The highest drop of 45%! BESTORE announced that the price of products was reduced, and the new chairman said that he was facing the "problem of whether he could survive";
Reporter: Chen Qing Editor: Wen Duo
On November 30, BESTORE (SH603719, share price 19.38 yuan per share, market value 7.8 billion yuan) announced the largest price reduction for the first time in 17 years, with an average price reduction of 22% and a maximum reduction of 45% for more than 300 products on sale in stores, mainly focusing on snacks with cost optimization but not affecting quality and high repurchase rate.
Yang Yinfen, the company's new chairman and general manager, has only been in office for three days, and it seems that it is no coincidence that BESTORE has continuously announced "change of leadership" and "price reduction" in a short period of time.
A few days ago, Yang Yinfen bluntly said in an open letter to all employees: "At present, what is in front of us is not only the problem of difficult life, but the problem of whether we can live. ”
This year's leisure snack industry is surging, the mass snack industry is gaining momentum, and there are two large number of snack head companies in the near future, Snack is busy and Zhao Yiming Snacks, announced a merger. Industry insiders believe that the price reduction of BESTORE has a certain relationship with the forced downside of mass snack companies.
Yang Yinfen data map Image source: Photo by reporter Chen Qing
"Facing the most difficult challenge since the beginning of the company"
As soon as he took up the post of new chairman and general manager, Yang Yinfen released a big move.
The price reduction of BESTORE is mainly aimed at offline stores. Among them, macadamia nuts, pine nuts, pistachios, cashew nuts and other nuts, meat snacks such as pork jerky, duck neck, grilled sausages, spicy strips, dried tofu, bread cakes, melon seeds and other categories with high repurchase rates are the main force for price reduction.
For a long time, BESTORE has adhered to the positioning of high-end snacks. Shen Meng, director of Xiangsong Capital, analyzed in an interview with the reporter of "Daily Economic News" that the reason for the price reduction may lie in the adjustment of the consumption structure and the downward movement of consumer demand, forcing enterprises to respond to market changes by reducing prices, otherwise they may lose their share.
Zhu Danpeng, an analyst of China's food industry, also believes that due to factors such as the macro economic environment and the lack of confidence on the consumer side, China's leisure snacks have entered a parity cycle, and the strategic adjustment of BESTORE is more timely.
On November 29, Yang Yinfen issued an open letter to all employees. According to the open letter obtained by the reporter of "Daily Economic News", Yang Yinfen analyzed the three reasons for the price reduction:
In terms of industry, online consumption traffic has shifted, competition has intensified, various offline snack models have blossomed, and a series of "new species" have emerged;
In terms of users, consumption has entered a rational era. In addition, the letter reads: "The reality that consumers think we are 'expensive' also shows that our products must be more affordable. ”
On its own side, the company has been developing for 17 years, and the organization is bloated, people are superfluous, and bureaucracy and self-centeredness have emerged. Externally, it is the sluggish development and the decline in scale and profitability.
"It's changing both internally and externally. Family, why do we have to stay the same?" Yang Yinfen said bluntly in the open letter.
Yang Yinfen also said: "I said in August this year that the 17-year-old Liangpin is facing the most difficult challenge since its establishment. At present, this challenge is still intensifying, and in order to stand out from the encirclement, Liangpin must be like a high-flying eagle, 'fading' from aging and regaining its life. ”
In fact, the current performance of BESTORE has fallen into a bottleneck. In the first three quarters of this year, BESTORE achieved operating income of 5.999 billion yuan, a year-on-year decrease of 14.33%, and net profit attributable to the parent company of 191 million yuan, a year-on-year decrease of 33.43%.
Image source: Picture of each classic
"It is a different development path from mass selling snacks"
For the food industry, product quality and safety are the lifeblood of enterprises.
Yang Yinfen said in the open letter that the company must adhere to the development route of high-quality snacks, but the company should carry out a new thinking on "quality" from the perspective of consumers.
