Source | Chop Pepper Spicy Toly Bread, once the "bread stock leader" that dominated supermarket bread shelves, is now experiencing unprecedented dark times. The Q1 2025 financial report hit like a hammer. Data shows Toly Bread's revenue plummeted 14.2% year-on-year to 1.201 billion yuan, with net profit attributable to shareholders crashing 27.07% to just 84.0372 million yuan. Both gross and net margins also took a dive, marking the worst single-quarter performance since listing. Looking at a longer timeline, from 2021 to 2024, revenue growth had already declined from 6.24% to -9.93%, with net profit falling for four consecutive years, signaling the downturn early. According to Zhongtai Securities and iiMedia Data, in 2023, the top five companies in China's bakery industry by market share were Daliyuan, Toly Bread, Panpan, Oreo, and Hsu Fu Chi, with CR3 and CR5 at 9.2% and 11.2%, respectively, indicating a highly fragmented competitive landscape. "Unlike other FMCG categories, leading pre-packaged bread brands rely more on a long-term stable strategy of 'classic products + visual identity'," Louis from New罐头 Visual Consulting, a full-chain FMCG visual creative agency, told Chop Pepper Spicy. Many brands' once-successful business models are now becoming development bottlenecks. In stark contrast is the brand logic of Three Squirrels. It's understood that Three Squirrels' short-video e-commerce center for Western pastries has over 120 SKUs. Through a product matrix of "head + mid-tier + tail products," a single hit product, Buffalo Milk Thousand-Layer Toast, contributes 30% of bread category sales. Shu Feixuan, Mini CEO of Western Pastry Category Operations at Three Squirrels' short-video e-commerce center, emphasized, "Core hit products attract concentrated exposure from influencers; the first shot must establish market awareness." In other words, Toly Bread's performance decline is essentially a microcosm of the industry's shift from scale production to precision operations. Mankattan's contraction and Dali's delisting, along with Toly's dealer attrition and performance decline, collectively outline the "midlife crisis" of the traditional packaged bread industry. On one hand, freshly baked bread is rising rapidly with its "fresh baking + social check-in" model. Brands like Nayuki and Holiland quickly capture consumption scenarios, far surpassing pre-packaged categories. Health-focused short-shelf-life products are also surging, with bakeries like BUTTERFUL&CREAMOROUS, UH祐禾, and Stone's Oven expanding aggressively. Many European-style bread brands are also expanding rapidly through online e-commerce, squeezing the living space of traditional bread. On the other hand, convenience store fresh food penetration is also delivering a massive blow to Toly Bread and its peers. Convenience stores like Lawson and 7-Eleven offer daily freshly made sandwiches and bread sets, meeting consumers' immediate hunger needs and successfully diverting customers from supermarket channels. Even snack giants like Three Squirrels and Bestore, as well as retail channels like Hema and Sam's Club, are launching private-label bread products, further intensifying market competition. "Three years ago, 70% of the shelves were Toly; now internet-famous brands and regional small brands are everywhere," said Xiao Li, who works in snack wholesale procurement in Guangzhou. His observation is quite representative: the market position of traditional brands is increasingly precarious. Toly's predicament has transcended individual business operations, becoming a necessary pain point in the industry's transformation from industrialization thinking to scenario-based competition. In this wave of industry change, no one is immune. How to break through and be reborn is a life-or-death race that all traditional bread companies must face. Toly's performance decline, Mankattan's contraction, and Dali's delisting: traditional packaged bread is struggling Toly Bread was once synonymous with short-shelf-life bread in China, sweeping the Northeast market with its "central factory + wholesale" model, with a peak market value exceeding 45 billion yuan. With 310,000 terminal outlets nationwide and 61.5% of revenue from supermarket channels in 2024, it once proved the strong dominance of the traditional channel model. However, in 2024, Toly Bread's sales volume of bread and pastries was 331,500 tons, with inventory (physical quantity of products not yet sold in the enterprise's finished goods warehouse) at 856 tons. In 2023, sales were 374,700 tons with inventory of 716.8 tons, meaning inventory increased by 19.4% year-on-year while sales dropped 11.5%. Behind this divergence in volume and price lies the fatal weakness of the industrialization model once called the "Foxconn of the bread world." On one hand, regional expansion encountered "localization issues." When expanding southward into East and South China, Toly Bread's gross margin remained below 20% for a long time, with some subsidiaries' losses expanding by more than 10 times. In contrast, the Southwest region, with lower capacity utilization, had gross margins nearly 20 percentage points higher than South China, revealing that the problem is not capacity but insufficient regional