consumption trends, as well as the ups and downs of snack companies due to product and channel changes.

**Snack 1.0 Era: Volume is King**

**China's first generation of snack giants generally emerged in the 1990s. The post-80s and post-90s generations, who grew up with the millennium hit song "Reform and Opening Up Spring Breeze Blows All Over the Ground," were the initial supporters of the snack market.**

Back then, ruling the school campus was either the four-eyed prince with a full set of instant noodle snack Water Margin hero cards or the girl with braces who could casually pull out Lonely God (Lonely God) during spring outings.

Behind these colorful snack packages were the two major Taiwanese snack giants of that era: Uni-President and Want Want.

Uni-President Group came to the mainland market in 1990. With its advanced marketing, Uni-President's instant noodle snacks like Xiao Dangjia and Xiao Huanxiong were all the rage in the leisure food sector.

Almost simultaneously, Want Want Group began building factories in mainland China. After several years of product and channel exploration, it captured half of the domestic market with hit snacks like Lonely God, Want Want Senbei, Snow Rice Cakes, and Want Want Milk, and went public in 1996.

Another Taiwanese company that cannot be ignored is Hsu Fu Chi. From its founding in 1992 to becoming the undisputed leader in the domestic candy industry by 1998, Hsu Fu Chi had already become intertwined with the gold coin chocolates that looked good but didn't taste great, and the duck-like laughter of Eric Tsang in its ads. To this day, post-80s and post-90s generations still reflexively recall its image when hearing Chinese New Year background music.

**In this era of blooming flowers, local snack brands were not to be outdone.**

Once given as a "national gift" to then-US President Nixon in the 1970s, White Rabbit candy never tires of mentioning this anecdote. This old Shanghai candy factory, which has held the "China Famous Trademark" since 1993, even took on the historical mission of "countering Western revolution."

In 1993, Strong Group entered the jelly industry with only 400,000 yuan in initial capital, achieving market monopoly five years later. "Strong," "Crystal Love," and "CICI Jelly" all became top products in the jelly and pudding industry.

In 1998, Chen Xianbao, the "father of popsicle sticks," targeted the sunflower seed business popular in his hometown of Anhui. After a new process of boiling with spices and herbs, Qiaqia sunflower seeds were born. Wrapped in red kraft paper, Qiaqia stood out from the bulk-packaged competitors.

Fujian Dali Group, founded in 1989, saw a turnaround opportunity in the early 21st century when it launched Daliyuan Egg Yolk Pie at a price one-third lower than Orion's, breaking the Korean company's four-year monopoly on sales in China. Subsequently, Dali replicated this success with Copico and Haochidian, expanding its business lines nationwide.

That was an era of "big" that people yearn for—

**The model of "big single product + big production + big channels + big retail" gave birth to these "snack kings" of the 1.0 era.** They focused on developing a few SKUs tailored to mass demand and market characteristics, mass-produced them, and then reached consumers nationwide through thousands of distributors.

They were also the earliest, largest, and best marketers. Today's popular viral ads, celebrity endorsements, IP collaborations, and customized packaging are nothing more than reinventions of concepts from that time.

**As the fundamentalists of China's snack market, their substantial profits and accumulated experience trapped them in the illusion of past glory for up to 20 years.** By the time they came to their senses, they found that those seemingly insignificant competitors had erected insurmountable walls around them.

**Snack 2.0 Era: Brand Chains**

After 2000, the "snack kings" who had accumulated over a decade of experience began to reap their first fortunes in their respective fields.

White Rabbit candy's revenue reached 600 million yuan; Qiaqia sunflower seeds entered a high-growth phase with sales exceeding 1.5 billion yuan; Dali directly joined the 10-billion-yuan club and was listed among the "Top 500 Private Enterprises in China"...

**Even though these established companies had entered the top tier in financial performance, it was far from enough to fill China's vast and deep snack market, and some newcomers began to emerge.**

In 2002, Haoxiangni stopped limiting itself to date slices, expanding its "date-based snacks" segment with red date vinegar drinks, special fragrant dates, and red date ginseng tea. In 2005, Yanjin Shop, which grew from a small food workshop, officially embarked on a long and arduous path of self-developed food products.

In 2004, the newly launched Xiangpiaopiao had almost no rivals in the instant cup milk tea market, charging toward its sales target of "circling the earth twice." Youyou Foods, founded in 2007, quickly established its position in the vertical category with a pickled pepper chicken feet product.

**It turned out that although these snack companies largely followed the old paths of their predecessors, these followers who focused on products later gained recognition from the capital market.** Almost simultaneously, a new model for the snack industry was quietly emerging.

