() The operating comments of the Board of Directors in 2023 are as follows:
I. Discussion and analysis of business conditions
In 2023, faced with the complex situation of global economic recovery and the urgent need to boost domestic consumer demand, the Chinese government adopted a series of accurate and effective policies and measures, which effectively promoted the recovery of the consumer market. In 2023, the total retail sales of social consumer goods in China was 47.15 trillion yuan, a year-on-year increase of 7.2%; The contribution of final consumption to expenditure and economic growth reached 82.5%, which became the main driving force of economic growth. For leisure and snack enterprises, 2023 is a year connecting the past with the future, and market products and channel innovations emerge one after another. After experiencing the rapid expansion of channel brands, the industry will enter the stage of intensive cultivation, which also puts forward higher requirements for snack enterprises to find a correct strategic direction and seize development opportunities.
1. The snack food industry has great potential and broad development space.
Leisure food is the food that consumers eat in leisure and rest, which has the characteristics of wide coverage, rich consumption scenes, long user life cycle, low customer unit price and high consumption frequency. According to the latest data from China Commercial Industry Research Institute, the market size of leisure snacks in China was 928.6 billion yuan in 2023, and it is estimated that the market size will exceed one trillion yuan in 2024. In terms of consumption, the per capita consumption of leisure snacks in China is only 1/2 of the global average, 1/3 of Japan and 1/5 of the United States, and the market space is broad. Because the entry threshold of snack food industry is relatively low, there are many industry participants and new players appear constantly, and the brand concentration is low, showing a completely competitive market state. With the increasing market competition, enterprises with advantages in brand, channel, product and supply chain will be able to adapt to consumer demand and occupy a competitive advantage position.
2. Offline stores are the main circulation channel of snack food and the main position to form brand mind.
According to the data of Euromonitor International in 2023, offline channels account for 82.6% of the circulation share of snack foods, and modern channels such as snack specialty stores and convenience stores continue to occupy the market share of traditional couples’ stores, and the trend of channel upgrading continues; Online channels accounted for about 17.4%, the growth of traditional e-commerce platforms slowed down, and online traffic shifted to high-quality products and content-based e-commerce platforms. Because snack food has the characteristics of impulse buying and what you see is what you get, whether it can be seen and bought everywhere has become an important factor for brands to attract consumers. In recent years, convenience stores and snack discount stores, which mainly serve community users, have achieved rapid growth with richer products, better consumption experience and higher cost performance, and become an important force to promote the development of the snack industry. Close to consumers, opening stores intensively around target consumer groups, providing consumers with convenient, diverse and high-quality products and experiences, has become an important driving force for the growth of offline stores.
3. Generation Z has become the main consumer, and brand rejuvenation is the inevitable choice for snack food brands.
Generation Z is becoming the main consumer of snack food. According to the data of the seventh census, there are 223 million people born after 1980s, 210 million people born after 1990s and 163 million people born after 00 in China. Among them, the total number of generation Z is about 260 million, accounting for about 19% of the total population. Generation Z consumers have stronger spending power, more diversified and personalized consumer demand, and are more easily influenced by social media. From the perspective of consumption preference, delicious taste, safety and health, cost performance, brand, functional components and packaging value are the most important factors for young consumers to consider when purchasing snack food. To satisfy more critical and changeable young consumers, it is the basic action to maintain high quality and high value in products, and to impress young consumers and satisfy emotional value in expression and communication.
4. Consumers’ demand for snack foods is diversified, and high quality and health are long-term and sustainable needs.
On the whole, consumers’ demand for snack food with good ingredients, good taste, low burden, nutrition, freshness and face is widespread and increasing continuously. In the leisure snack industry facing the whole country and the whole customer group, the differences of consumers’ consumption preferences also exist objectively. Low sugar, low salt, low fat and no additives have become the necessary options for most family consumers, but the mixed flavor, stimulating taste and novel taste are deeply loved by young consumers, and it is the common demand of most consumers that they are convenient to buy, economical and diverse. Facing the increasing diversified demand, snack food enterprises must develop products accurately according to the diversified demand, form a diversified product matrix, and pass on the value to consumers in the most efficient way. No matter how the consumer demand changes, higher requirements for product quality and making consumers eat healthier are always the most basic guidelines for the brand management of leisure snacks.
During the reporting period, the company’s operating measures are as follows:
1. Continuously optimize the omni-channel layout around consumer demand.
(1) Store business focuses on single store promotion: amplifying brand value and market competitiveness.
In 2023, the store business actively expanded cooperation with local life platforms, such as Tik Tok and Meituan, aiming at expanding market coverage and improving business capabilities. By establishing diversified marketing models, including "city matrix live broadcast", "talent with goods" and "official number live broadcast", the store business has effectively improved the efficiency of product promotion and enhanced the ability to attract customers into the store.
