CITIC Securities: China's mass snack industry is developing rapidly and is optimistic about the long-term development space of the domestic industry

The Zhitong Finance App learned that CITIC Securities released a research report saying that China's mass snack industry is developing rapidly. It is estimated that in 2024/2025, the number of stores will double/increase by more than 30% year-on-year to 42,000/56,000, and the sales scale of the industry is expected to reach 220+ billion yuan in 2025. Competition in the industry will intensify in 2024, and leading snack companies will accelerate store expansion by increasing store and price war subsidies. Competition in the industry eased in 2025, but due to rapid store encryption, the 2025H1 leading snack company's same-store sales declined a lot, and the 2025H2 same-store decline has improved month-on-month. The bank is optimistic about the long-term development space of the domestic mass-selling snack industry; the industry ceiling is far from over.

CITIC Securities's main views are as follows:

Stores: The mass snack industry still has room to expand, and the pace of net store opening by leading companies continues

The mass snack industry has developed rapidly in recent years. Driven by the rapid opening of stores by leading mass snack companies, the bank estimates that the number of mass snack stores will double to 42,000 in 2024, and the industry is expected to further expand to 56,000 by the end of 2025. The growth in store openings continues but the growth rate is slowing down. Using Hunan Province as the reference level for store saturation, and combining dimensions such as population size, population density, and local consumption habits, it is possible to estimate the store capacity of other provinces. It is estimated that the mass snack industry is expected to expand to 70,000 to 80,000 stores in the future, and the industry still has room for expansion by more than 30%. At the same time, in a mass-selling snack business where the scale effect is obvious, the bank is optimistic that the industry is strong and concentration is constantly increasing. Currently, the number of CR2 stores in the industry has reached 71%, and it is expected to rise to 80% + in the future. Corresponding companies still have more than 50% room to open stores.

Competition: Competition in the industry has eased, and the pattern is clear

Competition in the mass snack industry intensified in 2024. Leading companies promoted rapid store expansion through policies such as increased store opening subsidies, price subsidies, rent subsidies, and doorstep subsidies to seize the empty market. After a fierce market opening subsidy price war in 2024, a competitive pattern between the two leaders in the industry has now been formed. Under the formation of a two-leading competitive pattern, industry competition has improved markedly since 2025, and store opening subsidies have been drastically reduced. The bank believes that the era of price competition in the mass retail snack industry is over, and that future competition will focus more on the dimensions of brands, pallets, digital operations, and private brand products.

Store efficiency: The revenue of a single mass-selling snack store has declined, but it is improving, and store expansion is progressing rapidly

As the density of mass-selling snack stores increased, sales in mass-selling snack stores declined. According to channel feedback, the 2025H1 sales drop was 10% +. This led to a lengthening of the return period for mass snack stores from 1 to 2 to 3 years. Faced with increasing store density and declining store sales, mass snack companies have begun to actively raise customer unit prices by increasing non-snack food categories, expanding store area, testing the waters of money-saving supermarkets, and increasing their own branded products, hoping to reverse the downward trend in single-store sales. Currently, most mass snack stores are expanding their products in non-food products with low price sensitivity and low consumption frequency, and it is difficult to manage the multi-category supply chain. Currently, money-saving supermarkets for mass snack companies are still refining the single-store model, and large-scale replication will take time. Although private label products have high gross margins and help form a competitive advantage in product structure differentiation, private brand product supply chain construction and consumer education require a long period of time and effort. Under measures such as increasing non-food categories, actively slowing down store openings, and optimizing the product structure, according to Wanchen Group's financial report, the 2025H2 leading snack companies showed an improvement in same-store sales, and the decline in the same store was significantly narrower than in 2025H1.

Reviewing BIM: Store expansion through the cycle, private brand & product expansion & internationalization indicate the development direction of the mass-selling snack industry

BIM is the leading supermarket in Turkey's hard discount community. According to BIM's annual report, the company had 13,583 stores as of the end of 2024, with a net store opening CAGR of ~ 10% in the past 10 years. BIM maintains a cost-effective retail model through measures such as a limited number of SKU combinations (900 SKUs), a product matrix based on private brand products (60% of private brand products), detailed operation of the supply chain, and strict cost control, etc., and has achieved steady expansion of stores regardless of economic depression or severe inflationary economic environments, proving that discount retail has room to grow through bulls and bears. Through studying BIM, the bank obtained some conclusions that will help guide the future development of the domestic mass-selling snack industry:

1) Consumers pursue freshness and change, and their needs are constantly changing, and need to optimize and enrich the SKU of discount retail stores in due course or carry out store transformation to support same-store sales. The number of SKUs in BIM stores was initially strictly limited to 600, then expanded to 900. At the same time, the company continued to optimize the product structure through its own brand products, brand-exclusive products, and seasonal products. After BIM discovered the diversified and quality needs of consumers around 2015, it opened a new large-scale discount supermarket type FIİLE to enrich the store structure.

2) As procurement volume continues to rise, it may be a reasonable practice for hard discount snack vendors to choose to build their own production and processing supply chains for some key SKUs for cost control and quality control. With the expansion of the sales scale of its own brand products, BIM is also entering the upstream product manufacturing process. According to BIM's financial report, the company acquired a toothbrush manufacturer in 2012, laid out the packaging business for rice products and soy products in 2017, and completed the construction of a cookie production plant in 2024.

3) Retailers can moderately promote their own brand products to form differentiated and cost-controlled product combinations, thus forming a differentiated competitive advantage. More than 60% of BIM's sales revenue comes from branded products, covering food, dairy, frozen products, cleaning and personal care, etc. Private brand products are affordable and of excellent quality, making them a store drainage category.

4) Upstream product suppliers and hard discount retailers must be strategic partners, mutually beneficial and win-win relationships, not upstream and downstream price pressure that domestic capital markets are concerned about. BIM has mentioned many times in its annual reports that it regards upstream suppliers as important strategic business partners and regards upstream suppliers as important stakeholders. It will help upstream suppliers increase production capacity, improve production efficiency, and improve product quality. It is a win-win cooperative relationship.

5) Hard discount retail overseas is possible, but it takes more time to build up overseas local supply chains, local brand power, etc., which is a relatively long process. BIM opened hard discount retail stores in two overseas countries, Egypt and Morocco, and achieved positive operating profits and continued store expansion. However, it took 15 years for BIM to open about 800 stores in Morocco, and the pace of opening stores in Egypt is progressing relatively slowly.

Risk factors:

Demand in the mass-selling snack industry fell short of expectations; competition in the mass-selling snack industry intensified; mass-selling snack companies fell short of expectations by expanding hard discount retail supermarkets; food safety and quality issues in the mass-selling snack industry; rising rent costs and labor costs exceeded expectations; inflation greatly exceeded expectations; mass snack companies fell short of expectations in product selection.