Source: FN Business (ID: FN-24H) From the 1990s to the present, China's snack industry has evolved for over 30 years, and the development trajectories of snack companies have changed several times, reflecting the step-by-step upgrading of Chinese consumption trends. On March 16, Philippine food manufacturer Oishi passed the Hong Kong Stock Exchange hearing, moving one step closer to listing. At the same time, the domestic snack market has also been full of good news. Recently, under media attention, Tmall Supermarket's own snack brand Bonbater has gradually come to light; last month, Liangpin Shop, known as the "first high-end snack stock," officially listed on the main board of the Shanghai Stock Exchange; almost simultaneously, internet snack brand Baicaowei changed hands for the second time, merging with PepsiCo with a valuation of 5 billion yuan. Together with Three Squirrels, which had previously listed on the ChiNext board, the once highly watched and questioned internet snack leaders have now all obtained tickets to the secondary market and are competing on the same stage with large traditional snack companies that have long achieved success. Looking back at the track at this moment, one is struck by the realization that China's snack industry has evolved for over 30 years, and the development trajectories of snack companies have changed several times. Behind this lies the step-by-step upgrading of Chinese consumption trends, as well as the ups and downs of snack companies due to changes in products and channels. -01- Snack 1.0 Era: Volume is King China's first generation of snack giants generally rose in the 1990s. The post-80s and post-90s generations, who grew up with the millennium's hottest song "Reform and Opening Up," were the initial supporters of the snack market. Back then, the one who ruled the school was either the four-eyed prince with a full set of instant noodle-flavored Water Margin hero cards or the girl with braces who could casually pull out Lonely God (Langweixian) during a spring outing. Behind these dazzling 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, its instant noodle products like Xiao Dangjia and Xiao Huanxiong were all the rage in the snack industry. Almost at the same time, Want Want Group began building factories in the mainland. After several years of product and channel exploration, it captured half of the domestic market with hit products like Langweixian, Want Want Senbei, Snow Rice Cakes, and Want Want Milk, and listed on the capital market in 1996. Another Taiwanese company that cannot be ignored is Hsu Fu Chi, which emerged in the same period. 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 Eric Tsang's duck-like laughter. To this day, post-80s and post-90s generations still reflexively recall its image and voice when hearing the Chinese New Year background music. In an era of flourishing diversity, local snack brands were not to be outdone. Being given as a "national gift" to then-U.S. President Nixon in the 1970s is a detail that White Rabbit candy is too proud to repeat. 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, Xizhilang entered the jelly industry with only 400,000 yuan in initial capital and achieved market monopoly five years later. "Xizhilang," "Crystal Love," and "CICI Jelly" all became top products in the jelly and pudding industry at that time. In 1998, Chen Xianbao, the "father of Popsicle," set his sights on the sunflower seed business popular in his hometown of Anhui. After developing a new process of boiling seeds in spiced herbal water, Qiaqia sunflower seeds were born. Wrapped in red kraft paper, Qiaqia stood out from the mostly bulk-packaged competitors. Fujian Dali, founded in 1989, saw a turnaround opportunity in the early 21st century when it launched Daliyuan Egg Yolk Pies at a price one-third lower than Orion's, striking a blow to the Korean food company's four-year monopoly on sales in China. Subsequently, Dali replicated this strategy with Copico and Haochidian, expanding its business lines nationwide. That was an era of "bigness" that people yearn for— The model of "big single products + mass production + extensive channels + large-scale retail" gave rise to these "snack kings" of the 1.0 era. They focused on developing a small number of SKUs tailored to mass demand and market characteristics, then mass-produced them and, through thousands of distributors, ultimately reached consumers nationwide. They were also the first, largest, and best marketers of their time. Today's popular viral ads, celebrity endorsements, IP collaborations, and customized packaging are nothing more than reinventions of concepts from that era. As the fundamentalists of China's snack market, their substantial profits and accumulated experience trapped them for the next 20 years in the illusion of past glory. By the time they came to their senses, those seemingly insignificant competitors had already built insurmountable walls around them. -02- 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 the field. 