Leisure snacks set off again. Food is the first necessity of the people. As the "fourth meal," the leisure snack industry has always attracted much attention. Since the beginning of this year, Three Squirrels and Youyou Foods have been listed successively. Well-known brands such as Bestore and Ganyuan Food are also in the IPO process. On the one hand, the leisure snack industry has a broad market and optimistic prospects; on the other hand, competition among leading brands is fierce, and homogenization is serious. How each company finds its positioning and how to seize consumer mindshare through differentiation has become an urgent task. The leisure snack industry has huge market potential, and companies are competing fiercely. Not long ago, Mob Research Institute released the "2019 In-depth Interpretation of the Leisure Snack Industry," which stated that the scale of China's leisure snack market exceeds 500 billion yuan, and with the improvement of living standards, the compound annual growth rate remains above 6%. At present, the entire industry is in the early mature stage after rapid development, with huge market capacity and low market share concentration. At this stage of development, brand competition has begun among enterprises. Leading enterprises have started to focus on brand building, omni-channel and all-region layout, and market concentration is expected to further increase in the future. Blue Whale Finance selected six snack companies—Lai Yifen, Bestore (IPO queuing), Three Squirrels, Yanjin Shop, Haoxiangni, and Chacha Food—and analyzed them from four dimensions: inventory turnover rate, accounts receivable turnover rate, revenue year-on-year growth rate, and non-GAAP net profit year-on-year growth rate. Inventory turnover rate is one of the important indicators for analyzing a company's operating capability, reflecting whether a fast-moving consumer goods company's products are selling well. As shown in the figure below, from 2015 to 2018, except for Lai Yifen, the inventory turnover rates of the other five snack companies were generally rising, and the gap between them was gradually narrowing. This means that the companies' inventory management levels have been significantly improved, and product sales are relatively satisfactory. In comparison, Bestore's inventory turnover rate is higher than that of comparable listed companies in the same industry. From 2016 to the first half of 2018, Bestore's inventory turnover rates were 5.19, 6.25, and 4.17, respectively, higher than the industry average, indicating faster inventory turnover and higher inventory management levels. The relatively optimistic product sales directly lead to significant revenue growth. As shown in the figure below, from 2015 to 2018, the revenue year-on-year growth rates of the six companies fluctuated greatly, but overall, their average annual growth rate remained above 20%, reflecting the market potential of the leisure snack industry. As the market scale continues to be released, competition among enterprises will become increasingly fierce. This can be further corroborated by the accounts receivable turnover rate. During the same period, the accounts receivable turnover rates of various enterprises did not show a significant increase. While inventory turnover rates increased, accounts receivable turnover rates remained stagnant, which to a certain extent indicates that products are selling well, but in order to quickly increase market share, companies have adopted more aggressive sales strategies. From the data, Bestore and Lai Yifen lead the industry in accounts receivable turnover rate, mainly because their sales channels include both online platforms and offline direct-operated and franchise stores, giving them obvious overall advantages. In the same industry, Haoxiangni and Yanjin Shop are constrained by a relatively high proportion of supermarket sales, resulting in higher end-of-period accounts receivable and lower accounts receivable turnover rates. On the one hand, the continuous increase in marketing investment has led to a significant increase in sales costs. This includes not only the continuous growth of advertising and promotion expenses, but also the "hidden costs" brought by common sales strategies such as price reductions and promotional activities to stimulate consumption; on the other hand, the continuous expansion of offline stores brings financial pressure. Overall, from 2015 to 2018, the comprehensive gross margins of these six companies declined to varying degrees. The largest decline occurred between 2016 and 2017, and by 2018, this downward trend was somewhat alleviated. The direct impact of sacrificing gross margin is the instability of non-GAAP net profit growth. As shown in the figure below (since Three Squirrels' non-GAAP net profit growth rate in 2016 was extremely large, it is difficult to compare with other companies in the same chart, so it is presented separately), from 2015 to 2018, the year-on-year growth rates of non-GAAP net profit fluctuated greatly. Except for Bestore and Three Squirrels, the other four companies all experienced negative non-GAAP net profit growth at some point. It can be seen that although the cake of the leisure snack industry is big and delicious, when the snack giants raise their knives to cut the cake, there is still a lot of "open and covert struggle." The leisure snack industry enters the second half, with diversified development strategies. The market is quite huge, which means that the competitive pressure on enterprises vying for a share of the cake is equally high. In recent years, competition in the leisure snack industry has intensified, and leisure snack companies