---
title: "The Most Complete | 2016 China Snack Food Industry Overall Analysis"
description: "This article provides a comprehensive analysis of China's traditional snack food industry in 2016, covering competitive landscape, market structure, barriers to entry, profit trends, and factors affecting industry development. It highlights the fragmented market, the rise of leading enterprises, and the shift towards healthier and higher-end products."
author: "New Distribution"
publisher: "New Distribution"
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published: "2016-12-27"
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# The Most Complete | 2016 China Snack Food Industry Overall Analysis

> This article provides a comprehensive analysis of China's traditional snack food industry in 2016, covering competitive landscape, market structure, barriers to entry, profit trends, and factors affecting industry development. It highlights the fragmented market, the rise of leading enterprises, and the shift towards healthier and higher-end products.

I. Industry Competition
**1. Competitive Landscape and Marketization Degree**
The small-category snack food industry has numerous players, products are homogeneous, entry and exit barriers are low, information is largely shared, and consumer coverage is broad. However, there are certain technical barriers, and in some segments, leading enterprises have market influence beyond other industry players, with brand impact and differentiation gradually increasing. The small-category snack food industry comprises multiple sub-sectors and is overall a monopolistic competitive market. However, since the industry is in its early development stage, the degree of monopolistic competition is dispersed, closer to perfect competition, and market competition is intense. Overall, the industrialization level and operational scale of the traditional snack food industry remain relatively low.
Moreover, competition in the low-end product market is still primarily price-based and fierce. However, some enterprises with strong technical capabilities and high brand awareness are leveraging their R&D advantages to launch new products that meet market demand, explore new growth points, develop mid-to-high-end products, expand their advantages, and continuously improve industry competitiveness and market position.
Competition in the traditional snack food industry is fully competitive. Government departments at all levels regulate and control the industry through laws, regulations, and guiding policies from a macro perspective, without interfering in specific behaviors of enterprises and consumers. Production enterprises operate independently through various channels to reach consumers. The market plays a dominant role in resource allocation, and the industry's marketization degree is high.
**2. Major Enterprises and Market Shares in the Industry**
China's traditional snack food market has low concentration, with numerous production enterprises. Although some regional and industry-specific strong enterprises have emerged in certain regions and segments, such as Shanghai's "Laiyifen" and "Tianwo", Hunan's "Yanjinpuzi", Sichuan's "Huiji Food", and Hangzhou's "Huaweiheng", and some segment leaders have appeared, such as "Qiaqia" in nuts and seeds, "Liuliu Orchard" in preserved fruits, and "Bangbangwa" in dried meat and jerky, there is no national leader covering all categories. Each enterprise's market share is very small. In recent years, with expanding market demand and increased consumption of mid-to-high-end products, some enterprises have gradually increased their market share by leveraging channel and brand advantages.
**3. Main Barriers to Entering the Industry**
(1) Brand Barrier
With the improvement of living standards, consumers tend to prefer snack food brands with good brand reputation. As a small-category snack food industry directly facing consumers, new entrants need to invest heavily in marketing and spend considerable time to build brand influence before being accepted by the market.
(2) Channel Barrier
As fast-moving consumer goods, sales channels are the fundamental guarantee for the development of traditional snack food enterprises. Establishing channels with broad coverage, multiple levels, and strong penetration requires not only capital investment and management experience but also long-term operation. Having long-term and stable sales channels not only promotes product sales but also creates advantages in marketing promotion, user feedback, and information system construction, facilitating scientific and rational production and sales.
Currently, well-known snack food production enterprises in China have established multi-level marketing channels, including direct-operated stores in supermarkets, distributors, wholesale markets, e-commerce platforms, and franchise stores, with a stable consumer base. With changes in the retail industry landscape and consumer habits, the entry threshold for high-quality sales channels is rising, especially for large chain supermarkets, which have higher entry costs due to their scale, coverage, and influence. New entrants find it difficult to establish a comprehensive marketing network in the short term.
(3) Policy and Regulatory Barrier
With industry development, regulators and the public are paying more attention to food safety. The regulatory system for the traditional snack food industry is continuously improving, and industry standards are becoming more refined. Laws and regulations such as the "Food Safety Law of the People's Republic of China" and the "Special Provisions of the State Council on Strengthening the Supervision and Management of Food and Other Product Safety" have been promulgated, imposing higher requirements on product production and quality in terms of quality standards, market access, and production licensing. At the same time, departments such as the General Administration of Quality Supervision, Inspection and Quarantine, the Ministry of Health, the Ministry of Agriculture, and the Ministry of Public Security have certain regulatory responsibilities for food safety. The implementation of the food production licensing system has also led to the gradual elimination of small enterprises with weak strength, outdated production methods, and poor product quality. Increasingly stringent quality and safety control requirements and a stricter regulatory system have raised the industry entry threshold.
