Wen | AI Finance and Economics Agency Chen Rice Grain
Editor| Yang Jie
Because of the "food safety" problem, the three squirrels annoyed their "masters".
A few days ago, some consumers complained on Weibo that during the "Double Eleven" period, the "three squirrels" nut products ordered through the live broadcast room of the head anchor Wei Ya had deteriorated and moldy problems. But in her feedback, "the merchant did not admit that the spoiled nuts that had been opened could not be used as evidence and could not be compensated under the food safety law."
After the matter was exposed, it quickly attracted a lot of attention. On November 15, three squirrels contacted the parties to say that they would pay 1,000 yuan in compensation in accordance with the Food Safety Law, and the parties would send all the remaining unopened nuts back for testing.
But the consumer later said on Weibo that the compensation payment had been received, but it asked the three squirrels to disclose the test results to the public and promised future improvement work, and the three squirrels still did not give a positive answer.
Affected by this incident, the stock price of the three squirrels has continued to decline since November 15, and by the close of trading on November 20, the stock price of the three squirrels closed at 36.89 yuan, down 4.6%.
The three squirrels of the "snack porter" are trapped in their own OEM and e-commerce models.
After the end of "Double Eleven", Three Squirrels just announced that during this year's "Double Eleven", the company ranked first in sales in 14 core and new e-commerce channels including Tmall, JD.com, Douyin, Kuaishou, Vipshop, etc., of which the sales share of the daily nut products of the three squirrels on the Tmall platform was as high as 48%.
But on the second day of this "record" release, three squirrels suffered complaints. The complaining consumer said that during the "Double Eleven" period, he ordered a full box of 30 packs of three squirrel nut products through Via's live broadcast room, and paid the final payment on November 1, spending a total of 62.78 yuan. "It's a good deal, and they ship pretty fast." The consumer said. On November 4, she received the nut product, which shows a production date of October 18, 2021 and a shelf life of 6 months.
On the evening of November 11, the user opened a pack of nuts, but after disassembling it, he found that some of the nuts were visibly covered with a white moldy substance. However, it said that when he took a photo and sent it to the customer service of the three squirrel flagship stores for processing at the first time, the other party claimed that "the opened bag product cannot be used as evidence, if you send the remaining unopened nuts back, we can pay the amount of compensation according to the order." If you want to compensate according to the Food Safety Law, you need to identify at your own expense that there is indeed a problem before you can make compensation. ”
(Photo/Weibo screenshot)
The consumer who complained said that the official customer service staff of the three squirrels was very tough at the beginning, saying that "we know more about the food safety law than you, and the nuts that have been opened cannot be used as evidence, not that you say that you will lose money." Therefore, she chose to expose her unpleasant shopping experience on Weibo.
Three Squirrels is a "popular" brand in the snack zero food category, and its large single "Daily Nuts" product is even more deeply rooted in the hearts of the people. "But can this be a big bully?" The aforementioned consumers said angrily.
In addition to the three squirrels, in recent years, snack brands such as "net red" good shops, herbs flavor, and Laiyifen have gradually become well known to consumers through "touching the net". But "I didn't expect such a big brand, the quality can not be guaranteed", the above-mentioned parties speculated that the nut deterioration may be because the packaging seal was not done well, but in the face of the problems in the product, the three squirrels have been avoiding responsibility. She said that things quickly fermented, and the user said that he only received the treatment of three squirrels after that, "suddenly changed his attitude and took the initiative to pay."
But for the three squirrels, the "misfortune is not alone" is that on November 13, another Weibo netizen also posted that the three squirrels they bought at the Tmall supermarket also had moldy situations.
On social platforms, enter keywords such as "three squirrels" and "food quality", and a variety of complaints will appear. Problems include moldy bread, swollen duck necks, and hand-peeling of badan wood to eat eggs. AI Finance and Economics found that on the black cat complaint platform, the number of food quality and safety-related complaints of the three squirrels is also more than that of brands such as BaicaoWei and Liangpin Shop, a total of 1122.
