---
title: "Traffic or Brand: Which Reigns Supreme? A Look at the Nut Battle Among Three Squirrels, Bestore, and Qiaqia"
description: "In recent years, with the continuous growth of per capita income and consumption levels in China, the demand for leisure food has been gradually rising, and the market scale has expanded rapidly. Among them, the nut category has become the most prominent segment in the entire leisure food industry. Relevant data shows that China's leisure food industry is developing rapidly, with the market size reaching 500 billion yuan in 2018, and it is expected to maintain a growth rate of 10% in the next five years. Among them, nut and roasted seed foods continue to grow at an annual rate of 15%. Earlier this year, PepsiCo reached an agreement with Haoxiangni to acquire its 'Baicaowei' brand for $705 million, approximately 4.953 billion yuan, which also sparked heated discussions in the nut industry."
author: "肖明超"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2020-06-05"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/40k_ivLz7KIR9qHeVRVDQQ"
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---

# Traffic or Brand: Which Reigns Supreme? A Look at the Nut Battle Among Three Squirrels, Bestore, and Qiaqia

> In recent years, with the continuous growth of per capita income and consumption levels in China, the demand for leisure food has been gradually rising, and the market scale has expanded rapidly. Among them, the nut category has become the most prominent segment in the entire leisure food industry. Relevant data shows that China's leisure food industry is developing rapidly, with the market size reaching 500 billion yuan in 2018, and it is expected to maintain a growth rate of 10% in the next five years. Among them, nut and roasted seed foods continue to grow at an annual rate of 15%. Earlier this year, PepsiCo reached an agreement with Haoxiangni to acquire its 'Baicaowei' brand for $705 million, approximately 4.953 billion yuan, which also sparked heated discussions in the nut industry.

In recent years, with the continuous growth of per capita income and consumption levels in China, the demand for leisure food has been gradually rising, and the market scale has expanded rapidly. Among them, the nut category has become the most prominent segment in the entire leisure food industry. Relevant data shows that **China's leisure food industry is developing rapidly, with the market size reaching 500 billion yuan in 2018, and it is expected to maintain a growth rate of 10% in the next five years.** Among them, nut and roasted seed foods continue to grow at an annual rate of 15%.

Earlier this year, PepsiCo reached an agreement with Haoxiangni to acquire its 'Baicaowei' brand for $705 million, approximately 4.953 billion yuan, which also sparked heated discussions in the nut industry. At the same time, backed by various capitals, the domestic leisure snack industry has begun a new stage of market competition.

So, who can become the brand winner in this category battle? With Baicaowei already incorporated into PepsiCo's chessboard, what is the future trend for the three major brands: Three Squirrels, Bestore, and Qiaqia瓜子? From a brand building perspective, these three brands also have both online and offline channels. Between online 'traffic battles' and offline 'brand momentum,' which is more important? For consumers, what are the different reasons for choosing the same nuts from three different brands? Behind the fierce competition, these questions may be more worthy of attention and discussion.

**-01- Traffic-driven or brand-driven?**

**'Traffic' is a word that brands cannot avoid in recent years.** However, the disappearance of internet traffic dividends has almost become a conclusion that everyone is mentioning recently. Many new consumer brands have seized the dividend of internet traffic and risen accordingly, relying on e-commerce platforms to break out in new tracks, which has opened up a new situation for Chinese brand competition. As an internet-native brand, Three Squirrels is the pioneer in the nut category to seize this trend.

Holding the internet traffic dividend in one hand and leveraging the IP image of 'Three Squirrels' in the other, it captured the attention of many young groups in the mobile internet era and once became synonymous with the leisure snack category. Three Squirrels' 2019 annual report and 2020 first-quarter report show that in 2019, Three Squirrels' annual revenue was 10.173 billion yuan, a year-on-year increase of 45.3%, making it the first nut enterprise to exceed 10 billion yuan.

However, profit data in Three Squirrels' financial report shows that in 2019, net profit attributable to the parent company was 239 million yuan, a year-on-year decrease of 21.43%. This data indicates that the profit of the 10-billion-yuan Three Squirrels is relatively low. 'Heavy revenue, light profit' seems to be a typical portrayal of a brand that relies more on internet traffic for development. It took the lead in occupying the leading position in the leisure snack category, but it did not leave others far behind. Now, behind Three Squirrels, not only are brands like Qiaqia and Bestore catching up, but many regional and vertical brands are also dividing market share. Three Squirrels' position as the 10-billion-yuan revenue leader seems unstable.

