A major battle is inevitable. Recently, Beijing Business Today reporters found that nut products from snack brands such as Three Squirrels, Haoxiangni, and Qiaqia Food have all seen significant price cuts and promotions, with the lowest discounts falling below 50% of the original price. Industry insiders say the nut industry has low entry barriers and severe product homogenization. As more companies enter the market, some small and medium-sized enterprises will inevitably be eliminated or acquired, and the nut industry is on the verge of a shakeout. Price War Hits During the National Day holiday, Beijing Business Today reporters visited major supermarkets and found a wave of price cuts and promotions across the nut industry, with some brands' promotional prices halved. At Walmart in Beijing, Qiaqia Food, Wolong, and California Field were all offering discounts. Among them, Panpan Food's Daily Nuts saw the largest price cut: the original price for a 750g box was 200 yuan, but the promotional price was 89 yuan, a reduction of 55.5%. Similarly, at Wumart supermarkets, brands like Orchard Farmer and Liangshiji also had price cuts, with reductions ranging around 10 yuan, and some categories nearly halved. For example, Orchard Farmer's pistachios (200g) were originally 62.9 yuan, but the promotional price was 35.9 yuan, a reduction of 42.3%; Binfen Tianyuan used a buy-more-get-free promotion to attract consumers. A Wumart salesperson told Beijing Business Today: "Binfen Tianyuan nuts offer a free gift box for purchases over 99 yuan. Since it's National Day, many people are buying gifts, so sales of these nuts are quite good." Additionally, a supermarket guide revealed that nut brands on promotion tend to sell better. On major e-commerce platforms, the trend of price cuts and promotions is even more pronounced. On the flagship store homepages of brands like Three Squirrels, Baicaowei, and Bestore, large posters advertising discounts, full reductions, and gifts were displayed. Among them, the Daily Nuts category saw the most significant price cuts. Taking 30-bag Daily Nuts as an example: Three Squirrels' original price was 148 yuan, discounted to 99 yuan, a reduction of 33.1%; Baicaowei's original price was 148 yuan, discounted to 79 yuan, a reduction of 46.6%; Bestore's original price was 138 yuan, discounted to 79 yuan, a reduction of 42.8%; Laiyifen's original price was 299 yuan, discounted to 149 yuan, a reduction of over 50%; Qiaqia Food's original price was 139 yuan, discounted to 79 yuan, a reduction of 43.2%. In addition, other single items from nut brands also saw discounts. For example, for macadamia nuts: Three Squirrels' 265g two-bag pack was originally 49.9 yuan, discounted to 42.9 yuan, a reduction of over 10%; Baicaowei's 268g two-bag pack was originally 48.9 yuan, discounted to 36.9 yuan, a reduction of 24.5%; Bestore's 238g single bag was originally 44 yuan, discounted to 31.9 yuan, a reduction of nearly 30%; Laiyifen's 192g single bag was originally 42.9 yuan, discounted to 23.9 yuan, with the second item only 6.9 yuan, making the price for two bags lower than the original price of one bag; Qiaqia Food's 200g two-bag pack was originally 89 yuan, discounted to 42.9 yuan, which is below 50% of the original price. Industry insiders say that with the continuous development of the nut industry and promising prospects, more players are entering the market. Besides the top five nut companies—Qiaqia Food, Three Squirrels, Baicaowei, Laiyifen, and Bestore—dark horses like Wolong and Liangyouji have also entered. With the acceleration of full-category snack layouts, industry competition is intensifying, and price wars have become a killer move for nut companies. The "2019 Nut and Roasted Seeds Industry Consumer Insight Trend White Paper" shows that the nut food market has become the second largest in the entire snack food industry, releasing a trillion-yuan market. Zhang Liaoyuan, founder of Three Squirrels Co., Ltd., said: "The market size reached 500 billion yuan in 2018, and it is expected to maintain a growth rate of 10% over the next five years. Among them, nut and roasted seed foods are expected to continue growing at an annual rate of 15%." Facing such a huge and rapidly developing nut market, Zhang Liaoyuan said that the entire nut and roasted seed industry has moved from a growth stage to a competition stage, including comprehensive competition in categories, prices, and more. Zhu Danpeng, a Chinese food industry analyst, analyzed: "As the entire domestic snack market enters a stage of high homogenization in product categories, marketing methods, and overall operating models, price cuts and promotions have become the most direct and effective competitive method, which is beneficial for both companies and consumers." Nut companies choosing significant price cuts is also a helpless move. A Laiyifen representative expressed their concerns to Beijing Business Today: "Discounting is a marketing tool, not a long-term advantage. Blindly following trends and low-price strategies are detrimental to the healthy development of