In the face of the frequent food safety problems of the three squirrels, in the comments of netizens, there is a spearhead pointing directly at its "foundry mode": "It is not surprising at all, it does not have a production line, how does it engage in quality control?" ”
Three Squirrels was founded in 2012, and in the early days of its establishment, it had the title of "porter who does not produce snacks, but only snacks". In the annual report, it has introduced that it develops products through consumer data research, delivers them to foundries for production, and finally enters the sales link. Its common nuts, dried fruits and other products that need to be fried, freeze-dried and other intermediate processing technology are purchased by the cooperative alliance factory, and the intermediate process is produced and processed according to the company's requirements, and finally handed over to the company for quality inspection, product screening and packaging.
With the "OEM model" to start the snack brand more than three squirrels, the difference is that the three squirrels as the first generation of "Tao brand", relying on e-commerce dividends, at the beginning of the establishment of the Tmall "double 11 nuts zero food category" sales champion, since then the fame.
In those years, with the increase in per capita income and the continuous upgrading of consumption in China, the scale of the nut food market has steadily increased, gradually becoming the second largest category in the scale of leisure food, and consumer demand has increased significantly. However, at that time, most of the nuts on the market were mainly individual retail, and the brand concentration was not high, even if there were sporadic brands such as good shops, Qiaqia food, etc., most of them started offline, limited by geographical restrictions and thus the volume was not large.
The "asset-light" model of OEM has saved a lot of investment for three squirrels in the early days of its establishment. At the same time, taking advantage of the east wind of Internet marketing expansion, Three Squirrels became the first batch of "snack Taobao brands" to grow up with Taobao, quickly occupying the market and becoming the leader in the field of nut e-commerce segmentation.
Driven by the strong brand power, the revenue scale of the three squirrels has also increased year by year. But the product quality problems of the three squirrels also followed.
In 2017, the State Food and Drug Administration issued a relevant sampling report saying that three squirrel pistachios were detected to exceed the mold standard by 1.8 times and were fined 50,000 yuan. Later, before the "315" in 2019, the three squirrels were exposed to problems such as flies in bread and rotten labels in pistachios.
Food safety issues also almost missed the "big thing" of the three squirrels. In 2017 and 2018, the three squirrels submitted IPO reviews to the CSRC several times, but all of them ended in "terminating the review". According to Zhu Danpeng, an analyst in the Chinese food industry, the key to its multiple IPOs is the repeated food safety problems.
Until July 2019, three squirrels were listed on the Gem, raising a total of 602 million yuan. According to the prospectus, the company's net profit in the past five years before the listing reached a total of 1.4 billion yuan. However, the company did not pay attention to changing the OEM production model, but focused on sales and the establishment of logistics systems.
After the three squirrels successfully landed on the capital market, the problem of product quality control has still not been solved. Since October last year, according to reports, three batches of products such as squirrels with original crisp potatoes and open pine nuts have been found to be carcinogens and peroxide values exceeding the standard, and the company has taken conventional methods such as recalling unqualified products, expressing willingness to take responsibility and rectifying them each time.
Three squirrels have also tried how to improve quality control capabilities. In 2014, the three squirrels passed the ISO9001 quality management system and HACCP certification; in addition, from 2019, it also tried to change this situation by building an "alliance factory", and said that after the completion of the alliance factory, the company will achieve a full range of product quality control from the raw material end to the processing link to the finished product testing.
But in any case, in the OEM mode, the production link is not controlled by the hands of three squirrels, and its efforts to control product quality are always "beyond the reach of the whip". However, the resulting product quality complaints must all be paid by the "three squirrels" brand.
Food safety issues are undoubtedly the "bottom line" of food companies. If it is uncontrollable, the brand image that the three squirrels originally established with the e-commerce dividend will also be greatly affected.
At the same time, because the production discourse power of the product is not in the hands of the three squirrels, from the cost of raw materials to the cost of labor, etc., are determined by the foundry, which also means that the three squirrels cannot control the production cost of the product.
