Under cyclical pressure, how does Bestore play defense to offense?

Zebra Consumer 任建新

In today's highly competitive environment across all industries, no one can win by lying down.

On the evening of April 25, leading snack company Bestore (603719.SH) disclosed its 2023 annual report: revenue reached 8.046 billion yuan, with net profit attributable to shareholders of 180 million yuan. Despite cyclical pressures, the company managed to stabilize its fundamentals.

The Q1 2024 report released on the same day showed that revenue had returned to growth, increasing 2.79% year-on-year to 2.451 billion yuan. However, due to proactive profit concessions at the retail level, net profit attributable to shareholders fell 57.98% year-on-year to 62.4828 million yuan.

In recent years, the rapid expansion of discount snack stores and fierce price wars at the retail level, coupled with shifting online traffic and the return of rational consumption, have forced snack industry players to re-examine their strategies.

Bestore isn't hiding from these challenges. The company has been making targeted adjustments, avoiding one-dimensional price wars and instead focusing on innovation and differentiation to drive valuable growth.

We shouldn't underestimate the difficulties, nor should we underestimate the resilience of this 18-year-old snack industry leader.

Removing the Bandage to Heal

The trillion-yuan snack market wasn't built in a day. The market shouldn't be dominated only by KAs or brand operators like Bestore and Three Squirrels. Discount snack stores won't be the final model either.

Continuous innovation in models and channels can invigorate the entire industry and expand the market, ultimately benefiting consumers.

As an industry leader, Bestore acknowledges it's going through a "painful" period. While it could simply blame discount snack stores for the impact, the company recognizes that the root cause lies in failing to provide sufficient value to customers. Only by facing these issues head-on can it find effective solutions.

With 18 years in the snack industry, Bestore understands that relentless price competition harms healthy industry development.

Ultimately, competition between companies comes down to supply chains. Only by improving supply chain efficiency can companies offer high-quality products at competitive prices.

Unlike the simple buyer-supplier relationship in discount snack stores, Bestore acts as a brand owner, overseeing the entire supply chain from raw material sourcing and product development to production and sales.

Therefore, Bestore's approach to "squeezing out inefficiencies" differs fundamentally from discount stores. For Bestore, this doesn't mean pressuring suppliers to the limit but achieving cost control through lean management in production and commercial efficiency, making every supplier a participant and beneficiary in cost reduction.

In November 2023, Bestore implemented its largest price adjustment in 17 years, reducing prices on over 300 products by an average of 22%, with maximum cuts reaching 45%.

How can prices drop without sacrificing quality? Take nuts as an example. Previously, Bestore purchased high-grade raw materials at higher costs. The company adjusted its strategy by incorporating bulk nut sourcing into a direct supplier system and implementing grading after market-wide procurement.

For instance, with macadamia nuts, Bestore now sources domestic nuts through joint raw material bases instead of imports. Different grades are used for various products like canned, bagged, or mixed nuts, reducing prices by 5 to 10 yuan per product.

Bestore's popular lightly sweetened mango strips previously involved importing fresh mangoes for domestic processing, resulting in significant wastage. In 2023, the company supported suppliers in establishing overseas processing plants, reducing total costs. As a result, the price of 112g mango strips dropped from 16.9 yuan to 8.9 yuan (39.7 yuan/jin), significantly lower than comparable products in major supermarkets.

As Bestore continues to innovate and improve supply chain efficiency across product lines, consumers will increasingly notice the benefits in retail pricing.

Leveraging Strengths for Growth

Bestore stands out in the snack industry for its balanced online and offline development, a key competitive advantage.

In 2023, Bestore opened 537 new stores in four core provinces, bringing its total offline stores to 3,293, a net increase of 67 year-on-year. Offline channel revenue reached 4.294 billion yuan, up 4.02% year-on-year.

At Bestore's 2024 annual meeting, Chairman and General Manager Yang Yinfen emphasized that physical stores remain the company's most important channel and primary platform for brand promotion.

Going forward, store management, efficiency improvements, and model optimization will remain top priorities. Yang stressed that all channels should align with store products and pricing to prevent internal competition.

Regular customers have already noticed significant changes: new models and products have made stores more youthful and vibrant. Bestore has introduced high-frequency consumables like coffee and short-shelf-life products for specific scenarios, along with seasonal innovations like frozen goods, grilled sausages, and sweet potatoes, boosting average customer spending and sales.

For online traffic, Bestore avoids the industry's typical cash-burning approach, instead leveraging its offline store advantage to build unique models like "city matrix live streaming," "influencer 带货，" and "official account live streaming."

Charting a Different Path

No industry can thrive on low-end and low-price strategies alone—this only leads to unhealthy competition that ultimately harms consumers. Snacks, closely tied to daily life and health, are no exception.

Today's consumers are increasingly rational, demanding snacks that are "delicious," "healthy" (low-burden), "cost-effective," and "emotionally satisfying." Only brands that meet all these needs will survive long-term.

As a brand owner and supply chain leader, Bestore controls the entire process from raw materials to R&D and production, positioning it well to meet these "want-it-all" demands.

In late 2023, Bestore began upgrading products around "good ingredients, good recipes, good taste." From reduced-salt, preservative-free bamboo shoots to non-fried, zero-trans-fat crispy crackers and "nothing added" preserved plums (version 2.0), to 60-day shelf-life, preservative-free toast—these subtle changes reflect years of balancing taste and health.

As a drafter of the "General Requirements for Healthy Snacks," Bestore promotes a "five reductions" philosophy (salt, sugar, fat, oil, additives), focusing on natural ingredients and minimal processing for healthier snacks.

Recently, Shanghai pioneered a "nutrition choice" grading system for beverages, with clear ABCD labels indicating healthiness. Once Shanghai's pilot concludes, this model will likely expand nationwide across the food industry—a trend driven by consumer demand for healthier eating.

Companies must prepare early to seize opportunities in this shift.

With 18 years in the snack industry, Bestore has weathered changes and developed a differentiated competitive edge.

In 2019, tired of endless price wars, Bestore broke free from low-quality, low-price competition to champion high-quality snacks, carving out its own path.

Today, despite cyclical pressures, the company remains committed to premium positioning. Returning to its 初心 of "quality conscience, everyone's store," Bestore aims to win customers through efficiency and "quality-price ratio," ultimately forging its own unique path.