If we analyze the reasons carefully, it failed to seize the 'traffic' window period in time, quickly consolidate brand advantages, and establish sustained brand value, leaving room for later entrants. In contrast to Three Squirrels, **Qiaqia, which was previously regarded as a traditional brand, has relied on its brand value accumulated over the years, through unique brand differentiation positioning and innovation, to quickly conquer the category.**

Data shows that in 2019, Qiaqia Food achieved operating revenue of approximately 4.837 billion yuan, a year-on-year increase of 15.25%; net profit attributable to shareholders of the listed company was approximately 604 million yuan, a year-on-year increase of 39.44%; net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses was approximately 482 million yuan, a year-on-year increase of 46.37%, with very impressive results.

Qiaqia was once closely associated with sunflower seeds. Whenever consumers thought of sunflower seeds, they would think of Qiaqia. However, Qiaqia's growth failure can be described as 'success due to sunflower seeds, failure due to sunflower seeds.' Qiaqia's sunflower seed products once accounted for nearly 80% of total revenue. The growth space for the sunflower seed market, which had been cultivated for decades, was shrinking, and even saw negative growth in 2017. **Single product and brand aging became two mountains on Qiaqia's growth path. Missing the first wave of e-commerce expansion and consumption upgrade once caused Qiaqia to temporarily lose to Three Squirrels, which was established not long ago.**

To reverse the situation, Qiaqia Food decisively entered the nut industry and e-commerce platforms, catching up through clear positioning and strong brand building. The financial report shows that in 2019, Qiaqia's main product 'Little Yellow Bag Daily Nuts' achieved tax-inclusive sales of approximately 850 million yuan, a year-on-year increase of 64.21%, becoming the strongest growth category under Qiaqia Food.

**Qiaqia's third-quarter 2019 report pointed out that the rapid rise of Little Yellow Bag is mainly due to precise brand positioning and the strong detonation of strategic cooperation with Focus Media.**

On the one hand, Qiaqia found a differentiated position in the nut market from the perspective of freshness, using the National Science and Technology Progress Award as a trust endorsement to create the super symbol of 'Mastering Key Freshness Preservation Technology';

On the other hand, it reversely enhanced brand momentum through offline media channels. Qiaqia focused its budget of over 100 million yuan on Focus Media's elevator media, detonating the core advantage of 'freshness' in the apartment buildings and office buildings that 300 million urban mainstream consumers pass by daily, guiding consumers to e-commerce platforms and surrounding retail terminals for consumption, and forming a competitive difference in consumers' minds, thus achieving a breakthrough.

Three Squirrels and Qiaqia have chosen different brand growth models, reflecting a proposition worth pondering for Chinese brand development: **Is traffic-driven or brand-driven more advantageous in competition? The practice of many brands proves that seizing the window period as early as possible and investing in brand value building can better find the brand moat.**

For example, Xiaoxian Dun, also a new consumer brand that grew up on the internet, successfully seized the window period of traffic dividends and brand building, thus achieving a rise in the tonic category.

With the popularity of the two consumption concepts of 'national goods' and 'tonic,' the concept of internal supplementation has gradually taken root in the minds of the middle-aged consumer group, and bird's nest has become a sought-after health product for many. On November 11, 2019, Xiaoxian Dun, a new brand established only 5 years ago, surpassed the old brand Yan Zhi Wu and became the vanguard of tonic brands entering Tmall's billion-yuan club. Not only that, Xiaoxian Dun is the No.1 bird's nest brand on Tmall, JD.com, and Xiaohongshu, the three major e-commerce platforms. In 2019, Xiaoxian Dun's sales performance reached 800 million yuan, and its popularity was astonishing.

Why was Xiaoxian Dun able to achieve such speed? Before Xiaoxian Dun's rise, there were also ready-to-eat bird's nests on the market, but the consumer pain points of additives and nutrient loss always existed, until Xiaoxian Dun proposed the concept of fresh stewed bird's nest. Scientifically stewing bird's nest, stewing and delivering on the same day, adopting the C2M model, solving the problems of additives and nutrient loss, Xiaoxian Dun created a new concept in the bird's nest industry.

With hardcore product strength, Xiaoxian Dun did not neglect brand promotion. Xiaoxian Dun used live streaming, online seeding, and other methods to carry out online promotion, shaping the brand image of convenience, freshness, nutrition, and sufficient ingredients, while sales continued to surge.

However, with the continuous rise in traffic costs and weak traffic growth, founder Lin Xiaoxian, with keen insight, began to realize that the traffic brought by demographic dividends is ultimately a mirage. Brand premium is the core competitiveness of the market and the foundation for a brand to remain invincible. As the traffic tide recedes, facts prove that what can build brand power is people's hearts, and seizing user mindshare is far more important than traffic. Therefore, Lin Xiaoxian reached a strategic cooperation with Focus Media, using elevator advertising to launch a brand campaign offline.