In 2001, the leisure snack chain brand Laiyifen was officially born, though it had already opened its first small store in Shanghai two years earlier.

The initial Laiyifen mainly operated in the then-unpopular roasted nuts business, with the single product "honey-roasted walnuts" particularly outstanding in sales. Perhaps in gratitude for this "walnut wealth history" with its strong era flavor, when Laiyifen went public, it brought a cow carrying walnuts to the entrance of the Shanghai Stock Exchange.

As the business grew, Laiyifen expanded its roasted nut categories to cover the full range of snacks, including meat products, soy products, dried fruits and vegetables, candies and jellies, pastries, and imported foods.

Looking at its early development strategy, Laiyifen can be said to have intentionally or unintentionally inspired many of today's snack upstarts. The one that imitated it most closely was Bestore, founded by Yang Hongchun.

In 2006, Yang Hongchun, who had just resigned from Kelon Electric, gathered a few old acquaintances and borrowed over 600,000 yuan from relatives and friends to embark on his entrepreneurial journey. The fledgling Bestore not only adopted the chain store model but also followed the same approach as Laiyifen in standing out through dried fruits and roasted nuts.

However, unlike Laiyifen's belated awareness of categories, Bestore from its inception had the idea of "bringing together delicious snacks from all over in one store." In terms of expansion, Bestore was more tolerant of franchise stores, unlike Laiyifen's insistence on direct-operated stores.

Thus, after opening its first store in Wuhan in 2006, a strategy of "first set a model, then recruit franchises" drove Bestore's rapid expansion. From 28 stores in 2007, 88 stores in 2008, to nearly 1,000 stores by 2012, Bestore's store scale alone was comparable to Laiyifen, which had started seven years earlier.

Such impressive results naturally attracted capital attention. In December 2010, Capital Today invested 51 million yuan, acquiring nearly 30% of Bestore's shares.

Overall, **compared to traditional snack companies that handled everything from production to sales, the full-category leisure snack chains represented by Laiyifen and Bestore pioneered an "asset-light operation" approach.**

On the production side, their products are manufactured by numerous OEMs, and they do not insist on developing a few products but strive to carry as complete a range of snack SKUs as possible. On the sales side, these companies rely on self-built channels, mostly small and medium-sized street-side stores.

**Whether on the production or sales end, the competitive barrier for chain brands shifted from product R&D capability to the company's ability to manage suppliers.** Therefore, rather than being marketing-savvy brand owners, they are more like retailers with strong control.

It is worth mentioning that the parallel growth of Bestore and Laiyifen makes it easy to forget Be & Cheery, which was sandwiched between them at the time.

Founded in 2003 in Hangzhou, next door to Laiyifen, Be & Cheery diligently expanded in the style of Bestore but failed to become a third model of the 2.0 era. By 2009, Be & Cheery had barely opened 100 stores and was forced to halt its chain expansion due to bottlenecks.

Fortunately, Be & Cheery's achievements lay elsewhere.

**Snack 3.0 Era: All-Online**

**2012 was another watershed for the leisure snack industry.**

That year, traditional food giants like Want Want and Uni-President were approaching their peak market values, unaware that this upcoming peak would be their final glory.

Because in that same year, the competitive landscape for the second half of the snack industry began to take shape, and the first successful pioneer was Be & Cheery, which had been frustrated in the chain brand era.

At the end of 2010, Be & Cheery, facing expansion bottlenecks, entered the online space at the invitation of Alibaba. Seemingly recognizing the infinite potential of the internet, founder Cai Hongliang chose to completely abandon offline and focus solely on online.

Thus, in 2012, when Three Squirrels and Bestore were just starting online, Be & Cheery had already achieved online sales of 140 million yuan.

Bestore was almost the fastest among snack chain retailers to react. In 2012, Yang Hongchun, who had boldly declared plans to open 5,000 stores nationwide, took Bestore online, successively landing on dozens of e-commerce channels such as Tmall, JD.com, and Yihaodian.

It turned out that even today, Bestore still has only over 2,000 offline stores, but that doesn't prevent its online business from contributing billions of yuan in revenue annually.

Of course, the most eye-catching snack brand that year was Three Squirrels, which claimed to be the "first online-born snack," **as its rise carried the unique storytelling of that era—model disruption and capital frenzy.**

Founder Zhang Liaoyuan was the kind of business genius often featured in entrepreneurial articles. As early as early 2010, he sensed the opportunity in e-commerce B2C and launched a project to sell pecans online. This online store called "Keke Guo" achieved 20 million yuan in sales in just one year.

