Zhongtai Securities has released a research report indicating that in the short term, leading snack retail chains are showing positive single-store trends with solid and hard-to-shake scale-based competitive barriers. Both profit margin improvements and store expansion potential offer an optimistic foundation. Meanwhile, leading companies are actively iterating new store formats, with continuous internal innovation attempts being implemented. The industry boasts rich incremental directions worth exploring, carrying option value for the successful adoption of new business models. The report recommends focusing on Fujian Wanchen Food Group Co.,Ltd. (300972.SZ) and BUSYMING (01768). Key viewpoints from Zhongtai Securities are as follows:
Overview of the Snack Retail Chain Industry: A Trillion-Yuan Market with Over 50,000 Terminal Stores. In 2024, the retail market size of the leisure snack industry is approximately 37 trillion yuan, with a CAGR of 5.5% from 2019 to 2024. According to Frost & Sullivan data, China's leisure snack industry retail scale grew from 29 trillion yuan in 2019 to 37 trillion yuan in 2024, achieving a CAGR of 5.5% (compared to about 5.2% for the food and beverage sector during the same period). The market continues to expand and is projected to reach 49 trillion yuan by 2029, with a CAGR of 5.8% from 2024 to 2029. By channel, the retail market CAGR for specialty snack store channels reached 14% from 2019 to 2024, with their market share steadily rising to 11%. Specifically, the retail scale of specialty snack store channels in China increased from 218.4 billion yuan in 2019 to 419 billion yuan in 2024, with a CAGR of 14% during this period, significantly higher than the overall leisure snack market. Their proportion grew from 7.6% to 11.2%, and the scale is expected to achieve a CAGR of 11% from 2024 to 2029. Reviewing the development of domestic snack retail chains, the industry has progressed through stages including regional retail trials, cross-regional channel expansion, and advancing both product and efficiency. The current industry structure is relatively stable, with leading enterprises focusing on supply chain integration, SKU optimization, warehousing and logistics efficiency improvements, and refined management of franchise systems, driving the industry from a "fast and extensive" phase towards a stable and high-quality development stage.
Business Model Essence: Efficiency is King, Turnover Leads to Victory. The essence of the retail industry is competition over efficiency, and the snack retail chain sector is an ultimate contest of scale and efficiency. It is driven by full-chain efficiency, uses high turnover as the profit cornerstone, and builds long-term barriers through scale effects and supply chain integration. On the supply chain side, a short-chain direct procurement model is adopted, eliminating multi-level distribution and various miscellaneous fees, resulting in product pricing 20% to 30% lower than traditional channels. Scale expansion brings centralized procurement advantages, and upstream brand owners rely on scaled production to naturally reduce unit costs, achieving a win-win scenario through improved industrial chain efficiency. On the operations side, the core strategy involves curated SKUs and high turnover. Leading players like BUSYMING have over 1,800 SKUs per store and inventory turnover days below 20, significantly outperforming traditional channels. High turnover reduces spoilage and enhances profit efficiency. At the store level, light-asset franchising is the main expansion driver, combined with strong site selection capabilities, providing first-mover advantages and enabling rapid channel penetration and national layout. Currently, terminal retail chain stores exceed 50,000.
Shifting Gears, Journey Unfinished: Medium to Long-Term Potential for Over 40,000 New Stores. A provincial breakdown analysis, using Hunan as a benchmark and considering core variables such as urbanization levels, population density, climate characteristics, and economic foundations, estimates that the snack retail chain industry still has potential for over 40,000 new store openings. From a substitution perspective, under a neutral expectation and considering both business model substitution and channel conversion, it is estimated that existing convenience store and supermarket scenarios could contribute nearly 40,000 potential new store opportunities for the snack retail chain industry.
Risk warnings include potential fluctuations in product quality, volatility in raw material prices, market competition risks, the possibility of information lag or untimely updates in publicly available data used for research reports, risks of third-party data distortion, incomplete map statistics, and deviations in market size estimates.
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