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The way “working people” view extremely low prices is changing.

As summer officially arrives across the country, the high temperatures are overwhelming, and ice cups have become the new favorite of convenience stores and beverage shops. However, there are constant controversies surrounding this ice cup: the 3.5 yuan ice cup is too expensive, "I don't know who will buy it"; but the 1 yuan ice cup is not only unprofitable, but also makes the already extremely full store labor even worse. The store manager and staff are not satisfied, and customers are also dissatisfied. After "successfully angering two groups of workers" within one day, it was quickly removed from the shelves.

Consumers want both price and performance, but they are increasingly aware that the ultimate low price cannot be achieved by simply "optimizing" the organization and supply chain. In addition to the 1 yuan ice cup, judging from the recent social hot news about "coffee shops", "refunds only" and "tank trucks", after a price war in an industry continues for a period of time, either the lives of ordinary people in the supply chain will be squeezed, or the entire industry will have a systematic collapse in quality. The food and beverage industry chain is long, with primary agricultural products on one end and retail and service industries that directly contact consumers on the other end, and the final product must enter the consumer's mouth. Unlimited "bringing prices down" may not benefit every ordinary person in the end.

The unbridled price war in the food and beverage industry has gradually reached a divergence point.

Price war is to blame, not “consumption downgrade”

In the past two years, the entire food and beverage industry has been filled with the smoke of price wars. Pinduoduo and discount formats have emerged, and coffee and tea prices have dropped from "9.9 yuan" to "6.6 yuan". Popular restaurants simply write the prices directly on their shop signs. Suddenly, "consumption downgrade" has become a topic that everyone is talking about, and low prices seem to be the only truth in the food and beverage consumer goods industry.

Snacks are a major battlefield in the food and beverage price war. In 2022, the scale of China's snack market reached 1.5 trillion yuan, a year-on-year increase of 11.6%. The snack track has huge growth space, decentralized competition, strong regionality, and room for multiple big players to compete on the same stage. Since last year, it has become one of the few investment hotspots in the post-epidemic consumer field.

With the support of capital, thousands of new formats such as mass-market snack stores and snack discount stores of different brands have sprung up like mushrooms after a rain; retail giants such as Hema, Sam's Club, and Aldi have launched their own brands of snacks. Faced with the general trend of rational consumption, new competitors have all blatantly shown their price knives, which has posed a serious challenge to the pattern of branded snacks.

Price is certainly an issue, but it’s not the only one.As the "low-desire society" becomes a reality, price cuts alone are not enough to boost performance.

In November last year, Bestore, a leading snack brand, announced the "largest price cut in 17 years", and the related topic once became a hot search; in April this year, Bestore took the lead in the industry to advocate the production of "five reductions" healthy snacks.

With the brand image of "excellent quality" that has been established for a long time and deeply rooted in the hearts of consumers, the brand still chooses to actively face market feedback, especially for the problem that some consumers think the product prices are too high, and adopts a comprehensive and in-depth solution strategy. However, Bestore also deeply understands that the current challenges cannot be solved simply by reducing prices, but need to explore more diversified ways on the basis of maintaining product quality.

From the perspective of consumer insights, it is an indisputable fact that young consumers' willingness to consume snacks and milk tea has not disappeared, but has become more picky, and they are quite willing to pay a premium for consumer goods that can provide emotional value and social value. However, for standard products that are overly homogenized and cannot provide sufficient functional differences, price comparison logic becomes another source of emotional value or social value.

Tracing back to its origins, "consumption downgrade" was originally a playful reaction to the concept of "consumption upgrade", and "consumption upgrade" itself is a somewhat simplistic and crude conclusion. In essence, in an era of rich dividends from e-commerce and social media, the food and beverage industry is in a significant seller's market. At this time, making high-quality, high-profit products is certainly the most profitable choice, but describing this phenomenon as an irreversible trend can only be described as a kind of enthusiasm with the color of the times.

Driven by capital, the supply of goods and channels quickly became excessive, and the balance of supply and demand quickly shifted to buyers. The shift in the economic cycle brought a dramatic touch to this adjustment in supply and demand that was bound to come sooner or later:Consumers have become more rational in their consumption behavior because they perceive uncertainty, but they find that the 1-2 yuan ice cream they have been eating since childhood has disappeared from supermarket freezers, and has been replaced by various "assassins" under the banner of consumption upgrading. It is understandable that they angrily announce "downgrading" and no longer pay a premium for illusory brands.

"There is no problem with the overall market demand. The key is to solve our own problems." Yang Yinfen, chairman of Bestore, has repeatedly emphasized internally: "We must do something that is truly good for consumers." This conveys Bestore's determination to persist in product differentiation.

What should we do and how should we do it? Now may be the time for snack brands represented by Bestore to make a choice.