The store business adheres to the price strategy of "good goods are not expensive". By lowering the prices of more than 300 products and setting up characteristic display areas in the store, the market competitiveness of products has been enhanced. At the same time, through the continuous promotion of WeChat private domain and local life platform, the store business has achieved significant growth in sales of various single products.
At the same time, the store business continues to explore new category models and pilot fresh and short-term snacks in stores to better meet the diversified needs of customers. In addition, through the seasonal introduction of ready-to-eat frozen products and freshly baked foods, such as frozen durian, frozen chestnut, frozen bayberry, etc., the customer unit price and sales of the store in the current season have been effectively improved.
The company’s store business has made positive progress in improving product value, improving consumers’ cognition and meeting customers’ differentiated product needs, and the number of customers has steadily increased year-on-year.
(2) E-commerce business restructuring business competitiveness: focusing on product innovation, new channel development and user stickiness improvement.
In 2023, the company actively adjusted its online business strategy, and rebuilt the new competitiveness of e-commerce business development by optimizing product structure, enhancing user experience and strengthening marketing innovation. And continue to tap the user’s scene demand, innovate all kinds of scene product portfolio sales programs, focus on the user’s consumption demand for "nature, health and nutrition", and actively market and promote products with "clean formula and rich nutritional elements". By accurately matching the needs of users, the company successfully achieved a breakthrough in the sales scale of scene combination products; At the same time, the light-weight series products with 0 addition and 0 sugar have also been favored by consumers. The company has further strengthened cooperation with emerging e-commerce, actively expanded new e-commerce channels, and achieved rapid growth in sales scale on real-time retail platforms such as Meituan, Pupu and Yonghui. On the social e-commerce platform, the company makes full use of the content creation ability of platform experts to interact and communicate with consumers through short videos, live broadcasts and other forms, effectively enhancing brand awareness and user stickiness.
Looking forward to the future, the company’s e-commerce business will continue to maintain the trend of innovation and development, strengthen the research on the purchase scenarios and behavior habits of users on various platforms, and provide natural and healthy snacks for users’ various consumption scenarios around the new trend of consumers pursuing natural and healthy consumption; Strengthen the integration of (), improve the marketing efficiency of customer acquisition and reduce the cost of customer acquisition through omni-channel integrated marketing; Strengthen the application of new AI technology in product content creation, innovate the content quality of product "page, video and live broadcast", and improve the user’s shopping experience.
(3) Broad performance prospects for group buying business: channel expansion and New Year Festival marketing promote sales profit growth.
In terms of distribution channels for group buying gifts, the company has established a wide network covering five strategic regions, namely Central China, South China, North China, West China and East China, providing services to agents in 42 cities across the country. The company’s group purchase products and services are widely used in various scenarios such as employee welfare, business gifts and high-end club entertainment in terminal enterprises. Aiming at different user groups, the company has formulated and implemented accurate marketing promotion strategies, and won wide recognition from customers in the industry by providing high-quality products with high cost performance and differentiation and a perfect marketing system. These efforts have significantly enhanced the company’s brand image and market reputation, and further consolidated its leading position in the group buying gift market.
During the New Year Festival in 2024, the company further expanded the super-customer network of distributors in Northeast China, North China and Northwest China, and actively explored and implemented diversified marketing strategies for gift box products. In close cooperation with major supermarkets, the company not only enriches the sales channels of products, but also innovates the marketing forms of gift box products, which meets consumers’ demand for high-quality gifts during festivals, effectively enhances the market penetration rate of the company’s products, and enhances brand visibility and consumers’ willingness to buy.
In 2024, the company will continue to deepen the expansion of group buying channels, optimize product structure and improve service quality in order to achieve more stable performance growth. In addition, the company will continue to pay attention to market dynamics and flexibly adjust its marketing strategy to cope with the ever-changing market environment and consumer demand.
2. Focusing on the diversified and multi-scenario product needs of users, we will continue product innovation and enhance competitiveness.
In 2023, the company’s gift box product line achieved good results. Sales of gift boxes for new year’s goods increased by 25% year-on-year. Among them, canned nut gift boxes have been further consolidated with their leading position in the market, achieving a year-on-year increase of 158%. In addition, the company also launched an IP gift box co-branded with Wutai Mountain and the movie "Three Wan Li in Chang ‘an", as well as a series of high-protein gift boxes, which not only met the diverse needs of consumers for holiday gifts, but also deeply explored the emotional value and blessing meaning. Once these products were launched, they received enthusiastic response from the market, and their sales increased by 160% year-on-year.
In the supply chain management of gift boxes, the company has effectively improved its operational efficiency through refined management and cost control. The company has deeply integrated and optimized the supplier system, reducing the operating cost of the whole chain of gift boxes. In the field of marketing, the company adopted the strategy of combining online and offline, and effectively expanded the brand influence and increased the interaction with consumers through online channels such as social media, live broadcast and offline promotion of ground media. Relying on all-round marketing strategy, it not only enhances consumers’ perception of good shop brands, but also lays a solid foundation for the continuous growth of gift box product line. Looking forward to the future, the company will continue to devote itself to product innovation and market expansion in order to maintain its dominant position in the gift box market and achieve sustained growth in sales performance.