market adaptability. On the other hand, traditional supermarket channel growth has hit a ceiling. The channel system overly reliant on traditional supermarkets appears increasingly fragile in the new consumption era where convenience stores account for 32% of the market. In 2024, Toly added 118 dealers but lost 144, with East China alone seeing a net decrease of 34 dealers. In Xiao Li's view, insufficient product innovation and living off past glories are the main reasons Toly Bread has fallen behind in the leisure food sector in recent years. Financial reports show that in 2024, Toly's R&D investment plummeted 31.84% year-on-year to just 22.9684 million yuan, with an R&D expense ratio of only 0.38%, less than one-third of the industry average. Toly's predicament is not an isolated case but a collective microcosm of the traditional packaged bread industry. Similarly, Mankattan, under the global baking giant Grupo Bimbo, has faced multiple challenges in recent years. Rising raw material and labor costs, coupled with cost pass-through from supermarket channels, led to gross margins falling by more than 5 percentage points in some regions. In 2023, due to poor profitability in the South China market, Grupo Bimbo planned to exit the region, directly impacting Mankattan's South China business. The fate of the veteran food company Dali Group also reflects industry anxiety. In 2023, Dali Foods announced a privatization delisting plan after resuming trading, and officially delisted from the Hong Kong Stock Exchange in September of the same year. This industry giant, holding seven core brands including Daliyuan, Copico, and Doudou, ultimately bid farewell to the capital market, illustrating the valuation difficulties traditional packaged food companies face amid consumption upgrades and channel changes. But unlike this, from the perspective of industry category characteristics, the differentiated attributes of short-, medium-, and long-shelf-life bread are intensifying market stratification, with the short-shelf-life label becoming a clear shackle in lower-tier markets. "Toly is a typical short-shelf-life representative, while brands like Panpan and Haoshi focus on medium- and long-shelf-life. This segmentation directly makes it difficult for brands and products with significant time constraints to penetrate more granular channels," Louis said. Southwest dealer Wang Fang further confirmed this view: "Short shelf life is indeed Toly Bread's biggest problem; it's hard to expand in third- and fourth-tier cities." In low-tier city supermarkets and mom-and-pop stores, long-shelf-life brands like Panpan dominate with advantages of "low transportation costs and long shelf life," with high distribution rates for French-style mini bread hit products. "Although single-product profit is low, demand is stable and circulation is fast," Wang Fang explained. From a competitive landscape perspective, the long-shelf-life track shows a pattern of "Panpan leading, with Dali and Garden following." Panpan, leveraging its first-mover advantage with French-style mini bread launched in 2004, avoided high supermarket deductions and focused its channel efforts on township wholesale markets, with only 1-2 dealers per county-level market to ensure products reach price-sensitive consumers at the lowest cost. Under the "rural areas surround cities" strategy, Panpan's market share in long-shelf-life bread far exceeds competitors like Dali and Garden. Now, the refined life represented by convenience store fresh-baked bread and the satiety tool represented by supermarket long-shelf-life bread form a value gap, leaving Toly and its peers in an awkward position—unable to beat long-shelf-life brands on cost-effectiveness, nor compete with fresh-baked products on quality. Who took the market? The dual strangulation of new brands and channel changes Changes in consumer perception further exacerbate the plight of traditional brands. Unlike Toly Bread's decline, new brands like a1 Snack Research Institute, Haoshi, and Xiaobai Xinli Ruan are thriving. It's important to clarify that the traditional brand's survival belief that "short shelf life equals freshness" is collapsing. Chop Pepper interviewed multiple consumers in third-tier cities on social media, who generally believe medium- and long-shelf-life bread is equally safe, and pay more attention to "product innovation," "affordable prices," and "clean ingredient lists." The emergence and popularity of new brands are not without reason. Specifically, a1 Snack Research Institute is redefining baking innovation as a hit product machine. Its watermelon toast pioneered natural fruit and vegetable powder coloring technology, becoming a social media hit with a 1:1 realistic watermelon shape. Its banana bread, with the selling point of "one bread, half banana," consistently ranks high in category sales. Xiaobai Xinli Ruan broke into the market with "differentiated categories + IP marketing." After creating the hit "yogurt small pocket," the brand launched multiple flavors like yellow peach, strawberry, and matcha, leveraging internet-famous elements like "lactic acid bacteria" to target college students and urban new white-collar workers. On the marketing side, it created exclusive