---
title: "Three Men in the Snack Arena"
description: "The three-trillion-yuan snack market is entering a new round of competition. With the listing of Bestore on the A-share market, the 'BAT of the snack industry'—Bestore, Three Squirrels, and Baicaowei—are now all publicly traded, setting the stage for a new battle."
author: "全天候科技"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2020-03-05"
categories: "Capital, Earnings & M&A, Consumer & Categories"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/three-men-in-the-snack-arena-d1ccc4e6/"
markdown: "https://xinjignxiao.com/en/articles/three-men-in-the-snack-arena-d1ccc4e6.md"
original_source: "https://mp.weixin.qq.com/s/ORaizUFkhWfAwKrpmkfCBw"
translation: "https://xinjignxiao.com/zh/articles/%E9%9B%B6%E9%A3%9F%E6%B1%9F%E6%B9%96%E7%9A%84%E4%B8%89%E4%B8%AA%E7%94%B7%E4%BA%BA-d1ccc4e6.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/three-men-in-the-snack-arena-d1ccc4e6/"
citation: "全天候科技. “Three Men in the Snack Arena.” New Distribution, 2020-03-05. https://xinjignxiao.com/en/articles/three-men-in-the-snack-arena-d1ccc4e6/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Three Men in the Snack Arena

> The three-trillion-yuan snack market is entering a new round of competition. With the listing of Bestore on the A-share market, the 'BAT of the snack industry'—Bestore, Three Squirrels, and Baicaowei—are now all publicly traded, setting the stage for a new battle.

**The three-trillion-yuan snack market is entering a new round of competition.**
"5, 4, 3, 2, 1, boom... Warm congratulations to Bestore on its successful listing."
On the second day of the second lunar month (February 24), Hubei-based snack company Bestore officially listed on the Shanghai Stock Exchange, with an opening price of 17.14 yuan and a total market value of 6.873 billion yuan.
Live broadcast of Bestore's listing ceremony
This is also the first A-share company to list online via video live streaming. There was no crowded scene, no handshakes or hugs, but there was no lack of anticipation and attention. With this, China's "BAT of the snack industry"—Bestore, Three Squirrels, and Baicaowei—finally gathered on the A-share market.
Coincidentally, the day before, PepsiCo fired a "cannon": it acquired Hangzhou Haomus Food Co., Ltd. (the operating entity of "Baicaowei") from Haoxiangni Health Food Co., Ltd. for $705 million (approximately 4.953 billion yuan). It is foreseeable that with PepsiCo's backing, Baicaowei's strength in supply chain and capital may further improve.
After Bestore's listing, industry insiders judged that the leading snack companies would compete on different tracks, market concentration would increase significantly, and they would continue to integrate omni-channel and rapidly develop toward the high-end market. This trillion-yuan market will be stirred by the three giants, starting a new round of competition.
China's snack consumption market has huge potential. According to the "Snack Industry Development Report under the Background of Consumption Upgrading" released by the Commerce Ministry's Circulation Industry Promotion Center, from 2006 to 2010, the total output value of China's snack industry grew from hundreds of billions to trillions of yuan, with a compound annual growth rate of 17.98%. It is estimated that by 2020, the total industry scale of the snack industry will approach 3 trillion yuan.
But the entry barrier for snack retail seems not high; currently, there are thousands of snack retail enterprises in China. So, how did the "BAT of the snack industry" manage to break through? The three men behind the three giants deserve attention.
**-01- From Grassroots to Success**
Some describe Bestore's listing as "getting up early but arriving late at the gathering," because in the leisure snack field, many latecomers had already listed, while this veteran snack company, founded in 2006, took nearly 15 years to land on the A-share market.
The company's slow pace of development is closely related to the personality and strategic thinking of its founder, Yang Hongchun. He believes that listing is only a means, and winning the market in the long term is the goal.
Xu Xin, an investor in Bestore and founder of Capital Today, known as the "Queen of Venture Capital," said that the main reason she chose to invest in Bestore was her appreciation of Yang Hongchun's character. "Both the investment model and the person are important. How far a company can go is related to the entrepreneur. Yang Hongchun is a person who is down-to-earth, works solidly, and focuses on products; he can build a lasting business."
In 1997, after graduating from Hubei University of Technology with a degree in fine arts, Yang Hongchun joined Kelon, starting as an ordinary quality inspector on the assembly line. At the beginning, Yang often worked more than ten hours a day, which quickly earned him trust, and he was promoted to section chief within a few months.
