China's snack food market is enormous but is still in a growth phase. In 2018, the size of the snack food market exceeded 1 trillion yuan, according to data jointly released by Tmall and CBNData. The industry will continue to grow by more than 10% in the next three to five years [1].
Top players in the snack food market have been stable, with Three Squirrels, Bestore, and Be & Cheery occupying the top 3 places for three consecutive years. The market is not concentrated, with the top 5 players accounting for less than 5% of the total market in 2018 [2].
This week, two significant events transpired in China’s snack food market involving two of the major players. It is not clear yet whether China’s snack food market will change in the wake of these two events, but it is absolutely clear that the competition is heating up.
PepsiCo acquires Be & Cheery
On February 23, PepsiCo took over Be & Cheery, one of China’s top 3 e-commerce snack companies, from Haoxiangni, China’s leading red date food brands, for $705 million (4.953 billion yuan).
In 2016, Haoxiangni acquired Be & Cheery for 960 million yuan ($137.38 million), and since then, Be & Cheery has been a significant contributor to Haoxiangni’s overall revenue. Data shows that it accounted for 86% of Haoxiangni’s 2019 revenue [4].
Be & Cheery started as a bricks and mortar only brand but later became an e-commerce ace in China’s snack food market. According to the data, online sales revenue of Be & Cheery accounted for more than 90% of its total revenue. In 2018, it ranked NO.2 in terms of online snack food sales, coming in just behind Three Squirrels.
Beyond its impressive growth, Be & Cheery’s online success is likely the other key factor in PepsiCo’s decision to acquire the company. Be & Cheery’s e-commerce strength can help PepsiCo realize growth in China’s online food market, which is a vital step in PepsiCo’s road to comprehensive localization. Additionally, Be & Cheery’s diversified product categories will help PepsiCo expand on its snack food business and target a broader consumer base. PersiCo’s leading sellers in China, Pepsi, and Lay's are at odds with the current consumer trends towards healthier snacking. For Be & Cheery, PepsiCo’s strong sales channels, branding and reputation, marketing, and management capabilities will open up new avenues for its development.
Bestore is listed on the Shanghai Stock Exchange
On February 24, China’s leading snack food brand Bestore was officially listed on the Shanghai Stock Exchange, with its market value approaching 7 billion yuan. With the listing of Bestore, the number of A-share listed snack food companies is now 6, including Three Squirrels, Haoxiangni, Qiaqia, LYFEN, etc. [5].
Like Be & Cheery, Bestore started from bricks and mortar and then set up its e-commerce business in 2012. Unlike Be & Cheery, Bestore has struck a balance between online and offline development, with both channels contributing significantly to its overall revenue. It has built omnichannel sales networks, including offline stores, e-commerce platforms, mobile apps, and O2O sales platforms. By 2019, it had opened more than 2000 offline stores across China. In terms of online channels, the company uses standard e-commerce platforms (Tmall, JD, etc.), social e-commerce platforms (Red, PDD, Wechat stores and Wechat private domain traffic), and it also has its own APP [6].
| Year | Revenue (billion yuan) | Online vs. Offline proportion |
| 2016 | 4.289 | 33.69% vs. 66.31% |
| 2017 | 5.424 | 42.21% vs. 57.79% |
| 2018 | 6.378 | 45.52% vs. 54.48% |
According to Bestore, more than half of the funds raised from the sale of its shares will be used for omnichannel development, seeing it continue on a development path where equal emphasis is given to offline and online channels.
Competitive landscape of China’s top 3 snack food brands
| Brands | Logo | Founding time & Listing time | Major SKUs | Online & Offline performance |
| Three Squirrels |
| 2012 & 2019 | Nuts, dried meat, dried fruit, puffed food, etc. | Take the lead in the online channel 1.No.1 of 2019 11/11 online shopping festival snack food category 2.More than 70 offline stores |
| Bestore |
| 2006 & 2020 | Nuts, dried fruit, dried meat, seafood snacks, etc. | Take the lead in omni-channel 1.More than 2000 offline stores 2.Online revenues account for nearly 50% |
| Be & Cheery |
| 2003 & ? | Nuts, confectionery, dried fruit, etc. | Online channel is the pillar and is expanding the offline channel |
What can we get from the chart?
Three Squirrels was the latest to arrive in the market but the earliest listed company. E-commerce has played a crucial role in its development. The company is now targeting offline channels and is investing heavily in rolling out a bricks and mortar presence nationwide.
There is a high degree of product homogeneity amongst the top players. Product differentiation, innovation, and upgrading are the key ways to increase competitiveness.
In the future, omnichannel strategies that give equal play to both online and offline channels will become the norm.
Healthier snacks continue to gain traction among Chinese consumers. This change reflects a broader trend at play in the food sector and related sectors.