On 'Women's Day' in 2019, the 'red gift boxes' containing Xiaoxian Dun bird's nest appeared in all Focus Media elevator advertisements in Beijing, instantly triggering a building-sweeping activity. The sincere offline marketing also caused a phenomenal upsurge online. Many consumers posted the Xiaoxian Dun bird's nest they received online, indirectly completing secondary or even multiple brand information transmissions.

It not only captured the hearts of lucky consumers with its products but also attracted the attention of countless potential consumers. According to statistics, on the day of the event, Xiaoxian Dun bird's nest sales increased by 465% year-on-year. Subsequently, '618' e-commerce sales increased by 497% year-on-year, and Double 11 directly exceeded 100 million yuan, becoming a leader among bird's nest brands.

Since then, Xiaoxian Dun has continued to increase its investment in Focus Media, with brand momentum rising all the way, achieving cognitive 'blockade' in the field of fresh stewed bird's nest. Sales increased from 200 million yuan in 2018 to over 700 million yuan in 2019, and it is reported that the goal for 2020 is to achieve 2 billion yuan in sales.

Therefore, how to transform a brand from traffic-driven to brand-driven is the most urgent problem for many enterprises. When the traffic dividend passes, the improvement of sales ultimately needs to return to the brand itself. This may be the first reflection brought by the nut brand war.

**-02- From strategic positioning to strategic communication: Should brands be centralized or decentralized?**

Clausewitz wrote in the second principle of the four principles of battle in 'On War': Concentrate as much force as possible at the point where the decisive blow is to be struck.

In an era of surplus and consumer sovereignty, what is the competitiveness of an enterprise? It is brand cognition. **Because you have cognition, you have choice. You must form the most favorable differentiation with your competitors and build so-called brand cognitive advantage.**

In 2012, pecans were still a blue ocean market in the nut field, with not many brands producing pecan-related products, so market competition was not fierce. Three Squirrels started with this creamy-flavored nut and created a hit product.

At the same time, Three Squirrels fully insight into consumers' practical needs, solving the pain points of nut products one by one, such as high rate of bad nuts, shells too hard, dirty hands after eating, and nowhere to throw shells. First, the packaging not only contains pecans but also a shell opener, wet wipes for wiping hands, and garbage bags for collecting shells. Such a carefully packaged product is very popular with users.

However, as the brand grows and the category becomes increasingly diversified, from jerky to dried fruits, what Three Squirrels represents seems increasingly blurred.

Originally, IP was only an added value of the brand, not the core of brand positioning. In Three Squirrels' communication, the cute characteristics of Squirrel Xiaojian, Squirrel Xiaomei, and Squirrel Xiaoku brought the brand an easy-to-spread reputation and an easy-to-interact brand persona. However, because the brand positioning did not build a differentiated wall to distinguish it from other brands, even breakthroughs in the high-end field were not quickly effective due to over-reliance on traffic, which gave other brands an opportunity to develop in the internet era.

At this time, Bestore, which chose 'higher-end leisure food,' tore open a new gap in the nut market. Bestore's 'high-end' is not a slogan but a comprehensive high-end from strategy to implementation, capturing not purely price-driven consumers but the urban mainstream middle class.

Bestore's 'higher-end' starts with the screening standards for each raw material. For example, cashews are upgraded from 260 per pound to 180 per pound, pistachios from 21-23 per ounce, etc. For modern consumers who pursue a refined life, this higher quality control is more likely to be sought after.

Secondly, the packaging is more high-end. In the Mid-Autumn Festival of 2019, Bestore cooperated with the Dunhuang Museum to release the 'Dunhuang Trend Gift' Mid-Autumn gift box. In the cooperation of enterprises, museums, and designers, the small mooncake became a portal leading consumers through thousands of years of wind and sand, into the depths of the desert composed of flying Apsaras, three-eared rabbits, nine-colored deer, and so on.

Yang Hongchun, chairman of Bestore, pointed out in an interview after listing: Bestore's brand building has been very effective, mainly due to determining the positioning of high-end snack leader, hiring Kris Wu as spokesperson, and heavily investing in Focus Media, detonating the urban mainstream population. The first mention rate of high-end snacks in first- and second-tier cities reached 53%.

Yang Hongchun, chairman of Bestore

Strategic positioning + strategic-level communication, focusing on building centralized brand momentum, is Bestore's marketing mix for creating 'higher-end leisure snacks.' In 2019, after leading the industry upgrade with its high-end snack strategy, Bestore focused on the essential living spaces of 300 million urban mainstream people, launching a large amount of advertising on Focus Media's elevator and cinema media, locking onto high-end user mindshare as an important channel for rapid awareness growth, implementing 'higher-end' in precise delivery to the people facing each screen. Data also verifies the effectiveness of this strategy.