3. Integrate supply chain resources, and reduce prices without degrading quality.
During the reporting period, the company "actively strives for change and faces the competition", first of all, from the aspect of supply resources, integrating the global high-quality supply chain resources, only to provide users with more products with the ultimate quality-price ratio.
In the pot-stewed category, the company fully took advantage of the high-quality supply chain system to build a research and development center with industry leaders. The two sides shared R&D resources and technical advantages, and launched a variety of explosive products covering chicken feet, air-dried beef and other varieties. In vegetarian food, the company developed bean skin with chickpeas instead of soybeans as the core raw material around the changes of users’ needs, and gave full play to the advantages of suppliers in raw materials and technology, and promoted the high-temperature puffing process to replace the traditional frying process, making the bean skin as thin as cicada’s wings and crisp in taste, thus meeting consumers’ needs for zero trans fatty acids and reducing oil and fat. In order to better meet the young customers’ demand for novelty-seeking with new tastes and emotional value of snacks, the company cooperated with international suppliers to introduce foreign high-quality goods such as well-known wafer biscuits and drinks into the company’s offline stores.
In addition, in order to ensure stable product quality and higher quality-price ratio, the company continuously monitors dozens of food raw materials throughout the year, gives full play to the advantages of the source of the supply chain, promotes the distribution of direct mining resources at home and abroad, and continues to deliver more delicious and better quality-price ratio snacks to consumers, truly achieving "price reduction without quality degradation".
Ii. the industry in which the company is located during the reporting period.
(1) The industry in which the company is located
According to the Guidelines for Industry Classification of Listed Companies issued by China Securities Regulatory Commission (Announcement [2012] No.31 of China Securities Regulatory Commission), the company belongs to retail industry (classification code: F52). Judging from the main products and business model of the company, it is generally believed that the company’s business belongs to the snack food industry.
(B) Industry development stage and trend analysis
1, industry characteristics and development stage
Leisure snacks are foods that consumers eat in leisure and rest, which have the characteristics of wide coverage, long life cycle of users, low unit price of customers and high consumption frequency. Snacks are rich in consumption scenes, diverse in product forms, diverse in varieties and specifications, delicious in taste, safe and healthy, cost-effective, brand, functional components and packaging value are the most important factors for consumers to consider. The characteristics of consumers’ diversification, changefulness, early adopters and impulsive buying make the product change and channel change of snack industry faster, and each round of big product change and channel change corresponds to huge industrial development opportunities.
According to the latest data from China Commercial Industry Research Institute, the market size of leisure snacks in China was 928.6 billion yuan in 2023, and it is estimated that the market size will exceed one trillion yuan in 2024. In terms of consumption, the per capita consumption of leisure snacks in China is only 1/2 of the global average, 1/3 of Japan and 1/5 of the United States, and the market space is broad. Because the entry threshold of snack food industry is relatively low, there are many industry participants and new players appear constantly, and the brand concentration is low, showing a completely competitive market state.
From the perspective of product changes, the growth rate of new categories such as packaging, baking and meat snacks is more than 1.5 times that of the industry market, which is the most noteworthy market. Sugar Qiao, biscuits, puffs, packaged nuts, ice cream and other categories are growing at a slower rate than the industry market. New brands are constantly opening up new market space through new value propositions, and there is room for category innovation.
From the perspective of channel changes, according to the data of Euromonitor International in 2023, offline channels account for 82.6% of the circulation share of snack foods, and modern channels such as snack specialty stores and convenience stores continue to occupy the market share of traditional mom-and-pop stores, and the trend of channel upgrading continues; Online channels accounted for about 17.4%, the growth of traditional e-commerce platforms slowed down, and online traffic concentrated on high-quality products and content-based e-commerce platforms.
Generally speaking, the leisure and snack industry is in the stage of medium and high-speed growth, full competition in the market, and endless innovations in products and channels. Enterprises that can accurately grasp consumer demand and create consumer value will gain competitive advantages in the future.
2. Industry development trend
On the whole, the consumption classification trend of snack food industry is obvious, and the demand is diversified. Consumers’ demands for good ingredients, good taste, low burden, nutrition, freshness and face are widespread and increasing. In the leisure snack industry facing the whole country and the whole customer group, the differences of consumers’ consumption preferences also exist objectively. Low sugar, low salt, low fat and no additives have become the necessary options for most family consumers. Mix and match flavors, stimulate tastes and novel tastes are deeply loved by young consumers, and convenient purchase, economy and variety of choices are the common needs of most consumers. Because of the huge consumer base in China, there is a huge market behind any kind of consumer choice. Facing the increasing diversified demand, snack food enterprises must develop products accurately according to the diversified demand, form a diversified product matrix, and pass on the value to consumers in the most efficient way.
