Advertising and marketing "turn over", revenue declines, market value evaporates
When will the three squirrels get out of the cold winter?
Recently, the "Three Squirrels Advertisement" once again sparked controversy among netizens.
Some netizens pointed out that the images of the two teenagers wearing red scarves in the advertisements for the "331 Supplementing Brain Festival" previously released by the three squirrels were not compliant, and the relevant information of the Young Pioneers could not be used in advertisements.
Subsequently, the official Weibo of the three squirrels issued a letter of apology for this.
This can be described as "a wave of unrest and another wave".
Not long ago, the three squirrels were accused of deliberately demonizing the Chinese people because of the squinted eyes and thick lips of the advertising model for hot and sour powder products.
The three squirrels that advertised "overturning" twice in ten days were also exposed to high promotion costs and frequent food safety problems.
With sluggish growth, declining reputation, and frequent reductions in major shareholders, when will the three squirrels, the “first share of national snacks” emerge from the cold winter?
Traffic peaked, revenue declined
The three squirrels first started online.
In 2012, the three squirrels participated in the "Double 11" for the first time, and achieved the top spot in the Tmall category with sales of 7.66 million yuan.
Over the past ten years, the three squirrels have spread across multiple online channels, and the results are still impressive.
In 2021 Double 11, the three squirrels achieved ten consecutive sales of nut snacks.
However, behind this are high platform service fees and promotion fees.
The financial report shows that the sales expense ratio of the three squirrels has remained high.
From 2019 to 2020, the platform service fees and promotion fees of the three squirrels have continued to grow, reaching 660 million yuan and 961 million yuan respectively, an increase of 67.94% and 45.61% year-on-year.
The three squirrels that made their fortunes online are now struggling to move towards offline channels.
At the 2021 Tianjin Autumn Sugar and Wine Fair, the three squirrels announced in a high profile that they would focus on offline distribution channels and put forward the goal of "recreating a tens of billions of distribution in the next five years".
The three squirrels will open directly-operated stores and gradually open to franchise, launching alliance stores.
Pushing offline has always been the wish of "Papa Squirrel". Two years ago, Zhang Liaoyuan, the founder of the Three Squirrels, called out the slogan of five years and ten thousand stores.
According to his statement at the time, by 2020, the three squirrels will open 1,000 offline stores, however, as of the end of June 2021, the number of offline retail stores of the three squirrels is only 1,104.
In a blink of an eye, there is a new "five-year plan". Can the three squirrels achieve their goals this time?
In fact, seizing the offline distribution market is bound to be a tough battle.
Qiaqia Food, Yanjin Shop and Baicaowei have been deployed for many years.
Qiaqia Foods also proposed a nut brand upgrade strategy in July 2021. Its founder Chen Xianbao said bluntly: "We must be all in, and Qiaqia's Daily Nuts will be the number one in the industry as soon as possible."
To make up for the shortcomings of offline channels, you have to pay real money, which will drag down the earnings data to a certain extent.
For the three squirrels, revenue and profit are inexorable fish and bear's paws.
From 2016 to 2020, the three squirrels achieved revenues of 4.423 billion yuan, 5.554 billion yuan, 7.01 billion yuan, 10.173 billion yuan and 9.794 billion yuan, respectively, and attributable net profits were 237 million yuan, 302 million yuan, and 304 million yuan respectively. , 239 million yuan and 301 million yuan.
In five years, the scale of revenue has doubled, but the overall increase in net profit is not large, and the overall trend of increasing revenue is not increasing.
Although the profit situation has improved in 2021, revenue has declined.
The 2021 third quarter report of Three Squirrels shows that the company achieved operating income of 7.07 billion yuan in the first three quarters, down 2.23% year-on-year, and realized attributable net profit of 442 million yuan, an increase of 67.35% year-on-year.
In this context, the market has concerns about the growth of enterprises.
Prior to this, today's capital, IDG and Ruifeng Capital's funds have reduced their holdings of the company's shares in a large proportion to cash out.
In the future, I wonder if investors will give the three squirrels enough confidence and patience.
The foundry model has been "faced" frequently
Food safety issues have also plagued the three squirrels.
In recent years, the three squirrels have been complained by consumers many times and have been notified of quality problems by the regulatory authorities.
On November 12, 2021, Weibo netizen @三千天真 posted on Weibo saying that the nuts of the three squirrels he bought in the Wei Ya live broadcast room deteriorated and moldy every day.
The next day, another netizen complained on Weibo that the three squirrels torn bread bought by Tmall Supermarket were "exactly moldy."
On November 15th, the three squirrels responded to the matter and stated that they had already paid the consumers in advance, and the ultimate cause is under investigation. Carry out a comprehensive investigation on the transfer and sales links."
This is not an isolated case. In terms of complaints from black cats, the three squirrels have a large number of complaints concerning food safety and quality.
Industry analysts pointed out that this is related to its C2M production model.
In this mode, the three squirrels only need to integrate the resources of the foundry, and the alliance factory will produce and process according to the product standard, and then carry out the OEM.
China’s food industry analyst Zhu Danpeng believes that the root cause of the three squirrels’ frequent public turmoil in recent years lies in the "OEM + OEM" production model. Most of their OEMs are small companies with low quality control and other aspects, and product problems. Frequently appear.
He further analyzed that the business thinking of the three squirrels is to use the asset-light operating model to avoid asset-heavy operating risks, and the starting point for reducing costs is understandable. However, the foundry model is easy to lose control of food safety management, and companies cannot focus on the production process.
To this end, the three squirrels officially launched the alliance factory project in August 2020, and plans to enter trial production before the end of 2021.
The alliance factory can be interpreted as a compromise between "self-built factory" and "foundry factory".
But in fact the relevant details have not been announced.
Under this innovative approach, it remains to be seen whether the three squirrels can balance light asset operation and product quality control.
When will the "highlight moment" come again
Weilong, who dominated the childhood of the "post-90s", is preparing to go public, with a valuation of more than 60 billion yuan.
This allows investors to see the huge value space behind a small piece of snacks.
In fact, the leisure snack industry has a bright future.
According to the Frost & Sullivan Report, in terms of retail sales, the market size of China's snack food industry in 2020 will be 774.9 billion yuan, with a compound annual growth rate of 6.6% from 2015 to 2020.
Driven by factors such as the growth of residents' disposable income, the acceleration of urbanization, the increasingly enriched consumption scenes, the continuous emergence of innovative products and the continuous improvement of retail channels, the Chinese snack food market will continue to grow, with a compound annual growth rate expected from 2020 to 2025 Will reach 7.3%.
In terms of retail sales, the market size of China's snack food industry is expected to reach one trillion yuan in 2025.
However, despite the existence of the three squirrels, Baicaoyuan and Liangpinshop, the market structure is still very fragmented.
Calculated by retail sales, the market share of China's top 15 snack food companies in 2020 is 22.4%, and CR5 is only 10%.
This is mainly due to the low threshold of the snack food industry. Once there are explosive products, their counterparts will soon follow up, and the phenomenon of product homogeneity is serious.
The most typical example is the "Daily Nuts" that are sold in almost every store today.
On the whole, the overall gross profit rate of the industry is relatively low, only 30%-40%.
Food brands such as Wang Baobao, A1 Snack Lab, and Shizuren have successively obtained financing, and new brands are constantly emerging.
In the future, if the three squirrels want to remain at the top of the "Double 11" list, they will have to use their own R&D advantages to introduce snack foods that conform to market demand and open up new growth points in order to enhance the industry's competitiveness and market position.
Nanfang Daily Trainee reporter Huang Xiaoyun
Reporter Zhao Binghui