China Post Securities: Channel and product innovation in the snack industry brings a new round of growth, recommending Chacha Food Co., Ltd. and others

According to the Zhitong Finance APP, China Post Securities has released a research report stating that the snack industry in China has transformed from an outdated traditional industry into a modern large-scale industry, with the snack market surpassing 1 trillion yuan and growing at a rapid pace. The firm believes that the snack market will maintain a growth range of 6% to 8% over the next three years, with the potential to exceed 1.4 trillion yuan by 2026. During the rise of bulk sales, manufacturers enjoy the dividends of high sales growth; the high valuation of channels is due to the foreseeable space for future store expansion. The firm recommends individual stocks Chacha Food Co., Ltd (002557.SZ), JINZAI FOOD (003000.SZ), and YANKERSHOP (002847.SZ). The main points of China Post Securities are as follows: Compared to other categories, the growth of the snack market is relatively fast In 2024, the sales scale of pre-prepared dishes, health products, liquor, beer, and snacks is expected to grow by 15.6%, 11.5%, -5.2%, 3%, and 8.7% respectively. The growth of the snack market is lower than that of pre-prepared dishes and health products but higher than that of liquor and beer. In terms of the secondary market, the snack sector's revenue grew at an average annual rate of 25.59% from 2016 to 2019, and at an average annual rate of 14.62% from 2020 to 2024, both phases outpacing other sub-sectors. E-commerce and offline supermarkets remain the core sales channels, accounting for a combined scale of 68% in snack sales. In addition, snack bulk sales and brand stores each account for 14% and 10% of the distribution ratio. All these channels have experienced a transition from high-speed to low-speed growth. Currently, the sales growth rate of snacks in supermarket channels remains at 5% to 6%, while in e-commerce channels it is about 7% to 8%, with bulk sales channels growing rapidly. Snacks can be subdivided into nuts and seeds, puffed foods, candies, baked goods, meat products, cooked foods, dried fruits and preserves, biscuits and wafers, among others. Among these, nuts and seeds, baked goods, puffed foods, meat products, and candies are all large categories with consumption exceeding 150 billion yuan. Categories that cater to the trend of healthy and green consumption are growing rapidly, while traditional snacks are experiencing slow growth. Snack bulk sales are chain stores specifically selling snacks The layout of stores is widespread and dense, with high population coverage; stores feature discounts on snacks, presenting advantages of high cost-performance, a rich variety, and frequent iterations. Snack bulk sales penetrate various market levels through rapid and extensive store openings, thereby forming scale effects and achieving profitability. An efficient supply chain is the core value of snack bulk sales, with supply chain management focusing on "flat structure, efficient turnover, and digital collaboration," supporting its high turnover and low-margin business model by streamlining circulation links and enhancing quality control and warehousing logistics efficiency. As of July 2025, the total number of snack bulk sales stores in China has exceeded 40,000, and it is expected to reach 45,000 by the end of 2025. A dual oligopoly pattern has formed in snack bulk sales, with Mingming Hen Mang and Wanchen Group accounting for a combined market share of 75%. Currently, snack bulk sales represent an absolutely concentrated market. The store layout of snack bulk sales is dominated by lower-tier markets, with most stores concentrated in third and fourth-tier cities, where county markets are highly competitive. Additionally, the store layout process in southern regions is ahead, while the layout speed in northern regions is currently accelerating. The profitability of single stores in snack bulk sales varies significantly between first and second-tier cities and third and fourth-tier cities: single-store gross margins are higher in lower-tier cities, but sales volumes are lower; The gross profit margins in first- and second-tier cities are relatively low, but sales indicators such as customer traffic and average transaction value are higher. Risk Warning: More capital is flowing into the snack wholesale sector, leading to intensified competition in this market; the profit margins for snack manufacturers are being squeezed; the valuations of snack channel stocks are relatively high, which may bring about a risk of correction