Infinitely close to consumers has become a key element, and the near-field and content-based formats have developed rapidly. Because leisure snacks have the characteristics of impulse purchase, what you see is what you get, etc., whether consumers can see and buy them everywhere has become an important factor for brands to attract consumers, and both online and offline have obvious characteristics of near-field and content. Online, convenience stores and snack shops that mainly serve community users have achieved rapid growth in recent years with richer products, better consumption experience and higher cost performance, and have become an important force to promote the development of the snack industry. Close to consumers, opening stores intensively around target consumer groups, providing consumers with convenient, diverse and high-quality products and experiences, has become an important driving force for the growth of offline stores. From the perspective of online format, the instant retail platform has developed rapidly, effectively expanding the coverage radius of stores, and providing a foundation for leisure snack brands to obtain new traffic and better serve users; Content-based and socialized platforms are attracting more young consumers and providing a broader position for casual snack platforms to interact with consumers.
Facing the Z generation group, which has gradually become the main consumer, is both an opportunity and a challenge for the snack food industry. Generation Z consumers have stronger spending power, more diversified and personalized needs, and are more easily influenced by social media. In order to meet the ever-changing and iterative consumption demand of the main consumer groups, leisure and snack enterprises should not only adapt to the fresh and healthy life concept pursued by young people, but also use brand expressions that young people are willing to accept, and more importantly, control the product quality and delivery quality of the whole chain, which puts forward higher requirements for the resource integration ability and operational efficiency of leisure and snack enterprises in all channels and the whole industry chain.
(III) Industry status of the company
Liangpin Shop has been deeply involved in the snack food industry for 17 years. It is a well-known brand in China and one of the snack food enterprises with omni-channel development. Its sales scale is in the forefront of the snack food industry. In 2020, as the first "cloud-listed" enterprise in Shanghai Stock Exchange, the company landed in the A-share market and became the "first share of high-end snacks" in China. According to the data of "2022 Snack Market Research Report" of China National Business Information Center, good shops led the national sales of high-end snacks for eight consecutive years from 2015 to 2022.
Iii. Business of the Company during the reporting period
(a) the company’s main business
As a platform-based, digital and innovative retail enterprise driven by product innovation and channel development, operating all kinds of snacks, multi-brand operation, balanced omni-channel layout and coordinated industrial chain, the company is mainly engaged in the research and development, procurement, sales, logistics and distribution and operation of snack foods, and is committed to providing consumers with higher quality products and services to meet users’ needs for different healthy and nutritious ingredients, different purchase tasks and different use scenarios.
During the reporting period, the company’s main business has not changed.
(II) Main products of the company
1. The company has a rich product line.
In order to meet the needs of different users in different scenarios, the company has set up a rich product line, including meat snacks, seafood snacks, vegetarian delicacies, preserved preserved preserved plum, dried red dates, nuts, roasted seeds and nuts, drinks, candied fruit, canned jelly, scented tea, baked cakes, biscuit puffing, instant food, gift boxes, children’s snacks and other product lines.
2. The company provides a variety of products based on the user’s segmentation needs.
The company continues to adopt the product strategy of customer demand-oriented and creating value for customers, upgrade to the direction of "natural and healthy new snacks" and continuously improve the product matrix. For school-age children, fitness people, beauty lovers, white-collar office workers, enterprises and institutions, the company has launched a variety of products, such as children’s snacks, fitness snacks, collagen candy snacks, breakfast and dinner meal replacement, holiday gifts and so on.
(III) Main performance drivers of the company
During the reporting period, the company researched and developed products around the needs of users, and continued to explore product innovation in market segments. By optimizing the product operation mode, it helped new products to be new, and created a number of tens of millions of new products; Continue to deepen the supply chain and improve the efficiency of production and sales; In-depth omni-channel operation, refined operation, and promote continuous optimization and improvement of business.
(4) The business model of the company
The company carries out product innovation guided by users’ subdivided needs, and supports with leading food health and nutrition technology, formulates quality specifications and standards of raw materials, product processes and formulas, purchases products from upstream suppliers, and carries out actions such as receiving, warehousing and delivery after completing strict product quality inspection, and finally sells products to users through a perfect omni-channel network to provide users with high-quality products and services.
1. R&D mode
The company studies the different needs of segmented users in market insight, and at the same time, according to the new technologies in the market, it selects the segmented product categories to be included in the annual R&D plan to form product R&D needs, and supports and responds to the needs quickly by adopting independent in-depth R&D and outsourcing cooperative R&D according to the demand categories. Independent in-depth R&D is led by its own scientific research team, which independently or integrates domestic and foreign external scientific research forces to research and develop new raw materials, new formulas and new technologies for R&D innovation, and outputs products with better nutritional and healthy value and taste, which can meet the needs of users. Outsourcing cooperative R&D means that the company invites enterprises with rich industry experience and innovative ability to participate in the development, and sets up an evaluation expert group to evaluate the technology and products, which is mainly suitable for iterating over existing products, increasing the taste of products to meet the needs of customers with multiple tastes, improving the taste of products to bring customers a better experience, and innovating product forms to make customers feel more pleasant. At the same time, supported by food science and technology, the company has carried out work such as process improvement, environmental protection, product standards improvement, cost reduction and efficiency improvement, and quality improvement around R&D and innovation.