After his sales target of "300 million in three years" was ridiculed by all the "conservatives," he decided to go it alone.

In 2012, the online-born brand Three Squirrels, with its "pure online + high-end nuts + cute pet IP" model, immediately attracted capital that was obsessed with catching trends. Li Feng, then at IDG, and Xu Xin, who had already invested in Bestore, successively approached Zhang Liaoyuan, providing over $21 million in funding.

The capital darling Three Squirrels lived up to expectations, achieving 7.66 million yuan in sales during that year's Double 11, a figure that exceeded 500 million yuan by 2016.

**At this point, the snack industry entered a third era dominated by the internet.** The online boom gave the post-80s and post-90s generations, who had just become the main consumer force, more choices, and also allowed brands to better absorb excess production capacity and get closer to consumers.

**In this stage where online dominates and product is marketing, the core competitiveness of enterprises became their adaptability to the internet.**

Therefore, Three Squirrels and Be & Cheery, which were born and raised online, and Bestore, which sought deep integration with online channels early on, were able to stand out and form a tripod in this era. In contrast, the Want Wants, which still relied on the old offline path, inevitably began to pay the price for missing an era.

In 2014, the market values of Want Want, Uni-President, and Master Kong collectively peaked. While their industrial accumulation ensured financial decency, it also mercilessly sounded the horn of decline.

Financial reports show that Master Kong and Uni-President's beverage and instant noodle businesses entered a stagnation period in 2014; Qiaqia Foods and Dali Group saw revenue growth slow; Want Want fell into negative growth for four consecutive years from 2014 to 2017, with its market value dropping by nearly half.

**It wasn't until 2017 that reverence for "omni-channel" became apparent at the organizational level of these companies.** But by then, Three Squirrels, Be & Cheery, and Bestore had already secured the top three positions in market share in the snack industry, with Be & Cheery even going public through its acquisition by Haoxiangni.

**As for the 1.0 era companies, besides their visibly fatigued performance, they also had to suffer the fate of being forgotten by the "youngsters" who once made them successful.**

**Snack 4.0 Era: Health is King**

While you're torn between Three Squirrels, Be & Cheery, and Bestore, the young Gen Z has already started abandoning them.

Data shows that the market share of Three Squirrels, Bestore, and Be & Cheery has declined from 35% in Q1 2020 to 23% in Q1 2021. The latest Q3 financial reports show that these three "BAT" of the snack industry have all seen performance declines and frequent negative marketing incidents.

**When snacks enter the "health" 4.0 era, what are young people actually eating?**

Genki Forest led the food and beverage industry into the 0-sugar, 0-fat, low-calorie era; ffit8 sold 100 million yuan of protein bars in a year; Wangbaobao, Oatza, and other granola brands, along with Wonderlab, introduced scientific meal replacement; hyaluronic acid gummies and buffX opened the door to functional foods...

**"The previous food industry had a demand gap for today's young people. In the overall lifestyle upgrade, there are significant opportunities,"** said Zhang Guangming, founder of ffit8, to TideSight. "Various snacks and beverages in life can be redone with a health-oriented logic. Use youthful packaging, visuals, and communication language to redo marketing."

In many conversations, Zhang Guangming has stated that ffit8 wants to make future young people eat healthier, not just sell ffit8 products. So, after protein bars, there are probiotic protein powders, protein meal replacement shakes, protein cookies, etc. "Protein" has more possibilities.

**Functional foods, health foods, and healthy snacks are markets where consumers actively seek products with needs, which brings rapid dividends to the industry.**

Specifically, taking "healthy ingredients" as an example, higher-level health can be summarized with three additions and three subtractions:

**The first addition is that modern pain points make classic food supplement ingredients fashionable again. Modern pain points plus classic mind-share ingredients create new-style health preservation methods,** such as Quaker's five-black oatmeal.

**The second addition is ingredient innovation. Food is the "new health supplement" choice for young people.** Make snacks functional, or make functional foods snack-like.

**The third addition targets pain points of specific consumer segments. Ingredient additions give mature categories new life.** Find entry points for different groups, such as children's growth needs, young adults' beauty and skincare needs, etc.

**The first subtraction is the sugar-reduction trend.** Minimalist formulas, green sugar substitutes, scientific sugar substitute trends.

**The second subtraction is precise salt control.** Natural salty and umami flavors, or the next trend in health management.