(4) Production Technology and Experience Barrier
The taste of traditional snack foods is the most fundamental element determining product competitiveness. Developing products that meet different needs requires production and R&D personnel to conduct in-depth and continuous research on consumer preferences, continuously improve product formulas and processes, and accumulate long-term experience, which constitutes an important barrier for new entrants.
At the same time, advantageous enterprises in the industry have established their unique production technologies through years of development, accumulating rich technical experience in new product development, product testing, and production processes, ensuring product safety and stability. New entrants need to spend considerable time and economic costs to accumulate technology.
**4. Trends and Reasons for Industry Profit Level Changes**
(1) Trends
According to the "Research Report on the Development of Traditional Chinese Snack Food Small Categories" by the China National Food Industry Association, the domestic traditional small-category snack food market is still dominated by low-end products with traditional flavors, with mid-to-high-end products accounting for about 30-40% of the total. Many small-category snack food enterprises are striving to diversify and serialize their product structures. Currently, the gross profit of low-end small-category snack foods is less than 20%, mid-range products generally have a gross profit of about 30%, and high-end products generally have a gross profit of 30% to 50%, with some exceeding 60%. This shows a trend where high-value-added high-end products have substantial and rising gross profits, while low-end ordinary products have declining gross profits.
(2) Reasons
Low-end products in the small-category snack food industry are generally produced by small-scale enterprises, which lack sufficient talent, technology, capital, and management preparation, and lack professional and rational analysis of market demand. This leads to homogenization and price wars in the low-end market, making it difficult to improve gross profit levels. In contrast, excellent enterprises in the industry invest more in food safety, health concepts, and R&D capabilities, and their brands and products are more easily recognized by customers. Therefore, scale enterprises and their high-end products have substantial and rising gross profits. Additionally, high-end products are mainly sold through modern large-scale sales terminals, and small food enterprises and potential entrants cannot afford the cost of entering these terminals, so they continue to follow the existing large-circulation marketing model. The high entry barrier for the high-end market is also an important factor for scale enterprises to maintain high gross margins.
II. Favorable Factors Affecting Industry Development
**1. Growth in Resident Income and Food Consumption Boosts Product Market Demand**
With China's rapid economic development, urban and rural residents' income has increased significantly, and food expenditure has maintained steady growth. From 2004 to 2015, the income and food consumption of Chinese residents and their growth trends are as follows:
Snack food expenditure is generally positively correlated with income levels; the higher the income, the more spent on snack foods. As residents' income rises, the demand for snack foods will continue to increase, driving rapid industry development.
**2. Industrial Policy Support Favors the Growth of Scale Enterprises**
The snack food industry falls under the category of agricultural and sideline food processing, which helps increase the added value of agricultural products and extend the value chain of agricultural products. It is also a labor-intensive industry that can effectively absorb labor and create employment opportunities. Benefiting from national industrial policies supporting agriculture and the food industry, the traditional snack food industry has achieved unprecedented development in recent years.
According to the "12th Five-Year Plan for the Food Industry", it is proposed to "accelerate the development of new convenience food products, develop towards multi-variety, nutritious, and high-quality directions, actively develop snack foods with unique flavors and nutritional health, develop baked foods with diverse flavors and nutritional fortification, and meet market segmentation needs." The "2006-2016 National Food Industry Science and Technology Development Outline" proposes to "focus on consumer demand for nutrition, convenience, deliciousness, quality, and low price, use scientific formulas and appropriate extraction and processing techniques to develop a variety of mass foods, convenience foods, and functional foods that meet the needs of different groups, promote and develop China's excellent traditional foods and ethnic foods, and improve the level of industrialized production of staple and non-staple foods." The consecutive "No. 1 Central Documents" have stabilized the prices and supply of primary agricultural products and provided supportive policies for agricultural product processing and related industries.
With the support of industrial policies, the technical standards and industry supervision of traditional small-category snack foods will become increasingly refined. With industrial structure adjustment, optimization of resource allocation, and upgrading of production technology, leading enterprises in segments and regions will continue to grow. Traditional snack food enterprises will shift from pure price competition to product differentiation and brand competition, prompting them to strengthen brand management, enrich marketing methods, increase recognition of well-known brands among consumers, and enhance consumer brand loyalty. While leading enterprises expand, industry mergers and acquisitions will become increasingly active, leading to the birth of super-large production enterprises.