2. Product operation mode
The company’s product operation mode is based on the company’s strategic intention, market analysis and customer demand insight, with the operation of new products and cooked products as the core, including seven business processes: product development planning, single product planning and design, research and development, product testing and testing, listing and delivery, mature operation and product delisting, which provides strong support for meeting the different needs of different consumer groups for snack food.
3. Supply chain management mode
The company has established a supply chain management mode with supply planning as the control hub, logistics management as the supply guarantee and quality management as the safety guarantee, and controls and manages the whole process of product procurement, warehousing, logistics and delivery.
In the supply planning stage, according to the sales history and trend forecast of each channel, the company decomposes and forecasts the sales and supply of goods in different periods, formulates the procurement plan and improves the procurement efficiency.
In the procurement process, the company cooperates with excellent suppliers and takes measures such as locking in global high-quality bulk raw materials to ensure product quality and optimize procurement costs. The company also implements the mode of "purchasing by sales" to purchase customized and non-customized products accurately and in a planned way, greatly reducing the inventory turnover rate and ensuring the freshness of products reaching consumers.
In the warehousing and logistics link, the company manages the inventory in omni-channel sharing mode, and after receiving the order, it can deliver the order logistics from the nearest warehouse in an optimal way. The EWM system applied by the company also realizes data sharing with the systems of various logistics carriers, which enables the company to monitor the real-time status of orders and control the orders in a timely and abnormal manner.
In terms of product quality assurance, the company has established a comprehensive product quality control system, ensuring food safety in the whole link through regulatory measures such as supplier access management, supplier evaluation and elimination management, factory quality management, and food safety inspection management. In order to ensure the stability and high standards of product quality, the company has formulated strict product production quality standards and multi-dimensional acceptance standards, and established its own product testing center. It has passed CNAS certification, covering all the links from product warehousing to marketing, and constantly improving the whole process quality control process according to business changes, forming a whole process product quality and safety control system.
4. Sales model
The company adopts an omni-channel sales model with stores as the core, and provides products and services to users through various online and offline channels. At present, the company has laid out store channels, platform e-commerce channels, social e-commerce channels and group purchase channels, built all-round contacts to interact with users, responded to users’ needs in a timely and accurate manner, and intelligently pushed information matching users’ needs, upgrading to the omni-channel layout of "constantly approaching the terminal and providing services at any time".
(1) Store channels
The company has a mature and well-developed store channel, which is divided into direct stores and franchise stores. Direct-operated stores are chain-type snack food stores with the brand of good shops opened by the company in the offline market. The company is the sole investor in the store, and the assets, liabilities and profits and losses of the store belong to the company, which is under unified management and directly sells goods to end consumers. Franchise stores are licensed by the company to use the company’s brand resources, technical resources and operational resources to open a snack food specialty store with a good shop brand online. Franchisees are investors in the store, and the assets, liabilities and profits and losses of the store belong to franchisees. According to the Franchise Contract signed between the company and franchisees, the company provides goods and management services to franchisees, and franchisees pay the company the purchase price of goods and franchise fees. Store business activities are not limited to in-store, but actively radiate the surrounding areas, extending to single-customer-leaving operation, relying on stores and link platforms, operating online resources and tools, providing differentiated business services such as home purchase, store group purchase, community group purchase and online interaction, and expanding and operating store circle traffic in multiple dimensions.
(2) Platform e-commerce channels
Platform e-commerce channel refers to the business channels that engage in B2B (such as Tmall Supermarket, self-operated by JD.COM, etc.) and B2C (such as Tmall flagship store of Liangpin Store and JD.COM flagship store of Liangpin Store, etc.) on the third-party e-commerce platform. Based on users’ shopping needs and online shopping habits, the company builds a global marketing data center, analyzes users’ different needs with data insight, accurately matches product content and access channels, and meets consumers’ online delicious shopping needs.
(3) Social e-commerce channels
Social e-commerce channels refer to the channels (such as Tik Tok and Aauto Quicker channels) that establish the interaction between fans and brands through new media content forms such as pictures and texts, short videos and live broadcasts, and realize the e-commerce activities of commodity sales through the cooperation of MCN institutions, talents and live broadcasts. The company interacts and communicates with consumers through shopping malls, self-broadcasting, cooperation with MCN institutions/talents and other forms, which effectively enhances brand awareness and user stickiness.
