The Three Squirrels Annual Report: As a casual snack, the core of the Three Squirrels is still to serve consumers with products

For a long time, casual snacks, as the so-called "mental food" in people's daily life, have been favored by consumers of all ages, and casual snacks have also received the title of "fourth meal".
With the deepening of the market and the promotion of consumption upgrades, the snack business has become more and more important to the market, and many leisure snack companies have therefore risen.

A few days ago, the three squirrels, a giant in the leisure snack market, also released their 2020 annual report.
Judging from the financial report, the three squirrels are constantly seeking changes.

Break the vicious circle of "increasing income but not profit"

Break the vicious circle of "increasing income but not profit"

According to the financial report data, the three squirrels realized operating income of 9.

794 billion yuan in 2020, a year-on-year decrease of 3.
72%.
Although revenue declined for the first time, it is worth noting that the net profit of the three squirrels attributable to shareholders of listed companies was 301 million yuan, a year-on-year increase of 26.
21%, indicating that the three squirrels have found a healthy development path.

In addition, the substantial increase in net profit also broke the previous market's doubts about the three squirrels "increasing revenue but not profit".

Based on the performance of previous years, from 2017 to 2019, the revenue of the three squirrels was 5.
554 billion, 7.

The three squirrels have also made a lot of efforts behind the achievement of good results at the profit level in 2020.

First, the layout of online omni-channels.

According to the financial report, the operating income of Tmall flagship store in 2020 was 2.
847 billion yuan, a year-on-year decrease of 27.
63%, while the operating income of Jingdong platform was 1.

In addition to Tmall and JD.

com, the three squirrels also revolved around Pinduoduo and Douyin platforms to achieve a balance between major sectors.
In the future, with the blessing of e-commerce methods such as live e-commerce and short video e-commerce, the online sales channels of the three squirrels will also be more balanced.

Second, the implementation of product optimization.

During the reporting period, the three squirrels adjusted and optimized the product category structure based on data analysis and supply chain efficiency calculations, and cleared and eliminated more than 300 long-tail SKUs.
Not only can it reduce R&D costs, but it can also further improve product quality control, realize the centralization of high-quality products, and contribute to the annual profit.

In 2020, benefiting from the changes in product flow efficiency brought about by the reduction of SKUs, the company's average monthly product turnover rate increased by nearly 20%, and consumer complaints for all categories of quality dropped by 19.
1% year-on-year.

Offline is still the focus of layout

Offline is still the focus of layout

In addition to adjustments in online channels and product control, the three squirrels are also exploring offline markets.

Although it originated in e-commerce, in recent years, the three squirrels have continued to make efforts to offline stores, and seize the offline market through food and alliance stores.
As of the end of the reporting period, the three squirrel food restaurants opened 78 new stores, and 641 new alliance stores opened, and the total number of offline stores exceeded 1,000.

It is worth noting that during the reporting period, offline stores achieved profitability as a whole.

The financial report shows that the contribution of three squirrels' offline business revenue in 2020 has risen from 4.
5% in 2017 to 26%, and it is expected to further rise to 33%-35% in 2021.
There are also many considerations for the layout of the three squirrels in offline channels.

First, the cost of online customer acquisition is getting higher day by day.

As the demographic dividend of the Internet fades, the cost of acquiring traffic has become more expensive, but promotional prices have become lower and lower, and brands have gradually lost their bargaining power, which has also led to a decline in corporate gross profit margins.
However, once the launch cost is reduced, the sales volume will drop accordingly.

Second, the offline market is still vast.
Although the online market is extremely hot, offline channels cannot be underestimated.
According to Frost & Sullivan's forecast, the total retail sales of China's casual snack industry in 2022 will be about 1.
56 trillion yuan, of which offline retail will account for about 83%.
Therefore, the three squirrels are also forward-looking in their offline efforts, which will further increase the overall market share of the company.

Third, diversified channels will be longer-term.
Whether it is Baicaowei, which started online at the same time, or a good product store started offline, it is currently driven by both online and offline channels, which can not only avoid the risks brought by a single channel, but also further stabilize the sales method.
Therefore, the three squirrels optimizing online and expanding offline can also make enterprise development more long-term.

The three squirrels also expressed their hope that the overall revenue structure can be more balanced online and offline, which means that offline is still the focus of the future layout of the three squirrels.

Multi-category search for new additions

Multi-category search for new additions

It is not difficult to see that the three squirrels continue to make efforts in channels, and bring further growth to their products based on channel optimization.
However, it is worth noting that nuts, as the most competitive advantage category of the three squirrel brands, have seen a 10.
93% year-on-year decline in operating income in the 2020 financial report.
This is undoubtedly a bad signal.

It is not difficult to see that the drainage capacity of the three squirrel nut products is declining, and the three squirrels are also affected by a single explosion.

At present, companies such as Qiaqia Foods, Baicaowei, Laiyifen and Liangpin Shop are all accelerating their deployment in the nut field, and they are called the "Top Five Nuts" together with the three squirrels.

Explosive products have short life cycles, high reproducibility, and serious homogeneity, which will also bring a series of industry chaos such as price wars.
In the highly competitive snack food industry, R&D capabilities are an indispensable part for brands to continuously occupy the market and users.
The three squirrels are also aware of this problem, so they continue to work hard on product development.

Today's three squirrels focus on developing new brands, such as entering the baby food, pet food and other race tracks.
At present, they have hatched Xiaolulan and raised a fur boy and other sub-brands.
After nearly half a year of operation, the four sub-brands have achieved a total revenue of 76.
11 million yuan, of which Xiaolulan achieved a revenue of 54.
494 million yuan.

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