OEM production is a "double-edged sword" that hangs over the heads of three squirrels.
In recent years, the foundries behind the brand have gradually come to the front of the stage and begun to build their own brands. Compared with the high premium of big brands such as three squirrels and good shops, the foundry's own brand products are more cost-effective, but the taste is almost no different. On various social platforms, you can search for discussions about big-name snack foundries.
As a result, new problems have also arisen: with the frequent occurrence of product quality problems, once the brand power weakens, why should consumers spoil the "three squirrels"?
Compared with the unlimited scenery when it was first listed in 2019, although today's three squirrels are still the leaders in the leisure snack industry, their performance in the capital market has been eclipsed. In May 2020, the highest peak of the stock price of the three squirrels reached 91.09 yuan, and the total market value was as high as 36.5 billion yuan. Today, the company's stock price is less than half of its peak, and the total market value is only 14.8 billion yuan.
In the past, with the development of the Internet and the rise of e-commerce, the revenue scale of the three squirrels continued to expand, but with the slowdown in the growth of online traffic, the cost of customer acquisition increased accordingly, and the company increased the drainage efforts to ensure the steady growth of revenue, while increasing the drainage efforts, the profit suffered a certain impact. Since 2018, the three squirrels have begun to fall into the strange circle of "increasing income without increasing profits". The following year, the company's revenue exceeded the 10 billion mark, and under the bright 45% year-on-year increase in revenue, the net profit was less than 250 million yuan, down 21% year-on-year.
An epidemic in 2020 is good for online brands such as three squirrels to a certain extent, but it has long been trapped in the thinking of the e-commerce model, which has also laid hidden dangers for the future growth of three squirrels.
According to the 2021 semi-annual report of Three Squirrels, in the first half of this year, its operating income on the third-party e-commerce platform accounted for 70% of the total revenue. The e-commerce channel still determines the revenue status of the three squirrels.
At the same time, the promotion fee and platform service fee of the three squirrels are also growing. In 2018 and 2019, the expenses of this part of the three squirrels were 393 million yuan and 660 million yuan, an increase of 36.93% and 67.94% respectively year-on-year. In the first half of this year, this figure has reached 721 million yuan. The cost of "buying traffic" is becoming more and more expensive, compared to the net profit of three squirrels in the first half of the year was only 352 million yuan.
After the listing, the three squirrels have successively suffered from major shareholders such as IDG and Today Capital. Among them, today's capital shot earlier, in the second half of 2020, it reduced its holdings of 2.4% of the company's shares through centralized auction transactions and block transactions, about 550 million yuan; IDG reduction mainly occurred in the past half a year, accumulatively reducing the 3.4% equity of three squirrels, cashing out 650 million yuan.
The departure of big capital has caused panic among investors. They are concerned about how the three squirrels will go up to a higher level after the revenue broke through the 10 billion yuan in 2019; but in recent years, the company's continuous efforts offline and brand expansion seem to have not been able to see hope for them.
In 2016, after Ali proposed the concept of "new retail", Zhang Liaoyuan, founder and CEO of Three Squirrels, tried to open the first offline store in Wuhu, Anhui, the "base camp" of Three Squirrels. The first offline store of the three squirrels covers an area of 300 square meters, with an average daily sales of 150,000 yuan at the highest time, 50,000 people entering the store in a week, and achieving sales of 2.4 million yuan in one month after opening. However, the revenue miracle of the first store of the three squirrels has not been perfectly copied in other stores.
Initially, Zhang Liaoyuan proposed the online and offline "same price" strategy, that is, offline physical store categories and SKUs completely copied the online design. But this also means that offline stores have to bear high store rents and labor management costs under the same product price standards as online channels. In addition, in order to support offline store sales, the three squirrels began to expand multiple categories, "2017-2019, the SKUs of the three squirrels reached nearly 800 from the initial 200 or so." According to a three-squirrel employee told AI Finance and Economics, the company's multi-category SKUs were not supplemented by fine operation and management, and finally the three squirrels still did not get rid of the state of "increasing revenue and not increasing profits".