**3. The Traditional Snack Food Small-Category Market Continues to Expand, Maintaining Rapid Growth**
The next 10 years are very important for China's urbanization development. With the development of cities and city clusters, the population is rapidly gathering in cities, and lifestyles are becoming urbanized. The growth potential of snack foods remains considerable. In particular, traditional specialty snack foods, because they conform to the consumption characteristics and taste preferences of the Chinese public, have very considerable growth potential. According to estimates by the China National Food Industry Association in the "Research Report on the Development of Traditional Chinese Snack Food Small Categories", from 2015 to 2019, the national snack food industry will continue to maintain a high growth rate, with a growth rate of over 17%. It is expected that the output value of the national snack food industry will increase from 1,058.962 billion yuan in 2015 to 1,992.528 billion yuan in 2019. From 2015 to 2019, the output value of small-category snack foods will grow from 471.975 billion yuan to 1,047.298 billion yuan.
**4. Strengthened Food Safety Awareness in the Industry**
In recent years, frequent food safety issues have prompted China to establish the State Council Food Safety Committee, raising the level of food safety supervision. It also established the China Food and Drug Administration, implemented the food production licensing system, and the food recall management system, strictly supervising food safety risks. In addition, relevant national regulations and industry standards have effectively promoted the healthy development of the food industry. On the one hand, the state has promulgated laws and regulations such as the "Implementation Rules for Quality and Safety Supervision and Management of Food Production and Processing Enterprises" and the "Food Safety Law of the People's Republic of China". On the other hand, to promote orderly competition and healthy development, relevant regulatory departments have successively issued industry standards and regulations such as the "Regulations on Hygiene Management of Bulk Food" and the "Detailed Rules for Food Production License Review". The national emphasis on food safety, along with supporting laws, regulations, and industry standards, is conducive to the gradual standardization of the snack food industry, providing a good environment for the sustainable and healthy development of excellent enterprises that meet food safety conditions.
**5. Consumer Demand Gradually Shifts Towards Green and Healthy Products, Promoting Industry Standardization**
With the improvement of people's living standards, green and health have become an unstoppable trend. Consumers' focus on snack foods has gradually shifted from variety, quantity, and taste to green, nutrition, and health. Foods with health functions are favored by consumers. Production enterprises have also begun to focus on developing products with high safety and nutrition, ensuring the nutrition and health of food from multiple angles and channels. More and more production enterprises are incorporating the front end of the industrial chain into the production process, reducing the use of pesticides in the production process by establishing raw material production bases, controlling the initial processing of agricultural raw materials, and reducing the damage to food nutrition during processing. They control the use of chemically synthesized food additives in the production process and continuously develop the application of natural additives in food to meet market demand for healthy food.
Due to the improvement of consumer demand, focusing on nutritional balance and safety and health will become the focus of the small-category snack food industry. In the future, healthy traditional snack foods with low sugar, low salt, low calories, low fat, and high nutritional value will become the mainstream of market development. With the improvement of consumer food safety awareness, the establishment and improvement of long-term regulatory mechanisms, and the improvement of food testing technology and capabilities, food safety will be more strictly controlled, and the development of the small-category snack food industry will become more standardized.
III. Unfavorable Factors Affecting Industry Development
**1. Weak Overall R&D and Innovation Capability Affects the Industry's Overall Technical Level**
Due to the large number of small and micro enterprises, the industry's overall R&D and innovation capabilities are weak. Products are highly homogeneous in terms of variety, ingredients, taste, and packaging. The technical content and economic added value of products are low, and there are few high-end, high-value-added products. The industry's overall R&D capability needs further improvement.
**2. Food Safety Issues Have an Adverse Impact on Industry Development**
In recent years, frequent food safety incidents have made consumers and regulatory authorities pay more attention to food safety issues. The non-compliant operations of individual enterprises will damage the reputation of the entire industry and affect the image of the industry.
-END-
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## Citation metadata

- Publisher: New Distribution
- Author: New Distribution
- Published: 2016-12-27
- Canonical: https://xinjignxiao.com/en/articles/the-most-complete-2016-china-snack-food-industry-overall-analysis-5a9e65ec/
- Original source: https://mp.weixin.qq.com/s/QujyEvlVOdhwpl5tqmp5tg

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