(4) Group buying channels
The company takes the city as a unit, develops group buying agents according to the group buying channels of users’ mass purchase or customized purchase needs, and carries out brand and product promotion, sales channel network construction and business service management. The group buying business has been deeply rooted in the city network and established a long-term good customer relationship network. Now it has formed a core explosion product pool and customized gift service, providing product solutions for scenes such as "employee welfare" and "business gifts".
During the reporting period, the company’s business model has not changed significantly.
Iv. analysis of core competitiveness during the reporting period
(A) the impact of high-quality snack brands on sophisticated users is very competitive.
Since its establishment, the brand "Liangpin Shop" has been carrying the pursuit of high standards of "conscience quality" and gradually gathered a customer group mainly pursuing high-quality products. In order to meet consumers’ demand for health and nutrition, following the strategic positioning of "high-end snacks" in 2019, in 2024, the company released a brand-new brand value proposition as "natural and healthy new snacks", and further expressed and interpreted high-quality snacks as "more natural, healthier and more new experiences". At the same time, the company promotes product upgrading with "good raw materials, good formula and good taste" as the anchor point. In 2024, more than 140 healthy snacks will be launched, covering cakes and biscuits, vegetarian food, dried fruits and preserved fruits.
In order to support the brand-new brand value proposition, as early as January 2023, the company participated in drafting the group standard "General Requirements for Healthy Snacks" (T/CAB0235-2023), which gave a clear definition of healthy snacks from sensory, physical and chemical dimensions. In order to further implement this standard, in 2024, the company took the lead in proposing and advocating "five reductions" of healthy snacks in the industry (namely, "reducing salt, sugar, fat, oil and food additives"), focusing on two research and development directions of natural healthy ingredients and reducing additives during production, and continuously providing consumers with delicious and healthy high-quality snacks, leading the high-quality development of the industry.
(2) The company already has the industry-leading in-depth R&D capability.
The company has a high-level R&D team and extensive external collaborative R&D resources. It cooperates with domestic food professional colleges and food research institutes to build R&D platforms, accelerate technology introduction and transformation, and support high-quality and efficient product innovation through collaborative in-depth research and development. At present, in-depth food research and development cooperation has been carried out with China Academy of Agricultural Sciences, China Food Fermentation Industry Research Institute, Hubei Academy of Agricultural Sciences, Wuhan University of Light Industry, Hunan University of Chinese Medicine and other scientific research institutes and universities, and seminars have been held regularly. These external R&D institutions will become solid support for the company’s technology R&D and product development. The company invested in the construction of six professional R&D laboratories, including meat, seafood, vegetarian food, candied fruit, beverage, packaging, sensory evaluation and pilot plant, established its own product testing center, passed the certification of National Laboratory (CNAS), and cooperated with a number of third-party testing institutions to continuously strengthen product quality and safety control.
(C) The company has a highly integrated omni-channel marketing network.
The company has a highly integrated omni-channel sales network. The company has about 3,300 stores in 23 provinces/autonomous regions/municipalities directly under the Central Government, which has achieved multi-level coverage from the core business circle to the community stores. The store business system is mature and developed steadily. Its business activities are not limited to in-store operations, but actively radiate the surrounding areas to single-customer departure operations, and expand and operate the store circle traffic in multiple dimensions; In terms of online channels, the company has platform e-commerce channels such as Tmall flagship store, Tmall supermarket, JD.COM flagship store and JD.COM self-operated, and social e-commerce channels such as Tik Tok and Aauto Quicker. At the same time, it arranges group buying channels for users to purchase in large quantities or customize their needs. Effectively meet the diversified snack food needs of different consumer groups in different scenarios.
(4) The company has industry-leading supply chain resources and an efficient collaborative supply chain system.
The company has industry-leading supply chain resources, forming an agile supply chain from raw materials to manufacturing to consumers. On the raw material side, with an extremely rigorous attitude, the company has continuously incorporated the characteristic raw materials from various regions into the supply system, selected the characteristic raw materials from dozens of producing areas around the world, and provided consumers with rich, fresh and healthy unique snack products. In terms of supplier resources, the company adheres to the concept of "win-win cooperation" and forms a good cooperative relationship with various categories of head suppliers. Through strict supplier access screening and supplier performance control, it constantly promotes product concept iteration, upgrades production facilities and process standards, and forms a high-quality and fast-response cooperation mechanism. The shortest time from product concept proposal to production delivery can reach 26 days.
The company’s inventory model is omni-channel inventory sharing, and the system automatically balances the inventory after identifying the relationship between inventory and demand among channels, effectively supporting the timely response of omni-channel demand. At the same time, the company continued to iteratively deepen the S&OP system, and managed the whole chain information from the annual, quarterly, monthly and Thursday levels, and established a supply collaborative management system with annual budget planning, quarterly capacity pulling, monthly plan adjustment and weekly supply and demand response. Based on new formats such as live broadcast, the company cooperates with suppliers to create a factory direct hair model. After two rounds of SRM system upgrades, the company further improved the whole life cycle management of suppliers, and realized the online data management of suppliers from demand confirmation, source matching, introduction of certification to dynamic performance and capability evaluation, performance and special improvement, replacement and withdrawal management and cost.