IP images to increase interactivity and topicality. Haoshi achieved a curve-overtaking with "entertainment marketing + sinking channels." Previously, in "The Story of Ning'an," Haoshi bread gained popularity through Wang Xingyue's mid-roll ad with the line "Haoshi Haoshi, delicious delicious." Later, Haoshi signed Ten Qintian and Wang Xingyue as brand ambassadors and actively expanded into lower-tier markets, establishing close cooperation with many community stores. But from an industry-wide perspective, the core change in the packaged bread sector in recent years has not come from product innovation or brand iteration, but from the disruptive restructuring of channel patterns. "Private-label bakery products have seen significant growth, eating into part of the traditional bread market." Data shows that in 2024, convenience store fresh food sales grew 22% year-on-year. Lawson's Ice Skin Mooncake Cake has surpassed Toly in bread sales in South China, becoming the invisible champion in the short-shelf-life market. Moreover, "many convenience stores prioritize displaying private-label products in the core bread section, leaving non-core areas or even spots near the cold cabinet for other brands," Wang Fang said. Convenience stores are implementing point-of-sale monopolies through shelf restructuring. At the same time, supermarket bakeries represented by Hema, Sam's Club, Pangdonglai, and Aldi are rapidly rising, using supply chain integration capabilities, private-label strategies, and extreme cost-effectiveness to impact the traditional packaged industry from multiple dimensions. Sam's Club's hot-selling products like mochi and Swiss rolls sell tens of millions per month. Dazhong's potato bread and Pangdonglai's big mooncakes have attracted significant attention on social platforms. Pangdonglai's self-operated bakery "Delicious" and Olé's bakery specialty store Olé Bakery directly squeeze shelf space for brands like Toly. Even some stores of Snacks Are Busy have opened "store-in-store" bakery models, featuring internet-famous items like Swiss rolls, medium-ripe cheese, and Basque cake, with prices concentrated under 9.9 yuan. Xiao Li said, "The impact of such channels on the pre-packaged bread market is far more disruptive than competition between brands." It's worth noting that the rise of channel mindshare is overturning industry logic, with consumer trust in "Sam's Choice" and "Pangdonglai Made" surpassing traditional brands. For example, white-label brands represented by "Baking Institute" achieve "de-branded growth" through Sam's Club channels. Its butter dinner rolls, relying on the "Sam's quality control" label, sell over 10,000 bags per month. Even "Tafe" soy milk sandwich bread, containing 11 additives and 3 preservatives, sells well due to the Sam's shelf halo, with many consumers "relying more on channel endorsement than actively checking ingredient lists when buying bread at Sam's." Additionally, snack giants like Three Squirrels and Bestore are cross-competing through private labels. According to Youmi Cloud data, in the past 30 days, Three Squirrels occupied nearly half of the top ten spots in the bread category bestseller list, with whole-box bread prices controlled under 20 yuan, rapidly penetrating e-commerce platforms and existing market space with extreme cost-effectiveness and snack channel reuse strategies. To some extent, Three Squirrels' success stems from deep replication and innovation of the hit product logic. "We fully followed the previous hit product logic of 19.9 yuan macadamia nuts—precisely anchoring the 19.9 yuan golden price point, and verified that this strategy also applies to the bread category," Shu Feixuan told Chop Pepper. When a regional brand promoted milk toast, Three Squirrels innovatively launched "Buffalo Milk Thousand-Layer Toast." At the same time, to meet consumers' demand for one-stop multi-flavor purchases, Three Squirrels achieved extreme cost-effectiveness with a 19.9 yuan three-box multi-flavor combo, directly hitting the pain points of traditional models. In terms of product innovation mechanisms, Three Squirrels has built an agile system for capturing market trends. Whether an innovative single product appears on the market or the supply chain develops a new form, the brand can quickly follow up, complete listing and testing processes. This mechanism has rapidly expanded the bread category SKU scale to nearly 200. Additionally, the brand has significant advantages in influencer resources and business cooperation, currently cooperating with over 10,000 influencers, forming a broad sales network. From the experience upgrade of new Chinese baking, to the immediacy monopoly of convenience stores, to the omni-channel penetration of supermarkets and snack brands, the market loss of traditional bread companies is essentially a transfer of channel control. From channel distribution to scenario embedding: Where should the packaged bread industry go? It's not hard to see that the competitive dimensions of China's packaged bread market are being infinitely widened. While old brands still rely on traditional channel advantages, consumption scenarios have quietly rewritten the rules of the game. "When product development is limited, market