---
title: "Traditional Leisure Snack Giants Flounder in the Mire"
description: "The rise of bulk snack retail is burning the backyard of traditional leisure snacks. According to iiMedia Research, China's leisure food market grew from 410 billion yuan in 2010 to 1.1654 trillion yuan in 2022, with projections of 1.2378 trillion yuan by 2027, but growth is slowing to under 3% post-2021, while snack collection stores maintain over 10% growth. In this context, the traditional leisure snack giants—Three Squirrels, Bestore, and Lai Yifen—are facing significant challenges, with revenue and profit pressures, store closures, and price wars."
author: "蒙嘉怡"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2024-11-30"
language: "en"
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---

# Traditional Leisure Snack Giants Flounder in the Mire

> The rise of bulk snack retail is burning the backyard of traditional leisure snacks. According to iiMedia Research, China's leisure food market grew from 410 billion yuan in 2010 to 1.1654 trillion yuan in 2022, with projections of 1.2378 trillion yuan by 2027, but growth is slowing to under 3% post-2021, while snack collection stores maintain over 10% growth. In this context, the traditional leisure snack giants—Three Squirrels, Bestore, and Lai Yifen—are facing significant challenges, with revenue and profit pressures, store closures, and price wars.

The bulk snack retail craze is burning the backyard of traditional leisure snacks. According to iiMedia Research data, from 2010 to 2022, China's leisure food industry market size continued to grow from 410 billion yuan to 1.1654 trillion yuan, and it is expected to reach 1.2378 trillion yuan by 2027. Leisure snacks have shifted from a rapidly growing market to a micro-growth market, with growth rates expected to not exceed 3% after 2021, while snack collection stores will maintain growth above 10%. In this situation, the traditional leisure snack landscape has also undergone some changes. **Recently, many traditional leisure snack brands released their third-quarter reports. From the 2024 Q3 reports, some core data show weak growth or even decline.** In the face of new stars, the former "Big Three" of traditional leisure snacks—Three Squirrels, Bestore, and Lai Yifen—are now facing considerable challenges, each with its own difficulties.

**Revenue and Net Profit Under Pressure** Among the three snack manufacturers, the revenue scale for the first three quarters of 2024 is in the order of Three Squirrels, Bestore, and Lai Yifen, with revenue growth rates showing a similar trend. Specifically, 2024 Q3 data shows Three Squirrels achieved revenue of 7.169 billion yuan, up 56.46% year-on-year; Bestore's revenue was 5.480 billion yuan, down 8.66%; Lai Yifen's revenue was 2.523 billion yuan, down 15.96%. Looking back, 2020 can be considered a "turning point" for the Big Three. In terms of revenue growth alone, Three Squirrels fell from 43.79% in the first three quarters of 2019 to 7.70% in the same period of 2020, and Bestore's revenue growth dropped from 19.65% to 1.29% over the same period, both quickly turning from rapid growth to micro-growth. Lai Yifen maintained micro-growth, with revenue growth staying within 3% for both years. In 2021, Three Squirrels' revenue turned from growth to decline, only stopping the decline this year and achieving a strong rebound, from -14.07% in the first three quarters of 2023 to 56.46% this year. Since the second quarter of last year, Three Squirrels has narrowed its decline, turning to growth in the first quarter of this year, and has now grown for three consecutive quarters. The company's operating conditions have changed, and the future looks promising. Bestore and Lai Yifen did not show significant performance declines after the pandemic, but this trend came to an abrupt halt in 2023, with both revenues turning from growth to decline. This year, Bestore's decline has slowed, narrowing from -14.33% to -8.66%, but Lai Yifen continues to decline. Weak revenue growth has also affected profits to some extent. **From a net profit perspective, the two companies with declining revenues also saw varying degrees of net profit decline.** Lai Yifen's net profit fell the most, by 1038.26%, turning from profit to loss, with a loss of 0.43 billion yuan in the first three quarters of this year, making it the only loss-making company. **Bestore's net profit has declined for three consecutive years, with the decline widening each year. In the first three quarters of this year, net profit was only 0.19 billion yuan, down more than 80% year-on-year.** If it cannot reverse the trend in time, Bestore may also face losses. **In contrast, Three Squirrels has emerged from the negative impact of the pandemic and achieved a rebound in performance.** Starting from the first quarter of last year, Three Squirrels' net profit stopped declining and has grown for seven consecutive quarters. In the first three quarters of this year, it earned 3.41 billion yuan, up 101.15% year-on-year. **Overall, Bestore and Lai Yifen face significant pressure in both revenue and net profit.** Bestore's revenue has improved slightly, but net profit performance is poor; Lai Yifen's revenue and net profit are both deteriorating, and it has fallen into losses, marking its first loss-making Q3 report since listing, a severe situation. Although Three Squirrels has improved its operations, with both revenue and net profit rising and maintaining growth since the beginning of the year, it still faces many challenges.