the industry or companies." Industry insiders say that terminal price wars will only trap nut companies in an awkward situation of 'hurting the enemy by a thousand and losing eight hundred by oneself.' In the long run, as product profits become thinner, price wars are not a wise move. Severe Homogenization In fact, the significant price cuts by major nut companies are closely related to the homogenization problem. A Qiaqia Food representative told Beijing Business Today that due to obvious homogenization in the nut industry, low added value of products, and slow product renewal and iteration, there has been a large-scale price cut and promotion phenomenon. Moreover, almost all nut companies have launched Daily Nuts products. Beijing Business Today reporters visited multiple supermarkets and found that shelves generally displayed four specifications of Daily Nuts products for consumers: 1-day, 7-day, 15-day, and 30-day packs. Among them, the 1-day pack is about 25g, with a larger number on the shelves, and the original prices for 25g Daily Nuts from various brands are mostly between 4-5 yuan. The types of nuts included in Daily Nuts products from various brands are also similar. Taking Wolong and Qiaqia Food's adult Daily Nuts as examples: Wolong contains cashews, walnuts, dried cranberries, dried blueberries, almonds, and hazelnuts; Qiaqia Food's Daily Nuts also contains cashews, walnuts, dried cranberries, and dried blueberries, in addition to almonds and dried red dates. It can be seen that among the six types of nuts in Daily Nuts, four are the same, with only two different. Ms. Xu, who was buying Daily Nuts at Wumart, told Beijing Business Today: "The types of nuts in these Daily Nuts are not much different. When I buy, I choose brands that are on promotion, as they offer relatively higher cost performance." Compared with Daily Nuts, single nut products are relatively cheaper, but most brands have limited flavor options. Beijing Business Today reporters learned that the nut snack products on supermarket shelves are mainly charcoal-grilled, salt-baked, and sweet flavors. "Currently, most domestic nut companies' investments are homogeneous. Many brands focus on taste and health, failing to seek differentiation while developing," Zhu Danpeng said in an interview with Beijing Business Today. As consumer spending upgrades, traditional nut products will find it hard to become the consumption demand of more people, and pursuing diversified and multi-combination nut snack flavors will gain more consumer favor. Omnichannel Competition With severe homogenization of nut products, nut companies have to increase their layout in channels to maintain brand competitiveness. Zhu Danpeng pointed out that nuts are an industry with high profits and high risks, and online and offline are mutually integrated and complementary. As competition enters a new stage, omnichannel operation is the future trend. Whoever connects first will gain the upper hand. Achieving positive interaction between online and offline has become a consensus for nut companies to cope with market competition. In recent years, under the impact of the internet, nut food e-commerce channel sales have increased rapidly. In traditional nut food sales, offline channels dominate, with supermarkets and convenience stores playing a leading role. However, with the deepening of internet applications in China, the integration of "Internet+" with the nut food industry has led to the rapid rise of online retail channels for nut food. Data shows that e-commerce channels have gradually become an important sales channel for nut food companies, growing from 2.6% of sales in 2013 to 13.2% in 2018. The integration of online and offline channels is increasingly valued by the nut industry. Whether it's Qiaqia Food, which started offline, or Haoxiangni and Three Squirrels, which went public with the help of online internet dividends, everyone is focusing on areas they have not yet ventured into. Industry insiders believe that the trend of omnichannel integration under the new retail model is increasingly evident, and diversified channels have laid the foundation for the rapid development of the nut food industry. A Qiaqia Food representative told Beijing Business Today that as a modern leisure food enterprise mainly engaged in traditional roasted seeds and nuts, it will further expand its e-commerce business, leveraging its advantages in brand, technology, and market to achieve reasonable integration of online and offline resources. Beijing Business Today learned that Qiaqia Food has signed a cooperation agreement with WeChat Pay. The two parties will rely on WeChat's ecosystem capabilities, focusing on building the brand's mini-program ecosystem, optimizing front-end promotion, consumer reach, and sales conversion, to create Qiaqia Food's digital marketing. After acquiring Baicaowei, Haoxiangni leveraged Baicaowei's online foundation to connect online and offline dual channels. It is reported that in 2016, Haoxiangni and Baicaowei jointly launched the new product "Baobao Guo" (jujube and