Bestore's 2019 financial report shows that in 2019, the company's operating revenue was 7.715 billion yuan, a year-on-year increase of 20.97%; net profit attributable to the parent company was 340 million yuan, a year-on-year increase of 42.68%. Among them, high-end products accounted for 30.66% of sales, and market value exceeded 30 billion yuan, which also shows that Bestore's high-end strategy integration has shown results.

**Facing the explosive information and fragmented touchpoints of the mobile internet era, how brands find truly efficient strategic communication media has become a contentious issue in today's marketing world.** There are many internet information channels, but traffic is becoming more expensive. Even if most channels can be covered, due to excessive dispersion, it is impossible to form a centralized detonation for mainstream consumer groups. Therefore, how to form 'centralized, scenario-based' brand momentum and carry out momentum-based communication of the brand's unique strategic positioning is also the inspiration Bestore brings in the nut category competition.

**-03- The era of brand 'guerrilla warfare' is over; positional warfare and protracted warfare will exist for a long time**

From analyzing the nut brand war, we can find that even in the internet era, you can have many free channels and purchase a lot of traffic, but it is actually not easy to establish a strong brand cognition in consumers' minds in the complex and ever-changing information world.

**Due to the uncertainty and rapidity of internet information transmission, it will become increasingly difficult for brands to achieve whole-network detonation through internet media,** because today's internet information detonation is either a sudden social hotspot or the purchase of centralized traffic from large internet platforms.

But no matter which one, because consumers have control over information in the mobile internet era, the effectiveness of much information is being reduced. The mobile internet is like a galaxy; every brand is making a sound, but its voice is often ignored intentionally or unintentionally, or it can only communicate with certain groups. Brand momentum advertising is difficult to detonate centrally.

**Whether it is a new internet consumer brand or a traditional brand, they are no longer defined by traditional or new. Only by integrating traffic and brand to create a 'mind-flow brand' in consumers' minds is the future of the brand.** Seize offline entrances and scenarios, then maintain consumer relationships online; the brand's balance needs to be better balanced. Three Squirrels' deep cultivation during the traffic dividend period, Qiaqia and Bestore's timely differentiated positioning and centralized communication of brand momentum—all have successful experiences and room for repair and improvement.

However, the core of competition will ultimately return to competition for brand cognition and the ability to 'blockade categories.' The key to establishing brand advantage cognition lies in implanting brand positioning into consumers' minds, forming inertial guided decision-making, saying goodbye to guerrilla warfare, seizing positioning in segmented scenarios, seizing positional warfare for mainstream groups, and adhering to brand long-termism will become an important method for brands to survive in uncertain times. The following suggestions may be worth discussing.

**At any time, think about how to seize opportunities in segmented consumption scenarios and create brand-specific advantages.** From Three Squirrels' pecans to Xiaoxian Dun's bottled bird's nest, brand breakthroughs always rely on the sharp breakthrough of flagship products. Compared to the mass market that has become a red ocean, pecans and bottled bird's nest both started word-of-mouth building from niche consumers. From this perspective, brands that enter from small category scenarios have the gene to leverage niche markets and can find growth space through extreme innovation.

Find accurate brand positioning, achieve highly differentiated cognition, and strongly shape brand momentum. According to the '2020 China Consumer Trends Report' survey by Zhimeng Consulting, in the face of overwhelming advertising information, consumers are more likely to accept and be interested in advertisements rather than irrelevant recommendations. Moreover, users hope that advertisements can clearly express the core differences of the brand in the shortest time. 'Concise and needed' communication is more valuable than 'complex and speculative' information. Using 'fragments' to counter 'fragments' and using 'anxiety' to relieve 'anxiety' can only make the brand presentation more incomplete. Concise 'differentiated positioning' is more lethal than complex stories in the mobile internet era.

**Brands must not only go to consumers but also enter consumers.** If the internet requires proactive brand outreach and long-term operation and construction, then offline core media represented by Focus Media, which covers urban mainstream groups, cannot be ignored for brand value. If offline touchpoints can concentrate forces, the communication value of positional warfare will be greater than fragmented guerrilla warfare. Offline scenarios are key to establishing brand cognitive effectiveness.

We take the marketing perspective of the nut industry to discuss, and the ultimate message we hope to convey is that brand building is like planting a tree; the best time is from the beginning of brand creation, rather than waiting until you have gained share and find it increasingly difficult to increase premium space. Making consumers firmly believe in one thing is the secret to brand longevity, and these all rely on the continuous accumulation and construction of brand momentum.

Source: Xiao Mingchao - Trend Observation (ID: trendforesee)

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