Financial Services Association, April 17 (Reporter Xu Cihao) With the rise of affordable consumption, the good days of the snack circuit are getting closer and closer.

On the evening of April 15, Wanchen Group, the parent company of the mass-selling snack shop, announced its results forecast for the first quarter of 2024. During the reporting period, the company expects to achieve total revenue of 4.7 billion yuan to 5.1 billion yuan, an increase of 516.9% to 569.4% over the previous year. The net profit is expected to be 65 million yuan to 75 million yuan, an increase of 41.5%-63.1% year on year.

On the evening of April 16, the quarterly report disclosed by Three Squirrels showed that in the first quarter of this year, the three squirrels achieved total operating income of 3,646 billion yuan, an increase of 91.83% over the previous year; achieved net profit attributable to shareholders of listed companies of 308 million yuan, an increase of 60.80% over the previous year; and realized deducted non-net profit of 263 million yuan, an increase of 92.84% over the previous year. Affected by this news, the Three Squirrels opened at 24.1 yuan this morning, nearly 6 points higher. As of the midday close, the three squirrels fell 1.44%, closing at 22.51 yuan, with a market value of 9.027 billion yuan.

Recently, Jinzai Foods released its first quarter results forecast, which also shows that it is expected to achieve net profit of 705.592 million yuan to 78.391 million yuan in the first quarter, and net profit will increase 80.00%-100.00% year on year

In fact, not only are companies that have already been listed in the industry performing well; in recent years, the rise of affordable snacks is very busy, and mass-selling snack brands such as Zhao Yiming have set off round after round of store expansion plans, and also changed the direction of development of the industry.

Chinese food industry analyst Zhu Danpeng said in an interview with a reporter from New Consumer Daily that the entire casual snack circuit has now entered the “affordable” cycle.

Affordable consumption is on the rise, and the performance of listed snack companies improved after embracing mass sales

Wanchen Group was founded in 2011 and listed on A-shares in 2021. It mainly sells snacks and edible mushrooms in two major business segments. Since the official launch of the snack retail segment in 2022, Wanchen Group has successively incubated or integrated 5 mass snack brands, Lu Xiaoyu, Lai Youpin, Atiqdi, and Wife, and in September 2023, the top four brands were uniformly named “Good Want Brand Snacks”, and gradually developed into a leading brand in the mass snack industry.

In fact, the annual results forecast for the year ended December 31, 2023 issued by Wanchen Group on January 19 this year also shows that in 2023, Wanchen achieved operating income of about 9.294 billion yuan, an increase of 1592.03% over the same period last year; net profit attributable to shareholders of listed companies was a loss of 69 million yuan to 89 million yuan, which changed from profit to loss.

However, after Wanchen bet on mass-sold snacks, the company's profit situation in the first quarter of 2024 was mitigated.

Among them, the much-publicized snack business has achieved rapid, high-quality, and steady growth. According to the performance forecast released by Wanchen Group on the evening of April 15, it is expected to achieve total revenue of 4.7 billion yuan to 5.1 billion yuan, an increase of 516.9% to 569.4% over the previous year, and the net profit is expected to be 65 million yuan to 75 million yuan, an increase of 41.5%-63.1% year on year.

Among them, in the first quarter of 2024, Wanchen's snack sales business revenue is estimated at 4.6 billion yuan to 5 billion yuan, an increase of 678.3% to 745.9% over the previous year. After excluding share payments from the mass snack business, net profit is expected to be 110 million yuan to 130 million yuan, and the net interest rate is about 2.39% -2.60%. The net interest rate continues to rise compared to previous quarters.

Another giant snack brand in the industry is Three Squirrels, known as “the first stock of national snacks,” but since it went public, that is, after its revenue surpassed 10.17 billion yuan in 2019, it has not reached the level of 10 billion yuan, and 2023 is the lowest revenue value since it went public. According to financial data for previous years, the annual revenue of the three squirrels from 2020 to 2023 was 9.794 billion yuan, 9.770 billion yuan, 7.293 billion yuan, and 7.115 billion yuan respectively, down 3.72%, 0.24%, 25.35%, and 2.45%, respectively.

In recent years, the three squirrels have been looking for a breakthrough.

In the past year, “high-end cost performance” was often mentioned by the three squirrels, and the goal of “returning to 10 billion dollars and becoming stronger in all” in 2024 was even mentioned in the 2023 financial report.