walnut), which achieved sales of nearly 10 million yuan within just over 20 days of launch, becoming a hit product. Three Squirrels is also using big data to improve its packaging factories and quality control centers. Industry insiders believe that companies like Three Squirrels, Haoxiangni, and Qiaqia Food still have obvious advantages, but overall, the market concentration in China's nut food e-commerce market is still relatively fragmented. As leading companies enter the capital market, in the future, the leading companies in China's "Internet+" nut food industry will consolidate their advantageous positions and achieve increased market concentration. Competing in the Second Half "After experiencing price wars, the nut industry will enter the second half of competition," Zhu Danpeng believes. The key to competition for each company lies in whether they can establish a complete industrial chain from planting, production, channel, marketing, and terminal, forming category barriers, technical barriers, brand barriers, and scale barriers for industrial development. "Currently, the crux of severe homogenization in the nut industry is product homogenization. Nut types are nothing more than pecans, pistachios, almonds, and other varieties. The key to solving this problem lies in the planting end. Nut companies should master their own high-quality categories and develop new ones," Zhu Danpeng said. It is understood that among the many nut brands, Qiaqia Food has a relatively complete industrial chain. In 2011, Qiaqia Food built over 1 million mu of sunflower planting bases in Inner Mongolia, Xinjiang, Gansu, and other places, and established a sunflower seed planting base in Russia. Moreover, Qiaqia Food also plants pecans, macadamia nuts, and other nut varieties in Baise, Guangxi, and Hefei and Chizhou, Anhui. "Because Qiaqia Food has a relatively complete industrial chain, its transformation speed is also relatively fast," Zhu Danpeng said. In addition, Bestore is also conducting domestic breeding and planting experiments to cultivate domestic nut varieties, achieving stable raw material quality through agricultural industrialization, such as gradually realizing domestic planting of macadamia nuts and pecans. Xu Xiongjun, a strategic positioning expert and founder of Jiude Positioning Consulting, believes that on the production side, companies are also strengthening the advancement of their own processes to achieve full-process quality control. Currently, the nut industry mostly uses OEM production models, resulting in uneven product quality. As price wars continue, small and medium-sized enterprises will be merged and reorganized by large companies. In the future, product quality control capability will also be one of the core competitiveness of nut companies. "In the future, Three Squirrels will enter a new development stage, innovate the supply chain, and accelerate the transformation from an e-commerce brand to a digital supply chain platform enterprise," Zhang Liaoyuan said when Three Squirrels went public. By mastering big data, digitally transforming and empowering the traditional supply chain, further improving the production efficiency of the food industry, and strengthening its own supply chain capabilities in R&D, packaging, and logistics, especially in quality control, it will achieve effective control over all aspects of the industrial chain through a cloud quality information platform. Unlike Three Squirrels, Qiaqia Food regards the leading production technology as its core competitiveness, and "mastering key fresh-keeping technology" has become its current promotional slogan. At the terminal marketing level, the combination of online and offline will be the most exciting part of the second half of the nut industry competition. Currently, all nut companies are carrying out integrated online and offline development. As a traditional nut company, Qiaqia Food, after achieving the first place in offline Daily Nuts, is now developing online. In the first half of 2019, Qiaqia Food's e-commerce channel revenue was 212 million yuan, accounting for 10.69% of total revenue, a year-on-year increase of 62.08%. Nut companies with online advantages are also starting to make efforts offline. Since 2018, Three Squirrels has opened over 130 Squirrel stores and more than 80 investment stores; Baicaowei is also relying on Haoxiangni's stores to achieve rapid offline layout again. "Online traffic has reached a bottleneck, and the cost of acquiring customers for companies moving online is also rising. At the same time, offline high-quality resources are limited and are asset-heavy. In the future, the channel battle will become increasingly fierce. Companies with relatively complete online and offline channels may have certain advantages," Zhu Danpeng said. Source: Beijing Business Today (ID: BBT_JLHD) Authors: Li Zhenxing, Wang Xiao, Zhang Junhua Tips will be paid 400-2000 yuan once adopted. China FMCG + Internet Professional New Media Committed to FMCG manufacturer and distributor transformation and upgrading and channel digital solutions