Yang Hongchun, founder of Bestore
By 2002, Yang Hongchun had become the general manager of Kelon's Guangxi sales department, with an annual salary of 300,000 yuan. That generous salary was enough to ensure a comfortable life for his family at that time. But the good times did not last; in 2005, Kelon was acquired by Hisense. Yang, who did not want to renew his contract, became a "laid-off" young man.
During the three months at home, Yang Hongchun kept thinking about starting his own business. A remark by He Boquan, former chairman of Robust Group, inspired his entrepreneurial idea: "Bringing the world's snacks to the customer's doorstep is a business that can turn a small venture into a big one." So, Yang Hongchun, along with classmates and two partners, borrowed several hundred thousand yuan and embarked on his entrepreneurial journey.
After a year of product research and company inspections, and spending over 100,000 yuan on travel expenses, Yang Hongchun finally opened the first Bestore store next to Zhongshan Park in Wuhan in August 2006, appointing himself chairman.
In the same year, according to public records, another leisure snack brand, Baicaowei, had already opened more than 140 stores, with annual sales reaching 150 million yuan.
Cai Hongliang, founder of Baicaowei, had his entrepreneurial dream sprout earlier than Yang Hongchun. In 1997, the year Yang graduated from university, Cai graduated from a vocational high school. Lacking the "stepping stone" of a diploma, he started as an apprentice in electrical appliance repair at Hengdian World Studios, but after learning the trade, he couldn't find a suitable shop, so he moved to a food factory to work as a worker.
Cai, who always wanted to open a store, only worked at the food factory for four months before leaving to start his own business. He borrowed 6,000 yuan to open an electrical appliance repair shop. Young and ambitious but without business experience, the result was predictable; Cai had to return to the food factory to do electrical repair work.
Later, although he worked in various factories, he always kept an eye on the next entrepreneurial opportunity. While working at Yidelai Electronics Co., Ltd., Cai borrowed 50,000 yuan to contract the factory's convenience store. This time, Cai successfully earned his first pot of gold and expanded the convenience store to areas around schools and other regions.
It was during this venture that Cai Hongliang had the idea of opening a store specializing in snacks, and he quickly put it into action—the first "Baicaowei" was born. Although it was a "small workshop" format, the rich variety and low prices still attracted many students, achieving a turnover of 270,000 yuan within two months.
In 2007, Cai Hongliang formally established Hangzhou Haomus Food Co., Ltd., focusing on product development and production. Thus, the grassroots Cai Hongliang also started a new stage as an entrepreneur.
Also in 2007, in a food company in Anhui, a neighboring province of Zhejiang, Zhang Liaoyuan, a former "street hooligan," had worked his way up to the position of regional marketing director.
"Do I want to be a rich man like my cousin, or pick up mineral water bottles at 40?" In 1994, the "idle" Zhang Liaoyuan was taken by his cousin to spend 3,000 yuan in a day, and his cousin even washed his hands with 3-yuan mineral water. This prompted Zhang to reflect on himself.
It was this experience that completely changed him. For the next 7-8 years, Zhang Liaoyuan insisted on self-study and entrepreneurship simultaneously. He set up street stalls, opened a cold drink shop, and sold VCDs. Although he never succeeded, he kept persisting.
Time flew by, and at 27, Zhang Liaoyuan was still drifting in society. Finally, he had to choose to work as a frontline salesperson at Anhui Zhan's Food Co., Ltd., which made nut products. Within just two years, Zhang was exceptionally promoted to deputy general manager of marketing at Zhan's, and he gradually rose through the ranks.
In 2011, Zhang Liaoyuan created the online nut sub-brand "Keke Guo" under Zhan's. He proposed the concept of sub-category brands and 15-day fresh nuts, while leveraging internet sales, achieving sales of over 10 million yuan in 8 months, earning a reputation as a dark horse in the e-commerce world.
Sensing the opportunity in e-commerce, Zhang Liaoyuan had a bigger ambition—to build a national nut brand. But because Zhan's boss had different ideas, a year later, Zhang resigned to start his own business, which gave birth to today's "Three Squirrels."
Compared to Yang Hongchun and Cai Hongliang, Zhang Liaoyuan's snack retail started online from the very beginning. Three Squirrels took a shorter time than the other two to grow into a leader in the domestic snack industry.
**-02- Marketing Masters**
Yang Hongchun, Cai Hongliang, and Zhang Liaoyuan each have their own methodology in marketing. It can be said that their ability to break out in the snack arena is partly due to their "marketing philosophy."
