Growing spending power and pursuit of high-quality products spur demand

High-calorie biscuits, chocolate and candies are no longer as popular as they used to be. Quality-conscious young Chinese consumers are going for healthier snack food.

Locally-made snacks like nuts are enjoying a bumper year, spurred by the growing spending power of consumers and their pursuit of healthy and high-quality products.

"With the increase of per-capita income and the ongoing consumption upgrade trend, Chinese consumers are eating more and more snacks. Yet, compared with the United States, Europe, Japan and South Korea, China's average consumption volume and value on snacks is still relatively low, and it has significant growth potential," said Neil Wang, president of consultancy Frost & Sullivan in China.

"Healthier and high-quality snacks will make up for larger market share and attract more consumers. The growth speed of e-commerce platforms and specialty stores is foreseen to be faster than traditional supermarkets and individual sellers. The new-generation customers have formed a habit of online shopping, and such a trend is expected to continue," he said.

One top beneficiary is Anhui Three Squirrels Electronic Commerce Co Ltd, a Wuhu, Anhui province-based snack maker, which is one of China's biggest online snack retailers.

The company made its public debut at the Shenzhen Stock Exchange on Friday. The stock surged 9.98 percent to its daily limit high during Monday trading and closed at 23.25 yuan ($3.38) per share. Its market value stood at 932 million yuan.

Shares of Three Squirrels have soared from its initial offer price of 14.68 yuan.

The seven-year-old snack producer's products including nuts, preserved meat, and dried fruit. It was ranked the top snack retailer by sales revenue on Alibaba's Tmall online shopping platform for five straight years.

The company started its business by selling online. Since 2016, it began to launch offline stores. Now, it has more than 70 brick-and-mortar stores nationwide, the company said.

In the first quarter, Three Squirrels' sales revenues hit 2.87 billion yuan, 27.17 percent higher year-on-year. During the period, its net profit reached 249 million yuan, up 6.95 percent year-on-year, its earnings report said.

Top domestic snack producer Bestore Food Co Ltd, which is based in Wuhan, Hubei province, also has plans to list in Shanghai.

Shanghai-based snack food chain Laiyifen, Hunan-based Yanjin Shop Food Co Ltd, and Tianjin Guifaxiang, one of China's time-honored brands, have all listed in the country's exchanges.

Three Squirrels, Bestore, and Hefei Huatai Food Co Ltd, the parent group of ChaCha, took the top three market positions in the category of nuts, seeds and trail mixes. The trio accounted for 52 percent of the market share in China last year, among a total of more than 2,500 industrial players, said market research provider Euromonitor International.

From 2005 to 2014, the annual compound growth rate of snack foods in China was 22 percent. By 2020, the market scale of the sector is expected to reach 2 trillion yuan, a report by market research company Ebrun said.