**The third subtraction is scientific meal replacement and nutritional management.** Meal replacement is not just about weight loss; it has many other effects and scenarios, such as energy supplementation for athletes and nutritional supplementation for office workers.

Under the national trend, new domestic brands are emerging one after another, and time-honored brands are upgrading and rejuvenating. Behind this are new trends, new quality, and new value—more dimensions of emotion, more diverse senses, and higher-level health.

A close study of current internet-famous products reveals that **their combinations are not overly bizarre but new souls under the harmonious collision of old elements; the meeting of internet-famous new flavors and trend categories is the inspiration for new hits.**

"The most surprising difference of new brands is that this generation of new brands has shifted from focusing on sales volume to focusing more on brand building. They usually have a deep understanding of marketing, product R&D, and design, are proficient in digital marketing tools, and master the skills and methods of communicating with consumers," said Lü Zhibin, director of Alibaba Research Institute's New Consumption Research Center.

**Consumers' tastes and preferences are no longer one-dimensional. To satisfy consumers today, you must start with the five senses.**

For food and fresh products, taste is certainly important, but you also need to pay more attention to consumers' sense of smell, taste, hearing, sight, and even touch. Currently, the interaction and experience between consumers and products are comprehensive, multi-dimensional, and three-dimensional.

**All Roads Lead to the Same Destination**

**From the 1990s to the present, over 30 years, the snack industry has generally undergone three rounds of model innovation and has begun a fourth round of change.** Today, while the industry landscape is basically formed, new challenges are also emerging.

**The snack kings of the 1.0 era, after about three years of adjustment and reflection, have all begun to focus on online layout.**

In 2014, Yanjin Shop followed the internet trend and established an e-commerce company; in 2016, Haoxiangni brought the online snack upstart Be & Cheery under its wing; in 2017, Want Want shifted its focus to in-depth omni-channel layout.

In addition, in the 3.0 era where national trends and marketing dominate, the first-generation giants, always good at publicity, have all started new marketing paths with a nostalgic theme.

Thus, Want Want knitted sweaters, White Rabbit sold ice cream and perfume, and Hsu Fu Chi collaborated with the Summer Palace to launch pastry gift boxes, trying to pry open the sealed memories and wallets of contemporary consumers.

At present, **the diversification strategy has slightly improved the financial data of the aforementioned companies, but "it's hard to turn a big ship around." In today's snack industry with many players and fragmented traffic, returning to their former market value peaks will be difficult.**

**Laiyifen, which failed to transform in time in the 2.0 era, is now taking a two-pronged approach: catching up on its online homework while improving the shopping experience in offline stores.**

In 2018, Laiyifen achieved a 7.01% year-on-year increase in revenue, totaling 3.891 billion yuan, following Bestore as the fourth-largest brand in market share in the snack industry.

However, its net profit of only 10.2655 million yuan, a sharp 89.87% year-on-year decline, still made this latecomer seem overwhelmed.

**The "three giants" of the 3.0 era also encountered stagnation in online penetration and overt and covert price wars during their rapid development period. The gradual homogenization of models and products once blurred their brand identity.** The intense competition forced them all to embark on collective transformation.

**For the pure online players Three Squirrels and Be & Cheery, turning to offline is the most practical way to gain traffic increments.**

At the end of 2018, Three Squirrels announced it would open 150 offline stores in 2019; Be & Cheery, which specialized in online, after an eight-year hiatus, relied on Haoxiangni's offline advantages to resume its physical store business.

Bestore, which had always walked on both online and offline legs, continued to accelerate its offline layout while already having over 2,000 stores.

**It can be seen that although the strategies and paths of various companies differ, omni-channel, diversification, and differentiation have become the survival consensus for all snack companies today.** As industry links become increasingly tight and smooth, traditional companies are lowering their profiles, and online-born companies are returning to physical retail. The core focus of all participants is returning to the fundamental needs of consumers.

In terms of industry opportunities, **the market gaps of the 1.0 era will never return, and the underlying shifts of the 3.0 era may not occur in the short term. The snack field has entered a relatively stable industrial period.**

In terms of corporate landscape, Bestore, Be & Cheery, and Three Squirrels are all large and comprehensive, with many categories but no distinctive memory points. New brands emerging in various sub-segments are more in line with the tastes of today's young people, continuously eroding market share.

But even so, the combined market value of all capital market leaders is only in the tens of billions. **This means that for the players still in the game, whether they can succeed and how big they can become depends entirely on their own capabilities.**

After all, China's snack market is like a child's snack pocket—there is always room for better newcomers.

**Are you "watching" me?**


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