(E) The company has a solid first-Mover advantage in digital construction.
Adhering to the value-oriented digital investment, the company has successfully achieved efficient integration between core business systems. The foreground system has flexible coverage, the middle system has high integration efficiency, and the background system has stable support. At present, the company order system supports more than 3 million online single-day transactions and 1 million offline single-day transactions; The logistics system realizes the rapid delivery of more than 800,000 parcels per day, while the membership system operates the functions of points and stored value of tens of millions of members. This comprehensive digital support provides a solid backing for omni-channel operation. The back-office system integrates resources accurately, allocates resources efficiently, realizes the foresight analysis, real-time monitoring and careful inspection of the whole operation process, and constructs a scientific decision-making control mechanism based on data. With the support of intelligent digital logistics center, the company’s omni-channel supply realizes inventory sharing and integrated delivery sorting, providing reliable guarantee for strategic objectives. At the same time, the company is firmly committed to integrating AI technology into digital construction, and plays a huge role in business decision-making, data analysis, customer service and other fields.
In the future, the company will further integrate the application scenarios of AI. Further provide smarter member management and personalized services to create more valuable interactions for tens of millions of members; Further realize a more intelligent order processing and recommendation mechanism to provide users with a more personalized experience; Further optimize the distribution route and improve transportation efficiency, and improve the response speed and accuracy of the logistics system; Finally, we will consolidate the company’s digital first-Mover advantage, build a more intelligent and efficient digital ecosystem, and consolidate the company’s leading position in the industry.
V. Main operations during the reporting period
VI. The Company’s Discussion and Analysis on the Company’s Future Development
(A) the industry pattern and trends
From the demand side, the trend of consumption demand upgrading and consumption classification is becoming more and more obvious, and consumers’ consumption demand for snack food has changed from "full" and "safe" to "nutritious and healthy", "fun" and "emotional value". From the traffic end, the trend of traffic decentralization is obvious, new channels such as live e-commerce are booming, and an omni-channel digital retail ecology centered on consumers is initially formed.
(II) Company development strategy
Consolidate the brand positioning of high-quality snacks in good shops. Continue to strengthen investment in product research and development and build technical barriers to product research and development. Adhere to the mission of product quality first, strengthen product innovation, deepen market segmentation, provide differentiated product solutions for segmented people, and meet the needs of users for nutritious and healthy food. Take the operation and development of stores as the core to carry out omni-channel development, deeply explore the omni-channel development model supported by digital technology, face consumers and competition, and continuously improve the efficiency of the whole link. Insist on continuous investment in products, supply chain, organization and management system, and consolidate the competitiveness of good shops in all directions.
(3) Business plan
Based on the company’s strategic development vision, in 2024, the company will uphold the core concept of innovation and development, enhance brand value, further consolidate the company’s market position in the snack industry, and improve operational efficiency. The key business plans are as follows:
1. Improve the management efficiency and quality of store business. The company will continue its in-depth operation in brand building, product diversification and service quality to enhance customers’ willingness to go to the store and consumer satisfaction. Facing the rapid changes in the market environment, the company will constantly introduce new ideas, new elements and new values based on the characteristics and needs of different customer groups, and update and optimize the store model.
2. Strengthen the construction of product innovation system. The company will focus on cultivating product innovation ability, research and develop products with differentiated concepts based on the market development trend and the changing trend of user demand, and establish an integrated product management model with product innovation as the core, so as to realize the continuous output and iteration of differentiated products, optimize product structure and improve business profitability.
3. Actively transfer product value. All along, the company’s products have won a good brand reputation because of their quality and taste. While continuously improving the product innovation capability, the company will also pay more attention to the value transmission of products to ensure that distinctive differentiated products can be fully displayed and recognized.
(4) Possible risks
1. Seasonal risk of sales
The snack food industry has obvious seasonal characteristics. On the one hand, due to climatic reasons, consumers generally have higher consumption demand for snack food in the first quarter or the fourth quarter; On the other hand, traditional holidays such as New Year’s Day, Lantern Festival, Spring Festival and Mid-Autumn Festival are mainly concentrated in the first quarter or the fourth quarter, so the first and fourth quarters are usually the peak seasons for the snack food industry. In addition, in recent years, influenced by the sales model of e-commerce, the sales scale of snack food will also increase greatly during the discount promotion periods such as "618", "Double Eleven", "Double Twelve" and "New Year Festival" every year, resulting in certain fluctuations in the company’s performance during the year. Therefore, if the company can’t accurately grasp the market rhythm and arrange the procurement and distribution, inventory and stocking in advance, the company will face the operational risk of losing market share due to insufficient stocking or overstocking of some products.