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 club and was listed among the "Top 500 Private Enterprises in China"... Even though these established companies had already reached the top tier in financial performance, it was far from enough to fill China's vast and deep snack market, and some newcomers gradually emerged. In 2002, Haoxiangni stopped limiting itself to jujube slices and expanded its "jujube snack" segment with products like 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 debuted Xiangpiaopiao had almost no rivals in the instant cup milk tea market, charging toward its sales target of "circling the earth twice"; Youyou Food, founded in 2007, quickly established its position in the vertical category with a pickled pepper chicken feet product. As it turned out, 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 snack chain brand Laiyifen was officially born; in fact, two years earlier, it had already opened its first small store in Shanghai. Initially, Laiyifen mainly operated in the stir-fried nuts business, which was not yet thriving at the time, with the single product "honey walnuts" selling particularly well. Perhaps in gratitude for this "walnut wealth-building history" with its strong era flavor, Laiyifen brought a cow carrying walnuts to the door of the Shanghai Stock Exchange when it went public. Later, as the business grew, Laiyifen expanded its stir-fried 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 the development strategy of its early stage, Laiyifen can be said to have inadvertently inspired many of today's snack upstarts. The one who imitated it most closely was Liangpin Shop, founded by Yang Hongchun. In 2006, Yang Hongchun, who had recently 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 Liangpin Shop not only adopted the chain store business model but also followed the same approach as Laiyifen in standing out through dried fruits and stir-fried nuts. However, unlike Laiyifen's belated awareness of categories, Liangpin Shop had the idea from its inception of "bringing together delicious snacks from various regions in one store"; in terms of expansion, Liangpin Shop's tolerance for franchise stores also differed from Laiyifen's insistence on direct-operated stores. Thus, after opening its first store in Wuhan in 2006, a strategy of "first establish a model, then recruit franchisees" drove Liangpin Shop's rapid expansion. From 28 stores in 2007, 88 stores in 2008, to nearly 1,000 stores by 2012, Liangpin Shop, in terms of store scale alone, was not inferior 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 Liangpin Shop's shares. Overall, compared to the traditional snack companies' all-encompassing approach from production to sales, the full-category snack chains represented by Laiyifen and Liangpin Shop pioneered a "light-asset operation" approach. In production, their products are manufactured by numerous OEM factories, and instead of focusing on developing a few products, they strive to carry as many snack SKUs as possible; in sales, these companies rely on self-built channels, mostly small and medium-sized street-side stores. Both on the production and sales sides, the competitive barriers for chain brands have shifted from product R&D capabilities to the management capabilities of suppliers. Therefore, rather than being marketing-savvy brand owners, they are more accurately powerful retailers. It is worth mentioning that the step-by-step growth of Liangpin Shop and Laiyifen makes it easy to forget Baicaowei, which was sandwiched between them at the time. Born in Hangzhou in 2003, next door to Laiyifen, Baicaowei diligently expanded in imitation of Liangpin Shop but failed to become a third model example of the 2.0 era. Baicaowei, which only managed to open 100 stores by 2009, had to stop in the chain era due to expansion bottlenecks. Fortunately, Baicaowei's achievements were not in this area. -03- Snack 3.0 Era: Online for All 2012 was another watershed for the 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 Baicaowei, which had been unsuccessful in the chain brand era. At the end of 2010, Baicaowei, facing expansion bottlenecks, was invited by Alibaba to venture online. Seemingly seeing 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 Liangpin Shop were just starting online, Baicaowei had already achieved online sales of 140 million yuan. Liangpin Shop was almost the fastest to react among snack chain retailers. In 2012, Yang Hongchun, who had boldly declared he would open 5,000 stores nationwide, brought Liangpin Shop online, successively entering dozens of e-commerce channels such as Tmall, JD.com, and Yihaodian. As it turned out, to this day, Liangpin Shop still has only over 2,000 offline stores, but that doesn't prevent its online business from contributing billions of yuan in revenue to the company each year. Of course, the most eye-catching snack brand that year was still Three Squirrels, known as the "first internet-born snack," because its rise carried the storytelling typical of that era—model disruption and capital frenzy. Founder Zhang Liaoyuan is the kind of business genius commonly seen in entrepreneurial articles. As early as the beginning of 2010, he was among the first to sense the opportunity of e-commerce B2C and launched a project to sell pecans online. This online store called "Keke Guo" achieved sales of 20 million yuan in just one year. After Zhang Liaoyuan's sales target of "200 million in three years" was ridiculed by all the "conservatives," he decided to go it alone. In 2012, the internet-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 Liangpin Shop, successively approached Zhang Liaoyuan, providing a total of over $21 million in financing. The capital darling Three Squirrels lived up to expectations, achieving