---
title: "Where Can Bestore Find Its Next Source of Growth?"
description: "Bestore built a national premium snack brand through stores, e-commerce, and marketing, but investor exits and weak operating economics exposed the difficulty of sustaining premium positioning in a fragmented, low-barrier category."
author: "New Distribution"
publisher: "New Distribution"
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published: "2023-06-19"
language: "en"
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# Where Can Bestore Find Its Next Source of Growth?

> Bestore built a national premium snack brand through stores, e-commerce, and marketing, but investor exits and weak operating economics exposed the difficulty of sustaining premium positioning in a fragmented, low-barrier category.

In 2023, major investors continued reducing their holdings in Chinese snack retailer Bestore.

The transactions did not by themselves determine the company's future, but they raised a broader strategic question: where could the next stage of growth come from?

## Investors Reduce Their Positions

Bestore announced that an investment entity associated with Hillhouse Capital had completed another reduction, selling approximately 2.24 million shares—about 0.56 percent of the company—for roughly RMB 73.2 million.

Hillhouse-related entities had held a combined 11.67 percent after Bestore's February 2020 listing and began reducing the position after the first anniversary of the listing.

Across four reductions cited in the article, those entities realized approximately RMB 987 million and lowered their stake to 5 percent.

Another major shareholder, Dayone Capital, had invested in Bestore in 2010. As of March 2023, it held 30.3 percent, behind the founder-controlled shareholder group.

In May 2023, Dayone announced a plan to sell up to 6 percent of the company for its own funding needs.

Bestore stated that the plan would not affect corporate governance or continued operations.

## From One Store to a National Snack Brand

Founder Yang Hongchun left a management role at a home-appliance company, sold his home in Guangdong, and researched consumers, locations, products, and supply sources across China.

In August 2006, he opened a 30-square-meter store opposite Wuhan Plaza with more than sixty products.

The company expanded to six stores in its first year and eighty-eight within three years.

In 2012, Bestore entered e-commerce and gradually built sales across platform commerce, social commerce, its own app, and physical stores. Within three years, combined online and offline sales exceeded RMB 4.5 billion.

Sponsorship of the television program *Where Are We Going, Dad?* in 2015 helped turn a regional company into a national brand.

In 2019, Bestore adopted a premium-snack strategy in response to demand for greater variety, quality, frequency, and consumption occasions.

Membership reportedly increased from 47 million to 80 million in one year.

The company listed during the pandemic in 2020 through the Shanghai Stock Exchange's first online listing ceremony and became widely described as the first publicly listed premium snack company.

After more than a decade, it had built more than 3,000 stores and one of the industry's largest offline networks.

## Why Premium Positioning Was Difficult

Bestore emphasized high quality, high standards, and reliable products, seeking to create willingness to pay a premium.

But growth after the listing did not match the most optimistic expectations. The premium route faced three structural problems.

### 1. Low Entry Barriers and Intense Competition

Snack-discount stores expanded rapidly, while livestream commerce gave unbranded and emerging products new exposure.

Established snack companies faced pressure from both directions.

Snacks are also less essential than staple foods and can be difficult to differentiate enough to create a durable barrier.

### 2. Premium Claims Require Strong Quality Control

Bestore used an OEM model rather than owning a full manufacturing base.

Outsourcing is common and can be efficient, but it requires excellent supplier governance and quality control.

When consumers can find similar products from contract manufacturers and discuss lower-priced alternatives online, the brand must make its quality advantage visible and credible.

Food safety is non-negotiable. Any failure is especially damaging to a company whose strategy depends on premium quality.

### 3. Marketing Spending Did Not Automatically Improve Economics

The article argued that Bestore spent relatively little on research and development compared with the scale of its marketing.

In 2021, R&D expense represented 0.43 percent of revenue. Sales expense continued rising and reached RMB 1.756 billion in 2022, above several listed snack-sector peers cited in the article.

Celebrity endorsements, television programs, and entertainment exposure increased awareness, but high traffic spending did not guarantee sufficient conversion or stronger gross margins.

As marketing cost and brand recognition rose, prices also increased, creating resistance among some consumers.

For mass-market snacks, consumers still prioritize reliable quality, a good buying experience, and a reasonable price.

Premium positioning cannot survive when packaging and promotion advance faster than product value.

## The Operating Numbers behind the Concern

Bestore reported 2022 revenue of RMB 9.44 billion and profit of RMB 335 million, with both measures growing.

The article nevertheless highlighted weaknesses beneath the headline figures.

Operating profit was relatively flat, government grants and other income contributed more than 37 percent of total profit, and operating cash flow declined by 75 percent.

Those figures did not prove why individual shareholders sold, but they illustrated the difficulty of converting scale and visibility into strong operating economics.

## The Category Still Had Room to Grow

China's snack sector remained fragmented. Euromonitor data cited in the article placed the combined share of the five largest companies below 20 percent and declining.

The article also cited large differences between per-capita snack consumption in China and the United States as evidence of potential long-term growth.

Such comparisons are directional rather than guarantees. Consumer habits, prices, categories, and retail structures differ by country.

Still, rising incomes and changing consumption patterns left room for strong Chinese snack brands. International markets could also become an important expansion path.

## Discount Retail and All-Channel Consumption

Snack-discount chains had become a major competitive force by 2023.

Bestore responded by creating its own chain, Snack Player, with plans to expand in Hubei. It also invested with Black Ant Capital in snack retailer Zhao Yiming.

The company planned additional stores and upgrades to parts of its existing network, including larger formats and broader assortments involving beverages, coffee, bakery, and short-shelf-life products.

Those moves reflected an industry-wide transition toward all-channel marketing and consumption occasions that connect online and offline demand.

## The Next Growth Point Must Be Product-Led

Bestore's history demonstrated its ability to build stores, adopt e-commerce, market nationally, and create a large member base.

The next stage required a different emphasis.

The company needed to convert consumer insight into products with clear value, strengthen quality control across outsourced manufacturing, balance premium positioning with accessible prices, and make new store formats economically productive.

Discount retail, larger stores, new categories, and international expansion could all contribute. None would solve the problem if product quality, differentiation, cash generation, and consumer value remained weak.

In a low-barrier and highly fragmented category, the next source of growth cannot be another marketing label alone. It must be an operating system that turns product strength and consumer trust into profitable repeat purchase.


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