"We are taking a differentiated path, which is essentially a different development path from mass selling snacks. He said.
In this regard, Shen Meng's analysis believes that the cost of enterprise price reduction, generally speaking, is partly to compress its own revenue space, partly to optimize its own cost structure, and a considerable part is to squeeze the supplier's income.
At present, the reason why the sales price of the product terminal is relatively cheap is that the very important reason for the rapid momentum of mass snack enterprises is to establish a procurement advantage in the supply chain. So, what is the difference between BESTORE's current strategy and that of mass snack companies, and where will they start to "cut costs"?
The reporter of "Daily Economic News" noticed that the leisure snack industry is not a high gross profit margin industry. According to BESTORE's 2022 annual report, the gross profit margin of the company's main business is 27.67%.
BESTORE said that the room for this price reduction comes from measures such as improving the efficiency of the supply chain, improving lean production, optimizing operating costs, and introducing a red line for gross profit. "Cut" to the inside of the enterprise to cover the needs of more consumers.
Yang Yinfen said that BESTORE and mass-selling snacks are two completely different species. BESTORE adheres to the logic of channels and products, and has established a long supply chain that directly traces the origin of raw materials, and the company should design packaging, research and development, and formulate product quality standards, which is determined by the company's self-operated model.
Therefore, the two have formed a completely different price logic, and the methods of "squeezing water" from the supply chain are also different. For BESTORE, "squeezing water" is not the limit of squeezing suppliers, but is completed through lean management in terms of cost control, production efficiency, business efficiency, etc., so that every supplier in the industrial chain can become a participant, contributor and beneficiary of cost reduction and efficiency increase.
Image source: Picture of each classic
Is a new round of "price war" coming?
BESTORE's price reduction has become the "headline" of today's leisure snack industry. What impact will this have on the industry?
The reporter of "Daily Economic News" noticed that another major news in the leisure snack industry in November was that the head mass snack company Snack was very busy and merged with Zhao Yiming Snacks.
Regarding the above-mentioned merger, Founder Securities has analyzed that there has been a trend of price war in the snack industry before, and the accelerated integration of head brands is conducive to shaping a benign industry competition pattern.
Mass sales of snack products have always been known for their high cost performance, and now, with BESTORE reducing prices, will the price advantage of mass sales snacks be weakened, and will the industry pattern also undergo new changes?
Not only the mass snack companies, but also the reactions of other leisure snack companies have also attracted attention.
According to media reports, Baicaowei said that there is no similar price reduction action at present.
It is also reported that the three squirrels (SZ300783, share price of 18.82 yuan, market value of 7.547 billion yuan) said that the company has been implementing the "high-end cost-effective" strategy for a long time this year, through supply chain integration and strengthening internal management to improve quality and reduce prices, and maintain the terminal price at a benign level under the premise of ensuring basic profits, and will continue to promote in the future.
Image source: Picture of each classic
Previous reports show that the three squirrels have actually implemented the "high-end cost-effective" strategy. When it comes to the future of the snack industry, the company recently mentioned in its reply that "it is delicious and inexpensive", "the snack industry has broad development space and opportunities, and the consumer demand for delicious and inexpensive food has promoted a great change in the global supply and demand relationship".
According to Shen Meng's analysis, the price reduction of enterprises with higher pricing will squeeze the space of enterprises with lower pricing, forcing enterprises with lower pricing to also reduce prices to maintain consumers. The temporary competitive advantage formed by price reduction will put pressure on other homogeneous competing products, and other brands must follow up with price reductions if they lack sufficient differentiation.
Zhu Danpeng also believes that with the decline in the price of the head brand, the entire industry may be affected, and everyone may compete to reduce costs and increase efficiency in the future. He said that as for how to better achieve cost reduction and optimization, it is suggested that it can be achieved through the optimization of the supply chain and the improvement of store operation efficiency.
National Business Daily