sales of 7.66 million yuan in that year's Double 11, a figure that directly 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 brand owners to better absorb surplus production capacity and get closer to consumers. In this stage where online dominates and products are marketing, the core competitiveness of enterprises became their adaptability to the internet. Therefore, Three Squirrels and Baicaowei, which were born and raised online, and Liangpin Shop, which sought deep integration with online channels early on, were able to stand out and form a tripartite balance 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. Although their industrial accumulation ensured financial respectability, it also mercilessly sounded the horn of decline. Financial reports show that Master Kong's and Uni-President's beverage and instant noodle businesses entered a stagnation period in 2014; Qiaqia Food and Dali Group saw slowing revenue growth; 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 respect for "omnichannel" appeared at the organizational level of these companies. But by then, Three Squirrels, Baicaowei, and Liangpin Shop had already become the top three in market share in the snack industry, with Baicaowei even going public through the 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 "kids" they had once helped create. -04- All Roads Lead to the Same End Over the 30 years from the 1990s to the present, the snack industry has generally undergone three rounds of model innovation. Today, while the industry landscape has largely taken shape, new challenges have also arrived. The snack kings of the 1.0 era, after about three years of adjustment and reflection, have all been making efforts to lay out online strategies. In 2014, Yanjin Shop followed the internet trend and established an e-commerce company; in 2016, Haoxiangni brought the online snack upstart Baicaowei under its wing; in 2017, Want Want shifted its focus to in-depth omnichannel layout. In addition, in the 3.0 era, where national trends prevail and marketing is paramount, the first-generation giants, always good at promotion, have without exception embarked on a new marketing path with a nostalgic theme. Thus, Want Want knitted sweaters, White Rabbit sold ice cream and perfume, and Hsu Fu Chi launched a pastry gift box co-branded with the Summer Palace, trying to unlock the sealed memories and wallets of contemporary consumers. At present, the diversification strategy has slightly improved the financial figures of the above companies, but "it's hard for a big ship to turn around." In today's snack industry, where there are many players and traffic is fragmented, returning to their former market value peaks will inevitably be difficult. Laiyifen, which failed to transform in time in the 2.0 era, has been 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, with total operating income of 3.891 billion yuan, following Liangpin Shop as the fourth-largest brand in the snack industry by market share. However, its net profit of only 10.2655 million yuan, a sharp decline of 89.87% year-on-year, still made this latecomer seem inadequate. The "Big Three" of the 3.0 era also encountered stagnation in online penetration and overt and covert price wars during their rapid development period. The increasing homogenization of models and products once blurred their brand identities. The intense competition in the track forced them all to embark on a collective transformation path. For Three Squirrels and Baicaowei, which were purely online, turning to offline was the most practical way to gain incremental traffic. At the end of 2018, Three Squirrels announced it would open 150 offline stores in 2019; Baicaowei, which had been exclusively online, after an eight-year hiatus, resumed its physical store business by leveraging Haoxiangni's offline advantages. Liangpin Shop, which had always walked on both online and offline legs, continued to accelerate its offline layout while already having over 2,000 stores. In addition, to create a more differentiated competitive barrier, Liangpin Shop made comprehensive upgrades from its logo to its store scenes, and the evolution of its spokesperson from Huang Xiaoming to Kris Wu signaled its brand positioning of embracing youth and moving toward high-end. It can be seen that although the strategies and paths of various companies differ, omnichannel, diversification, and differentiation have become the consensus for survival among all snack companies today. As industry links become increasingly tight and smooth, traditional companies are lowering their profiles, and internet-born companies are returning to physical entities. The core focus of all participants is returning to the essential needs of consumers. At this moment, in terms of industry opportunities, the market gaps of the 1.0 era will never appear again, 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, with Liangpin Shop's listing and Baicaowei's second acquisition, most snack companies at the forefront of the market have embarked on the path of capitalization. Every step of their development will be subject to transparent, fair, and timely scrutiny from the market. But even so, the total market value of all the leading companies in the capital market is only at the tens of billions level. 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. Tips will be paid 400-2000 yuan upon adoption.