are all at odds. Against this backdrop, corporate development strategies have also begun to shift towards diversification. In 2016, Haoxiangni acquired Baicaowei for 960 million yuan, expanding its product range from single red dates to seafood jerky, dried fruits and nuts, baked goods, and preserved fruits. Chacha Food, which had been selling sunflower seeds, also hit its performance ceiling in recent years and had to develop a richer product category. Lai Yifen, which has occupied an advantageous position in the Central China market through offline stores, has also been continuously expanding its product categories and further expanding its online and offline layout. Since the beginning of this year, Three Squirrels and Youyou Foods have successfully listed on the A-share market. More well-known brands such as Bestore and Ganyuan Food are also successively applying for IPOs, many of which are in the "pre-disclosure update" status. In addition to the diversification presented by strategic considerations in the general direction, companies also show diversification in product innovation and marketing strategies. In terms of product innovation, not only are single product categories enriched, but more importantly, the appearance, taste, function, and consumption scenarios of products are enriched. In terms of marketing, the introduction of cross-border cooperation, influencer带货, and film and television product placement has made the communication dimension deeper and broader, greatly enhancing the exposure of corporate brands and products. For example, Chacha Food collaborated with skincare brand Chunji to create a co-branded gift package; Wolong Nuts did product placement in the TV drama "All Is Well"; this Mid-Autumn Festival, Bestore co-branded with Dunhuang Museum to launch Dunhuang IP 7 Mid-Autumn mooncake gift boxes and peripherals, which were both popular and profitable. From "deep" to "refined," high-end may become an industry trend. The "2019 Domestic Snack Market Research Report" analyzes that the stage the snack market is in and the ongoing consumption changes determine that China's snack market will continue to maintain a relatively fast development speed in the next few years. In addition, China's snack market will show the following characteristics: market concentration will significantly increase, omni-channel integration will continue, and the high-end market will develop rapidly. Since the industry competition entered the second half, the development trend of "high-end snacks" has become increasingly obvious. Enterprises have begun to pay more attention to product quality construction, either by connecting the entire industry chain or building their own ecosystem. For example, Three Squirrels announced that it will transform from a pure e-commerce enterprise into a digital supply chain platform enterprise. Bestore, which took the lead in launching the high-end strategic transformation of "high quality, high appearance, high experience," has recently gradually revealed more details behind the company's strategic track shift: using "supply chain" as the keyword, entering agricultural production, thereby changing agricultural production efficiency and improving the competitiveness of the entire industry chain. The person in charge of Bestore's commodity procurement and sales center said that the core proposition of Bestore's high-end snack strategy is market segmentation, segmenting the market and products from different consumer groups, accurately meeting the consumption needs of different customer groups, and creating a differentiated strategy. In addition, through supply chain management, trace back to the most upstream raw materials, carry out joint and control at the planting and breeding ends, and thereby support the industry chain integration strategy. Taking the Northeast red pine with annual sales exceeding 100 million yuan as an example, through quality inspection of pine cones from different bases and production areas, numbered records are stored; Storage and transportation: use -10°C cold storage for fresh preservation throughout the year; Production and processing: before production, record the batch of raw materials; before leaving the factory, record the production batch of finished products, record the shipping time, and establish a detailed and clear multi-dimensional product standard from specifications, finished product sensory quality requirements, defect classification and description, defect acceptable rate, sensory sampling method, physical and chemical indicators, microbial indicators, etc., to control the harvesting, acceptance, warehousing, and factory processing of pine nuts, ensuring that all batches can be traced. The traceability of the entire industry chain brings higher quality. At present, the industry average perfect fruit rate is 92%-93%, and the opening rate is 93%. Bestore's two types of Northeast red pine have "strict" quality standards, with a perfect fruit rate of over 96% and an opening rate of over 96%. Zhu Danpeng, an analyst at China Food Industry, believes that one of the major characteristics of leisure food companies this year is that products tend to be high-end, high value-added, and have high bargaining power, which is in line with the current consumption thinking and behavior of Chinese consumers and the overall trend of the leisure food industry. Companies use this to build their own differentiated advantages and increase profits. Source: Blue Whale Finance If the tip is adopted, a payment of 400-2000 yuan will be made.China FMCG + Internet Professional New Media****Committed to FMCG manufacturer and distributor transformation and channel digital solutions