share is eroded by cross-border entrants. It's not that the overall market has disappeared, but more competitors each take a piece of the concept, making the pie smaller," said Chuanchuan, head of investment at a top agency. He once managed a lye bread brand that exited after more than a year, mainly because the strong operations team lacked sufficient budget for product development and market capture. On content e-commerce platforms like Douyin, packaged bread competition presents three harsh realities. First, visual selling points determine conversion rates. Product appearance design, visual presentation, and differentiated selling points are core elements that move users. In Douyin's content-as-shelf ecosystem, brands like Toly and Panpan lack strong online competitive advantages. For example, Toly's main products like sliced toast and natural yeast bread have built awareness offline through freshness, but core product iteration is slow, and online and offline product differentiation is minimal. Second, price points determine survival. "Adding 5 yuan loses conversion" is a real traffic rule. The industry has entered a 19.9 yuan price point battle, and brands sticking to 29.9 yuan will inevitably face traffic loss. Third, repurchase rates determine sustainability. Unlike nuts and other snack categories, bread repurchase rates are generally below 25%, making the "high commission for new customers" model unsustainable. Chuanchuan revealed that he initially thought if the brand achieved enough audience growth, repurchase at 30% would be profitable, but in reality, repurchase is not high. But at the same time, "the bread category doesn't have long-cycle planting; consumers seek what they see is what they get. Online traffic ceilings are obvious, so it's necessary to return to offline scenarios." In other words, consumers no longer need standardized products but solutions that precisely fit scenarios. Similarly, as a traditional brand, Panpan has not been confined to the comfort zone of "small bread." In 2022, Panpan Foods launched its snack chain store brand "Linglingzui," offering its own products, quality peer products, and imported snacks. The following year, Panpan's first coffee and bakery bistro "upping coffeex加油满分" opened in Quanzhou, Fujian, offering freshly baked bread, desserts, coffee, and tea. Although the expansion of new business formats has not met expectations, while maintaining its base with long-shelf-life products in lower-tier markets, Panpan is exploring scenario-based initiatives like "UPPiNG COFFEE Coffee & Bakery Bistro" and "Linglingzui Snack Store" to connect long-shelf-life products with fresh-made experiences. This confirms industry consensus: traditional channels remain strategically important, but when all brands crowd into the same track, exploring fresh and more reasonable growth points and spaces is the way to achieve differentiated growth. "Focus on densely populated but non-traditional first- and second-tier cities, explore new consumption scenarios and demographics, and drive product volume upgrades," Louis said. The brands they serve have begun adjusting strategies, and from the underlying logic of sales growth, core elements revolve around people, frequency, and unit price. On the scenario side, the judgment that "pre-packaged bread can explore precise scenarios like university campuses and office buildings" is confirmed by innovative practices from brands like Haoshi. Taking Haoshi's "Little Bread" series as an example, the brand uses 12-gram mini sizes and individual packaging to precisely cover scenarios like early morning classes and office afternoon tea. In terms of audience expansion, Three Squirrels launched the sub-brand "Good Morning Panda," focusing on children, using cartoon IP packaging and nutritionally fortified formulas to capture family breakfast scenarios. At the same time, some brands are beginning to test the silver-haired market, developing low-sugar soft bread to suit the dental and health needs of the elderly. In terms of delivery models, the industry is also exploring innovative paths. Louis cited Japan's Nichirei prepared meal model as an example, suggesting the baking industry could explore "semi-processed forms" to break traditional boundaries. Currently, most products in the domestic market are ready-to-eat, while "DIY baking kits" in Europe, America, and Japan have proven viable—providing pre-mixed dough, natural fillings, baking paper cups, and other complete ingredients, allowing consumers to simply bake for 10-15 minutes to transform from raw materials to freshly baked bread. To some extent, this "semi-processed form" satisfies the pursuit of "fresh-made feel" among consumers in first- and second-tier cities while creating interactive scenarios through low-barrier DIY processes. It's clear that as the packaged bread industry upgrades from category competition to scenario warfare, Toly's real opponents are no longer similar brands but a three-dimensional scenario network composed of convenience store breakfast counters, office tea break areas, and community bakeries. The traditional category needs to solve the problem of finding new growth space amid consumption upgrades. 🔺Scan code for ticket consultation🔺