"In the past, marketing was about informing the value of the product; the product was directly for consumers to feel the value and use it," said Wu Bofan, former editor-in-chief of 21st Century Business Review, in 2014. He pointed out that this thinking had shifted; the internet has changed the cost of product launches and information dissemination. "So, product is marketing, product is advertising."
The three big names in the snack arena also treat product as the focus of marketing.
Yang Hongchun chose the name "Bestore" from more than 300 alternatives, meaning "good quality, everyone's store." In the early days of entrepreneurship, Yang found that among more than 50 snack categories, there was not a single well-known product. To change this, he launched a "Walnut Festival" concept, selecting 36 varieties of walnuts from across the country as the main products, which helped change consumer impressions and increase revenue.
Through tracking research on consumers, Bestore found that "deliciousness" is the most critical factor in purchase decisions in the snack market. Behind deliciousness, raw materials, production processes, optimal consumption period, nutritional content, and healthy recipes are key elements.
"Previously, we separated media plans and channel sales plans for communication and sales, but now we make one plan; the design of user experience is the design of all elements of marketing," Yang Hongchun believes. He has set higher requirements for products, even in product structure and design, down to details like how to make plastic bags easy to tear and comfortable to hold.
At the end of 2018, he established the "high-end snacks" strategy for the company's ten-year development and brand management, attempting to differentiate Bestore's brand image from other competitors in the market.
Bestore high-end snack launch event
At the same time, to cater to young female consumers, Bestore used celebrity endorsements to assist marketing. They not only invited Kris Wu as a spokesperson but also hired Panhu Studio, which designed packaging for Chu Orange and Six Walnuts, to design the "Shi Er Jing Dian" snack gift box packaging.
Yang Hongchun is not the only one using products for marketing; Zhang Liaoyuan, who accumulated a lot of marketing knowledge in his youth, is no exception.
"I have always believed that the first generation of enterprises grow on dividends, but the second generation can only rely on products," Zhang Liaoyuan has publicly emphasized the importance of products.
In the public eye, Three Squirrels' corporate genes are known for marketing. But Zhang believes that "marketing is just the skin of user experience," and it is more a process of insight into user needs and reverse customization of products.
Zhang Liaoyuan realized this change in 2017. That year on Double 11, Three Squirrels' online channel sales were 522 million yuan, only 14 million yuan more than in 2016; earlier, growth rates had been doubling.
Facing this situation, Zhang proposed two goals: first, make sales seem less important; second, regardless of company size, maintain growth. "As long as we do well in experience and products, all channels will thrive. The so-called dividends have nothing to do with us," he said.
Once, because pumpkin seeds contain a certain trace element, an employee planned to add them to the daily nuts formula, which was strongly opposed by Zhang. "I was very angry. We are snacks, not health products or medicines. Consumers who spend over 100 yuan on food with pumpkin seeds will think it's low-end." In his view, snacks are for consumers to enjoy, with nutrition as a bonus, and the priorities should not be reversed.
Cai Hongliang, on the other hand, played the marketing card heavily during Baicaowei's entrepreneurial process. The name "Baicaowei" comes from two sources: one is the story of "Shennong tasting a hundred herbs," symbolizing the courage to try many things without fear of failure; the other is Lu Xun's "From Baicao Garden to Sanwei Study," which left a deep impression on Cai.
Even in the early days, in the "convenience store" of only a few square meters, the words "Baicaowei" were everywhere.
In addition to placing great importance on brand building, another characteristic of Cai Hongliang is that whenever he has time, he is willing to actively cooperate with brand colleagues and go to the front line to try new plays and methods.
During the 2010 World Cup in South Africa, Cai Hongliang interacted frequently with Huang Jianxiang. They not only guessed the results of three popular group matches on Weibo but also promised to give 1,000 packs of snacks to fans who guessed correctly if they lost. The contest eventually attracted over a million viewers.
He also co-starred with Huang Jianxiang in a hilarious short drama "Huang Jianxiang Demonstrates the Correct Way to Pick Up Girls during the World Cup," which received nearly 1 million views on the day it was released. Later, they invited international football stars like Cristiano Ronaldo and Lionel Messi to send signed jerseys to customers, pushing the campaign to a climax. As a result, Baicaowei, whose 70% of users were female, also opened the appetite of a large number of male users.
As the company's development channels increased, Baicaowei also used the positioning of "fun snack explorer" to promote fun and interesting concepts, attracting consumers by changing packaging design.
