Dongwu Securities: China's mass snack industry competition focuses on leading nationalized expansion and efficiency improvement opportunities
The Zhitong Finance App learned that Dongwu Securities released a research report saying that Japan's discount retail development experience provides an important reference for understanding the growth path of mass-selling snacks in China. Both Don Quixote and Kobe Bussan have experienced a process of upgrading from a single point of low price advantage to systematic capabilities. China's mass snack industry is also moving from an early “horse-riding ground” to a stage of efficiency competition. In the future, the focus of competition will shift from the number of stores to procurement scale, warehousing and distribution efficiency, product development and franchise management capabilities, and focus on nationalized expansion and efficiency improvement opportunities for leading Chinese snack sellers.
The main views of Dongwu Securities are as follows:
Japan's experience shows that in a low growth environment, rational consumption drives the rise of discount retail, and demand for cost performance changes from phased selection to long-term consumption trends
In the early 1990s, after Japan's bubble economy burst, the average growth rate from 1991 to 2000 was only 1.4%. As the center of economic growth moved downward, consumer consumption gradually shifted from brand premiums and consumption upgrades to matching price and value. Japan's household consumption level index continued to decline after reaching a high of 108.8 in 1992. In the context of slowing consumption growth, discount retail is rapidly developing due to low prices, high efficiency, and abundant product supply, and has become an important part of the Japanese retail system.
Japan's discount retail forms two typical models
Don Quixote relies on opportunistic procurement to monetize non-standardized products, and Kobe Bussan has achieved continuous low prices through supply chain restructuring. In the process of development of Japan's discount industry, supply-side product iterations have accelerated, providing sufficient supply for discount channels. FY1983-FY2000, the number of convenience stores in Japan increased from 6,308 to 38,274; in 1993-1997, the number of new food products launched increased from 1,992 to 3,758, and rapid iteration of products drove an increase in end-of-season goods, and phased inventory. Don Quixote turned non-standardized supplies into a competitive advantage through flexible procurement, store decentralization, and a “treasure hunt” experience; Kobe Bussan relied on its own factories, global procurement, and sales to reduce costs. The number of FY2018-FY2025 supermarket stores increased from 813 to 1,122, the share of PB products increased from 30.0% to 34.2%, and sales increased from 267.2 billion yen to 551.7 billion yen. Both models eventually moved from supply dividends to competition for supply chain and organizational efficiency.
Mass-selling snacks in China have a demand base similar to the development of discount retail in Japan, but they rely on mature manufacturing systems to form a differentiated path
On the demand side, consumers pay more attention to the price-quality ratio; on the supply side, China has a world-leading food manufacturing system, and a large number of white label, foundry and brand manufacturers provide stable low price supply. During the epidemic, the average inventory sales ratio of representative snack companies such as Yanjin Shop, Jinzai Foods, and Youyou Foods increased from 18.3% in 2019 to 23.2% in 2020, and remained above 20% from 2022 to 2023. Industry inventory pressure pushed manufacturers to actively expand mass sales channels. Mass-selling snacks reduce traditional distribution links through direct procurement from manufacturers, large-scale procurement, customized products, and central warehouse delivery.
Japan's discount retail development path verifies the long-term space of the low-price business. Estimates show that mass-selling snacks in China is still at the stage of national penetration
Japan's experience shows that the development of discount retail not only comes from changes in the consumer environment, but also depends on the evolution of channel structures and large-scale replication. Since 2017, mass sales of snacks in China have gone through three stages of regional verification, national expansion, and industry integration, and industry concentration has increased rapidly since 2024. By the end of 2025, there were about 44,600 major snack brand stores, of which Ming Ming was very busy, and the number of Wanchen Group stores reached 21,900 and 183,000 respectively in 2025. The industry CR2 was about 75.5% based on GMV. Based on the resident population of each province and the density of mature market stores, we carried out regional revisions based on population density, regional GDP, per capita GDP, and per capita food, tobacco and alcohol consumption expenditure. The medium- to long-term store space is about 85,000-112,000. As the two leaders continue to expand, the number of stores nationwide still has considerable room for improvement; further combined with industry scale and single-store model estimates, the theoretical capacity of long-term stores is about 103,000 to 106,000.
Risk warning: Consumer demand and store efficiency fall short of expectations, increased industry competition, cross-regional expansion and franchise management fall short of expectations, food safety and supply chain management risks.