It is understood that as of October 2018, there are only 45 three squirrel direct-operated stores (feeding stores). In the same period, the number of offline stores of brands such as Good Shop and Laiyifen has exceeded 2,000.
With the gradual peak of the e-commerce dividend, as well as the brands that were deeply rooted in the line in the early years such as good shops and cha-cha food, they are also actively moving closer to the Internet, and the three squirrels have also felt the pressure of competition. In 2018, the three squirrels decided to open the franchise model, that is, to open an alliance squirrel store, accelerate offline expansion, and boast of "helping young people start businesses, so that there is no difficult snack shop in the world". However, some peers said that the three squirrels did not let go of the offline store until the end of 2018, "or a little late."
In 2020, despite the impact of the epidemic, the three squirrels still did not give up the pace of expanding stores. According to its financial report for that year, throughout 2020, the three squirrels opened 78 new feeding stores, a total of 171 as of the end of the period; the alliance small stores opened 641, a total of 872 at the end of the period. The three squirrels basically completed Zhang Liaoyuan's original plan to "open more than 1,000 stores in 2020".
At the same time, the three squirrels began to promote "weight loss and muscle gain", reduced nearly 300 SKUs in one go, and returned to the "nut dried fruit + selected snacks" as the main product, focusing on brand building.
The product focus strategy has improved the efficiency of the company's supply chain operations, and the gross profit margin of the company's individual products, including nuts and meat products, has also begun to improve. Under this influence, the net profit of the three squirrels in the first three quarters of 2021 has rebounded, but the revenue in the first three quarters has dropped by 2.23% year-on-year, and the company has begun to fall into the embarrassing situation of "increasing profits but not increasing income".
Offline stores, especially alliance stores, have expanded rapidly, but the company's revenue has not been improved, and the current offline expansion model of the three squirrels seems to have encountered a bottleneck.
AI Finance and Economics found that the three squirrel stores in Beijing's Chaoyang Joy City, only two months after opening in September 2021, were in the process of closing for reasons such as "poor operation".
"If you really want to join, you should be cautious, and it is best not to open too much in the beginning." The above-mentioned employees also gave a more conservative suggestion to those who want to join, "Now that the epidemic is repeated, the sales impact on offline stores is still very large, and the price of products in franchised stores is generally higher than that of direct sales, unless you talk more about corporate group buying business, it is difficult to survive." ”
After nine years of development, the three squirrels that originated online are working hard to lay out new offline distribution, hoping to "recreate another 10 billion in 5 years". But today, it seems that it is not easy to achieve this goal.
In addition to offline expansion, Three Squirrels is also actively seeking growth through the development of new brands, launching a children's food brand "Fawn Blue Blue" that provides nutritional supplements and baby and child snacks for 6 months to 14 years old, and a pet food brand that provides special pets for different breeds of pets. However, compared with the nut track with scattered brands in the past, today's children's food track and pet food track are fiercely competitive, and they still face the threat of many international big names, which still need a certain amount of time to grow and experience market verification.
What makes consumers more worried is that now the three squirrel main brands frequently expose food safety problems, and the supply chain control capabilities and the shortcomings of the processing model reflected behind them will not also appear in the "deer blue blue" and "raising a hairy child" brands in the future. This is really difficult to reassure the owners of the mothers and pets.
It is worth noting that in June this year, three squirrels were exposed to the former logistics staff general staff with others, embezzling the company's waste cartons to make a profit of nearly 700,000 yuan, which also triggered a hot discussion on the Internet. Behind this, three squirrels are also facing management and internal control pressure.
The three squirrels trapped in the "food safety" problem and the e-commerce model have a long way to go if they want to stabilize the pattern of their leisure snack industry leaders.
This article is originally produced by AI Finance and Economics, an account of Caijing Tianxia Weekly, without permission, please do not reprint it on any channel or platform. Violators will be prosecuted.