In 2015 alone, Baicaowei's product packaging design team produced over a hundred designs, with different styles for different product categories. Dried fruits and vegetable products basically used realistic illustration styles; seafood and jerky used kraft paper packaging with simple cartoons and witty copy.
"People's consumption is driven by desire, so first think about your product positioning," Cai Hongliang believes. Enterprises need to deeply cultivate product stories and quality around product attributes and positioning. However, he also believes that focusing on making products is fundamental to solving people's essential needs.
**-03- Exploration of Online and Offline**
Cai Hongliang, who had been in the snack field for many years, was the first to smell the opportunity in e-commerce.
In 2010, Baicaowei began to try to develop online and made a decision that surprised everyone—closing all offline stores. For Baicaowei, which already had over 100 offline stores and occupied a significant share of the college student market, this was like walking a tightrope, extremely risky.
As Baicaowei opened stores on major e-commerce platforms such as Tmall, JD.com, Paipai, Yihaodian, Dangdang, Suning, Amazon, and Vipshop, its sales increased rapidly, and it gradually grew into a top store in the snack category on these platforms.
During the 2013 New Year shopping festival, Baicaowei's gift box sales ranked first across the entire network; in 2014, it became a leading brand in internet leisure food, ranking in the top three in the industry; on Double 11 in 2015, Baicaowei's transaction volume exceeded 156 million yuan; on Double 11 in 2016, Baicaowei's online sales reached 252 million yuan, with Tmall flagship store transactions exceeding 200 million.
Cai Hongliang, founder of Baicaowei
Performance proved that Cai Hongliang had bet correctly. Later, whenever Cai mentioned this, he spoke with a tone of relief and even pride. However, he did not shy away from the pressure behind the move—closing all offline channels was just to cut off all retreats and focus on online; it was a do-or-die battle.
Unexpectedly, in 2017, seven years after closing physical stores, Baicaowei again "revolutionized itself" by returning offline, and made a bold statement: to achieve 10 billion yuan in sales within three years.
But by then, Baicaowei had already been sold to Haoxiangni (stock code: 002582), and Cai Hongliang had begun to retreat and no longer managed any affairs.
Three Squirrels, as the second company among the "BAT of the snack industry" to "touch the internet," chose to enter the snack track through online e-commerce from its inception.
Zhang Liaoyuan believes that "the emergence of any new channel will definitely incubate new brands," and the internet, a new channel revolution brought by technological innovation, is more disruptive.
Then, he led his team to complete what he called "disruption": Three Squirrels maintained doubled revenue growth for several consecutive years, exceeding 7 billion yuan by 2018, successfully listing on the A-share market in 2019, with a current market value exceeding 27 billion yuan; in terms of user numbers, by 2018, online members reached 80 million, and flagship store annual visits exceeded 600 million.
In fact, in the early development of e-commerce business, Zhang Liaoyuan simply moved offline products online. Only when online dividends peaked did he begin to have a concept: "make products online, sell them in three dimensions," which means moving online products to offline stores. "Online should help consumers understand the product faster and more efficiently; once the product matures, quickly push it nationwide," he said.
In addition, a series of supporting measures are needed. In a public speech, Zhang Liaoyuan simply summarized the company's successful experience as: correct brand positioning; advertising; innovative emotional marketing to build the brand; appropriate category and competitive environment; excellent entrepreneurial thinking.
The last to board the "e-commerce" train was Bestore, which had extensive offline layout. In 2012, Bestore established an e-commerce company to expand online sales channels.
Yang Hongchun started from scratch, leading his team to build channels on various platforms and lay out e-commerce business. Initially, Bestore's online sales performance was not ideal, until later, together with partner IBM, they outlined the structure, form, and business logic of omni-channel, built social e-commerce forms like WeChat mall, and connected various e-commerce business units, gradually improving the situation.
Public data shows that in 2016, Bestore's revenue reached 6 billion yuan, with online sales of 2 billion yuan and offline sales of 4 billion yuan, leading the industry.
**-04- A New Round of Competition**
In the process of traditional snack companies transforming online, they inevitably experience a painful period.
In December 2010, Baicaowei officially entered Tmall. What Cai Hongliang did not expect was that within just four months, the online store achieved the number one position in the food category at that time.
But the increase in sales also raised the bar for Baicaowei, and soon the supply chain shortcomings were exposed. Cai Hongliang still remembers that when he first participated in the Juhuasuan promotion, he offered three single products as bestsellers, and they sold out in one day, but production could not keep up, and the supply chain broke. He was so anxious that he could not sleep, so he personally followed every step from pickup to urging supply speed.