Zhu Danpeng further analyzed that the “high-end cost performance” strategy allows the three squirrels to optimize large areas and reduce hidden costs by optimizing the entire SKU on a large scale and implementing low-cost operations, energy saving and efficiency, open source and savings within the company, etc.

However, Zhu Danpeng also pointed out that in a situation where competition in the snack industry is becoming more and more intense, the three-squirrel system still needs to be upgraded, innovated and iterated. Otherwise, the 10 billion target is still far away.

The “convergence” of the new forces selling snacks is changing the industry pattern

In November 2023, Snack, which represents mass-marketed snacks, was busy announcing a merger with Zhao Yiming Snacks. After the merger was completed, the total number of stores exceeded 6,500, completely changing the industry pattern.

According to public information, Snack is busy completing Series A and Series B financing in 2021 and 2023, respectively. Investors include Gao Rong Capital, Sequoia China, and Wuyuan Capital; Zhao Yiming Snacks completed Series A financing of 150 million yuan in February 2023. The investors were Black Ant Capital and Liangpin Shop. However, in October of that year, Liangpin Store announced that it would transfer 3% of the shares of Zhao Yiming Snacks held by its wholly-owned subsidiary Guangyuan Juyi to Black Ant Capital at a price of 105 million yuan.

After completing the merger, in December of last year, Snack Very Busy. Zhao Yiming Snacks signed a strategic cooperative investment agreement with Miss You and Yanjin Shop Holdings. I think you and Yanjin Shop Holdings invested 1.05 billion yuan in the Snack Very Busy Group. The two obtained 6.64% and 3.3175% of the Group's shares respectively.

In an interview with a reporter from New Consumer Daily, Zhu Danpeng said that the entire casual snack circuit has now entered the “affordable” cycle, and seeking change is an inevitable choice.

In fact, the continuous expansion of mass snack sales channels has brought a sense of crisis to traditional casual snack companies, and casual snack track competitors, including Liangpin Stores, have adopted cost-effective strategies one after another.

At the end of last year, Liangpin Store also announced that it will implement the biggest price reduction in 17 years. The products reduced are mainly concentrated on 300 snacks with a high repurchase rate. The maximum drop was 45%, with an average drop of 22%.

Also, it is worth noting that the three squirrels have also set up a business to sell snacks in bulk. In 2023, Three Squirrels abandoned the early online business model of franchise stores and replaced them with building a “private brand community snack shop.”

According to the 2023 financial report of Three Squirrels, during the reporting period, the company opened 149 community snack stores, 266 original stores, and the operating revenue of community snack stores was 92 million yuan; the total revenue of the original stores was 266 million yuan.

On March 19, Zhao Yiming was very busy at the first press conference after the merger in 2023. New Consumer Daily learned on the spot from Snack Very Busy Founder Banquet Zhou that the combined Snack Very Busy Group's total revenue in 2023 has exceeded 20 billion yuan, far more than double that of Wanchen Group's 2023 revenue.

According to reports, Zhao Yiming is very busy with snacks and snacks, and the two sides have more than 7,500 stores nationwide and are working on the “Ten Thousand Stores Plan.” Meanwhile, as of January 2024, Wanchen Group mass-sold more than 6,000 stores in the snack sector, and maintained an average monthly opening rate of over 500 stores.

In order to speed up “racing ground,” Wanchen Group announced an investment of 1.2 billion dollars to enter the Southern Market at the beginning of this year to launch highly subsidized competition. The group company also announced plans to invest more than 1 billion yuan in the next six months for national market development, focusing on the northern region, and increasing investment in franchise policy support, competitive marketing support, urban core site development, and direct store expansion. Two brands, Wan Chen and Zhao Yiming, were even revealed to have a “flop” competition at one point.

According to Jiang Han, an expert at the Whale Platform Think Tank and a senior researcher at the Pangu Think Tank, the threshold for the snack industry is relatively low. More and more companies have seen the huge potential of the snack market and are entering this field one after another. This has led to many brands and intense competition in the market.

“With the intensification of market competition and the continuous improvement of policies and regulations, snack companies need to continuously improve their competitiveness and ability to innovate in order to remain invincible in the market.” Jiang Han told the New Consumer Reporter.

Meanwhile, Zhu Danpeng told reporters that how to bring the entire industry into standardized, specialized, branded, capitalized, and large-scale development to build a “moat” for the sustainable development of the industry will be a direction that enterprises within the industry need to work together.