**Store Contraction** It should be emphasized that offline remains the main channel for leisure snacks. According to Euromonitor International 2023 data, offline channels account for 82.6% of leisure food distribution; online channels account for about 17.4%, with traditional e-commerce platforms seeing slowing growth and online traffic concentrating on high-quality products and content-based e-commerce platforms. The expansion of bulk snack retail has also taken away some market share from self-operated snack stores. **On one hand, bulk snack stores are offline stores that sell a collection of multiple brand snacks, mainly characterized by direct procurement from manufacturers, eliminating intermediate links, and bargaining with upstream suppliers through bulk purchasing, ultimately achieving low terminal prices, and adopting bulk sales models, allowing consumers to buy snacks at extremely low prices.** A normally operating bulk snack store can compress prices of similar products to about 70% of traditional brands, giving it a clear price advantage. **On the other hand, compared to online channels with similarly low prices, bulk snack stores are physically closer to consumers.** Moreover, the total number of stores of Three Squirrels, Bestore, and Lai Yifen combined is less than the number of stores of Mingming Henmang, a bulk snack retailer, giving the latter a clear advantage in terminal reach. This not only affects consumer perception of brands but also makes bulk snack stores better able to meet consumers' impulse buying needs for snacks. In this situation, the total number of stores for the three companies has shown a downward trend. In the 2023 semi-annual reports, Three Squirrels, Bestore, and Lai Yifen reported store counts of 317, over 3,200, and 3,663, respectively, while in the 2024 semi-annual reports, these numbers changed to 209, over 3,000, and 3,472, with each company closing over a hundred stores. **Overall, this year is a turning point, with both Lai Yifen and Bestore seeing declines in store numbers.** Three Squirrels' offline layout has always lagged behind, and its overall layout has not been smooth. In 2019, to achieve "walking on both legs" online and offline, Three Squirrels CEO Zhang Liaoyuan announced a "10,000-store plan" to open 10,000 offline stores within five years. However, they closed quickly as well, closing over 500 stores in a year from 2022 to 2023. As of the first half of this year, Three Squirrels had opened 209 national snack stores, with only 116 remaining of the original store type.

**Deep in the Price War** As mentioned above, the advantages of bulk snack brands in terms of stores and prices have squeezed the development space of traditional leisure snack brands, so the Big Three have changed their strategies to cope with competition from bulk snacks. Except for Lai Yifen, which resolutely refuses to cut prices, both Three Squirrels and Bestore have changed their pricing strategies. In March 2023, Three Squirrels launched a "high-end cost-performance" strategy; in December of the same year, Bestore announced a "price cut," implementing its largest price reduction in 17 years, with an average reduction of 22% and a maximum reduction of 45%. However, while price wars help compete for market share, their "destructive power" on themselves cannot be underestimated. **On one hand, for the FMCG industry, maintaining price stability is crucial.** Once a price reduction strategy is initiated, it is easy to create price anchoring among consumers, who will expect low prices long-term and find it difficult to accept normal or increased price systems, which will have a long-term impact on brand positioning and brand image. **On the other hand, price reductions also lead to a continuous decline in gross margins.** Three Squirrels' gross margin fell from 30.2% in 2016 to 23.33% in 2023. In the first quarter of this year, Bestore's overall gross margin fell by 2.82 percentage points. **Moreover, price reduction strategies are not sustainable.** The Big Three are completely different from bulk snack retailers, which mainly rely on white-label products for profit. The latter's investment in advertising and marketing is significantly lower than that of the Big Three. Financial reports show that from 2015 to 2019, the total sales expenses of Three Squirrels, Bestore, and Lai Yifen were 17.447 billion yuan, with an average annual sales expense of 1.163 billion yuan per company, and a sales expense ratio of 23.56%. At that time, snack brands were keen to expand brand influence through TV drama placements and inviting traffic stars as endorsements. For example, Three Squirrels placed ads in popular dramas like "Ode to Joy" and "Love O2O"; Bestore hired Dilraba as a tasting officer for three major categories; Lai Yifen chose Wang Yibo as its brand ambassador. **As competition intensified, the revenue generated by this marketing approach became limited, and the Big Three began to cut marketing expenses in an attempt to "reduce costs and increase efficiency."** Among them, Three Squirrels saw the sharpest decline in its sales expense ratio, dropping 4.54 percentage points from its peak in 2022 in the first three quarters of 2024, followed by Lai Yifen, which dropped 4.05 percentage points from its peak in 2020, while Bestore was slower in this regard, only dropping 0.44 percentage points from 2020, which is the highest level in the past three years. High marketing expenses are ultimately passed on to consumers, and the decline in marketing expenses provides companies with more room for price reductions, allowing them to pass on benefits to consumers. In addition to price and marketing expenses, the Big Three have also worked hard on inventory turnover, which plays an important role in improving food freshness. **From the inventory ratio perspective**, Bestore saw the largest decline in inventory ratio, with a ratio of only 7.34% in the first three quarters of this year, also the lowest among the three; followed by Three Squirrels at 9.16%; while Lai Yifen's inventory ratio increased instead of decreasing. **From the inventory turnover days perspective**, Three Squirrels' inventory turnover days decreased by 32.38 days, a drop of 38.54%; Bestore followed closely with a decrease of 21.44 days, a drop of 37.90%, becoming the company with the fewest inventory turnover days; while Lai Yifen's inventory turnover days only decreased by 1 day, a drop of just 1%. **As it stands**, Bestore has the strongest inventory management capability, followed by Three Squirrels, and finally Lai Yifen. In this situation, Lai Yifen's goal of achieving its "fresh snacks" strategy proposed in 2020 will undoubtedly face greater challenges.

**Final Thoughts** **Overall, Three Squirrels' cost reduction and price cuts have been quite effective, with revenue starting to rise and net profit gradually recovering, and it is emerging from the mire. However, whether future development will continue to improve remains uncertain. Bestore and Lai Yifen are still struggling in the mire and need to stabilize their strategic positioning and find a "way out."** Moreover, regardless of the measures taken by each brand, as a leisure snack company, they cannot forget the most fundamental issue—food safety. On the Black Cat complaint platform, there are 3,822 complaints containing the search term Three Squirrels, 2,797 complaints containing Bestore, and 985 complaints containing Lai Yifen, with food safety issues being particularly prominent. Recently, Bestore has also been embroiled in allegations of ingredient label fraud. Of course, for the currently popular bulk snack retail, food safety is a "Sword of Damocles" hanging over their heads, ready to fall at any time.


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