2. Risk of raw material price fluctuation
The main raw materials of the company’s snack food include nuts, fruits, meat, aquatic products, grains and other agricultural and sideline products. In recent years, China’s snack food industry has generally maintained a good development momentum. However, because agricultural and sideline products are easily affected by natural conditions, market supply and demand and other factors, their prices fluctuate to some extent. Therefore, there is a risk that the company’s procurement cost will change with the market price fluctuation of agricultural and sideline products. Although the company has stabilized and improved its profitability by constantly improving the supplier introduction system, establishing a linkage mechanism between purchase price and product selling price, and conducting large-scale procurement, if the price of raw materials fluctuates greatly in the future and the company cannot eliminate the adverse effects caused by the fluctuation of raw material prices in time, it will have an adverse impact on the company’s profitability and financial situation.
3, industry competition risk
In recent years, with the continuous improvement of residents’ living standards, China’s snack food industry has continued to develop and the number of market participants has been increasing. At the same time, some regional snack food enterprises have gradually formed, and these enterprises have gradually developed and expanded with their advantages in brand, capital and regionality, and the competition in the snack food industry has become increasingly fierce. After years of development, the company has formed strong competitiveness in product research and development, omni-channel operation, supply chain integration, digital transformation, etc., and continues to consolidate its differentiated competitive advantage in terms of brand culture, product quality, omni-channel operation, big data application, etc. However, with the increase of new enterprises and brands entering the snack food industry, if the company cannot continue to maintain its leading position and differentiated competitive advantage in the industry, it may lead to a decline in product sales or lower price, thus affecting the company’s financial situation and operating performance.
4. Food safety and quality risks
The company is mainly engaged in the research and development, procurement, sales, logistics distribution and operation of snack food. In recent years, with the government and consumers paying more and more attention to food safety, food quality and safety has become the top priority for the survival and development of snack food enterprises.
The company continuously increased investment in product research and development, procurement, production, transportation, warehousing and sales, from system construction, hardware facilities to staffing, and constantly improved the whole process quality control process according to business changes, forming a perfect product quality and safety control system. The company has established multiple mechanisms of supplier introduction management, supplier production process control, product acceptance quality management and food safety management in storage, transportation and sales. In the introduction process, each new supplier has been strictly screened through the processes of hardware condition investigation, compliance review, sample testing, product evaluation and testing, and on-site audit; In the process of cooperation, the quality performance evaluation and risk grading dynamic management are carried out for suppliers, and annual inspection and flight audit are carried out accordingly to eliminate unqualified suppliers. In order to improve the quality management level of suppliers, the company formulated the supplier quality management manual, unified the quality and safety control requirements for suppliers, conducted training and supervised the implementation. In order to ensure the stability and high standards of product quality, the company has formulated strict product quality standards; For zero food with agricultural products as raw materials, we should adhere to strict quality control standards for raw materials, inspect the origin of raw materials with upstream suppliers, select high-quality raw materials, and always adhere to the formulation of food safety indicators stricter than national standards. The company has established its own testing center, passed CNAS certification, and continuously verified its ability, cooperated with third-party testing institutions, empowered suppliers, and established a "good product testing center as the leading factor, third-party testing institutions as the auxiliary, and laboratories of various manufacturers as the basis".The detection system. Strict inspection on arrival and monitoring of key quality and safety indicators during shelf life are implemented, and the five-link product acceptance process from arrival sampling to sample retention secondary inspection is implemented, covering all links from product warehousing to marketing and sales. At the same time, digital means are adopted in product acceptance, storage, transportation and sales environment, production and sales cycle control, disposal of unqualified products, and customer complaint reverse traceability, so as to deepen quality control with all factors, whole process and high standards.
Nevertheless, the quality of the company’s products is inevitably limited by the supply of raw materials for agricultural and sideline products, the production capacity of suppliers, the storage conditions during transportation and the climate and environment, and the risk of product quality problems caused by some unforeseen factors cannot be completely avoided. If the products sold by the company have food safety risks or even food safety accidents, it will adversely affect the company’s brand image and business performance.
5. Risk of brand counterfeiting
Brand is an important influencing factor for consumers to buy snack food. After years of efforts, the company has won honorary titles including "China Well-known Trademark" issued by the State Administration for Industry and Commerce, "Hubei Famous Trademark Enterprise" issued by the Hubei Provincial Administration for Industry and Commerce, and "E-commerce Demonstration Enterprise" issued by the Ministry of Commerce. The brand of "Liangpin Shop" has a high popularity and reputation in the domestic snack food market. However, with the expansion and development of snack food market, copying and forging products of well-known brands has become a means for some unscrupulous manufacturers to participate in market competition. The company has actively taken various measures to protect independent intellectual property rights, but there are also cases where all infringement information is not obtained in time. If the company’s products are copied in large quantities in the future, it may affect the company’s brand image and consumers’ willingness to consume the company’s products, which will adversely affect the company’s normal production and operation.