Small snacks to solve small problems

Intuitively, snacks are a non-essential consumption, and should show a clear contraction trend during the economic downturn. However, this is not the case. The "In-depth Report on the Snack Food Industry" released in May this year pointed out that the snack food sector has shown strong counter-cyclicality and sustainability. "At present, we believe that the snack food industry is still in the stage of category diversification and channel expansion, and the sector's performance resilience will continue."

"Snacks" is a large category. When it comes to each category and variety, the scenarios in which consumers eat snacks and the needs to be met can be almost infinitely subdivided.

Snacks do not need to rely on the grand narrative of "food is the first necessity of the people". They only need to effectively soothe some small emotions and solve some small problems in specific scenarios, and they will naturally last forever.The current capital competition in the snack industry seems to verify that the snack industry still has a certain amount of imagination.

In the ideas of Bestore's past hit products, we can clearly see this awareness of "small problems". For the first time, "Crispy Pancakes" innovatively added 17% fresh potatoes. More than 40 varieties were selected from all domestic potato producing areas to test the moisture and starch content one by one. It was determined that Tengzhou potatoes were used as raw materials, which resulted in an exclusive flavor formula and a biscuit with annual sales of nearly 200 million yuan. A batch of the most popular meat snack "Pork Jerky" was reported to be "wet and soft, without dry fragrance". The quality management department insisted on taking the batch off the shelves despite the cost already paid, and guided suppliers to make adjustments. In order to make the "Thick Meat Dried Prunes" have a clean label ingredient list, the R&D team tried and failed many times, "rehydrated" the imported air-dried prunes, tested and controlled the moisture ratio, and the steam high-temperature sterilization temperature and duration, and finally made this dried prune without any additives.

Snacks are small things, and a single variety or category may not be enough to constitute a rigid demand in a certain aspect.However, consumers’ demand for the emotional value brought by snacks remains unchanged, and they can empathize with snack brands’ efforts to solve “small problems”.No matter how the market supply and demand fluctuates, this product thinking itself remains unchanged.

To solve small problems, we must return to basics

After returning to product thinking, we may have a different understanding of the "small problems" that need to be urgently solved in the current snack industry.

First of all, when it comes to snacks that consumers ultimately eat, they never pursue extremely low prices, but rather relative affordability based on safety, deliciousness, and health.

When announcing its price reduction strategy in November last year, Bestore emphasized that this was a reform that returned to its original intention of "conscientious quality, everyone's shop". Bestore pursued "lowering prices without reducing quality" and at the same time rethought "quality" from the perspective of consumers, so that every penny Bestore spent on quality would be recognized by consumers.

In the past two years, the health of casual snacks has attracted more and more attention. On social networks, topics such as "Are healthy snacks a real need or just a waste of money" and "Doctors from top three hospitals teach you how to choose snacks" have emerged one after another. Even doctors want to know what snacks are safe to eat, which shows that the health attributes of snacks are an issue that brands must address.

At present, "all consumer products are worth redoing" has a new interpretation. At the FBIF2024 Food Innovation Conference in June, "eliminating all unnecessary additives within three years" was the determination of BESTORE to make healthy snacks to the industry.

Among the first round of "Five Reductions" ("reducing sugar, salt, oil, fat, and additives") products released, the focus is on launching innovative upgrades to the preserved plums, bamboo shoots, and baked cake series. The research and development directions are centered around making products with natural and healthy ingredients, and reducing additives during the production process, making snack recipes simpler, less burdensome, and healthier.

Since April this year, more than 60 new and upgraded healthy snacks have been launched one after another. The series of products with clean ingredient lists that "only" contain the raw materials themselves are particularly "conspicuous": including thick-fleshed dried prunes, fresh steamed dried pumpkin, fresh steamed dried sweet potatoes, fresh steamed dried purple potatoes, organic chestnut kernels, organic hand-peeled chestnuts, etc.

Consumers will pay for good products. In the first half of this year, Bestore launched new single products with monthly sales of millions, such as wild bamboo shoots (pickled pepper flavor), wild bamboo shoots (chicken sauce flavor), California prunes 508g (stores), whole squids, and beef and duck potato chips; the Menglan bamboo shoot series and prune series have become single products with monthly sales of tens of millions; crispy Bo pancakes (seaweed flavor) and California prunes have become single products with monthly sales of tens of millions across all channels.

The price war has reached a point of divergence, and it is time to re-evaluate the significance of the brand.Extremely low prices can certainly provide consumers with more benefits, but they lack consideration of supply chain, store service, product quality, etc. In contrast, it is particularly difficult for brands to simplify and return to their original intentions and essence.

Under the pressure of the overall environment, companies like Liangpin Puzi have always been facing consumers and working hard to upgrade their own cognition and capabilities with a product mindset. However, we still need to observe how this 18-year-old company will perform in the future.