After this experience, Cai Hongliang secretly resolved, "Baicaowei must transform from a channel retailer to a brand that can produce its own products." So, he spent a year learning the entire e-commerce process, and then two years improving the supply chain and logistics.
This transformation greatly expanded Baicaowei's food categories, adding Vietnamese cashews, Australian macadamias, South African pecans, Brazilian pine nuts, American paper-shell walnuts, Turkish hazelnuts, and California pistachios to its food processing chain. In 2016, Baicaowei "sold itself" to the listed company Haoxiangni for 960 million yuan, which the industry saw as Baicaowei taking a "shortcut" to go public. Subsequently, Baicaowei spent 560 million yuan to strengthen supply chain construction.
Sadly, in the same year, Cai Hongliang announced a three-year retreat, no longer accepting media interviews, and gradually withdrew from Baicaowei. In an internal open letter, he said that during the retreat, he would "deeply cultivate the internet meal replacement snack market."
Now things have changed; Baicaowei has been sold again, and the integration with PepsiCo is uncertain. Cai Hongliang has also started a new business, but upon hearing that the brand he once created would go international, he simply sent nine words: "Congratulations to Pepsi, congratulations to Baicaowei."
Unlike Cai Hongliang's asset-heavy approach of building his own supply chain, Yang Hongchun chose a "value-added" model when building Bestore's supply chain, that is, by integrating thousands of upstream agricultural production enterprises to create a high-quality value-added supply chain, achieving integrated development of primary, secondary, and tertiary industries. His goal is to connect food production and retail, building a supply chain that matches his product positioning.
To match the "high-end snacks" product positioning, Yang Hongchun can be said to be "regardless of cost," with extremely strict management of suppliers and procurement. A purchaser could stay for two months in the uninhabited Gobi desert in Xinjiang for a bag of sunflower seeds; to pick the 20% of winter jujubes with the best ripeness, they could complete the task in 7 days and 4 times.
In addition, Yang Hongchun also united some suppliers to jointly build free bases to promote raw material upgrades; cooperated with universities and research institutions to apply cutting-edge research results to product development, thereby launching a series of healthy snacks, such as additive-free preserved plums.
Unlike Cai Hongliang and Yang Hongchun's unremitting efforts in supply chain construction, in Zhang Liaoyuan's view, snack companies building their own supply chain is actually a false proposition.
"Today, so-called supply chain enterprises cannot go from back to front; they must go from the consumer end forward. If a company says it does supply chain, it is actually useless," he believes. All supply chains in this industry in China are incomplete. "We hold traffic and terminals in our hands; that is our advantage, and we can activate this supply chain."
Zhang Liaoyuan, founder of Three Squirrels
In Zhang's view, the essence of new retail is to remove retail; the core of new retail is "reverse customization," emphasizing efficiency improvement. Therefore, in the future development of Three Squirrels, it should be driven by digitalization to achieve supply chain front-loading and high organizational efficiency.
In short, it means making the supply chain revolve around the sales terminal, using digital methods to "cloud" the supply chain, allowing each channel to clearly understand consumer demand, and then handle processes such as order processing and delivery. In this model, Three Squirrels plays more of a platform role, connecting hundreds of producers on the supply side on one end, and serving hundreds of millions of consumers on the other.
Before the digital supply chain is built, Zhang Liaoyuan still has thorny problems to deal with. Outsourced production makes products difficult to monitor, and quality lacks guarantee. In recent years, reports of Three Squirrels products being moldy, containing hair, insects, foreign objects, and the like are not uncommon.
The long-awaited listing has also become a watershed for the company's performance. Unlike the excellent performance of net profit growth from 2015 to 2018, in 2019, Three Squirrels expects net profit to decline by 8%-24% year-on-year. Zhang Liaoyuan, who once said "the real competitor is not what you can see now," also has to face the challenges of the secondary market.
At present, the BAT of the snack arena have all entered a new stage: Three Squirrels' performance has reached an inflection point, Bestore has become a public company, and Baicaowei has a new owner, PepsiCo. In the three-trillion-yuan snack market, a new round of war is beginning.
Source: All-Weather Technology (ID: iawtmt)


---

## Citation metadata

- Publisher: New Distribution
- Author: 全天候科技
- Published: 2020-03-05
- Canonical: https://xinjignxiao.com/en/articles/three-men-in-the-snack-arena-d1ccc4e6/
- Original source: https://mp.weixin.qq.com/s/ORaizUFkhWfAwKrpmkfCBw

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671