Chinese Snack Giant BESTORE to Raise CNY 773 Million in Shanghai IPO
COVID-19 and China
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BESTORE (良品铺子) – which runs a self-operated dried leisure snack business – announced the approval of its Initial Public Offering (IPO) on November 28. The Wuhan-based firm is now about to start trading on the main board of the Shanghai Stock Exchange.

Following its IPO, the company is issuing 41 million shares, with a plan to raise a total of CNY 773 million (equivalent to USD 110 million). It is reported that the funds will be for its strategic expansion via four aspects. CNY 446 million will be used for the construction of an omni-channel marketing network to provide customers with integrated shopping experience, CNY 193 million to improve its warehouse and logistic systems, CNY 100 million on upgrading its digital information systems and the rest poured onto reconstruction of its R&D center.

Established in 2006, BESTORE focuses on high-end retail strategy. Since 2012, BESTORE has begun to execute an omni-channel sales model, and ventured into the online retail business, building its e-commerce platform, mobile APP and O2O sales platform as a compliment for its offline store business development. For its online services, the company is adhering to the ‘e-commerce platform + social e-commerce + self-operated APP’ scheme.

The company has outperformed other companies in the industry over the last few years. Net profit grew at an outstanding pace, increasing from CNY 45 million to CNY 113 million between 2015 to 2017, achieving a Compounded Annual Growth Rate (CAGR) of 58.5%.

Its online omni-channel strategy has been shown to be an effective tool, as it is experiencing a rapid growth rate and rising revenue, compare figures of only 26.53% in 2015 and 44.85% in 2018. However, BESTORE is not neglecting its offline channel and has added 415 stores to its fleet in 2019, amounting to a total of 2507 stores across more than 100 cities in China.

Two other snacks giants Three Squirrels (三只松鼠) and Be & Cheery (百草味) which started as an online platform, have started shifting its strategy to offline stores as well, to enrich their big data platform, hence enhancing customers’ experience.

Three Squirrels, which was recently listed on A share, inaugurated its first offline store back in 2016, and currently has 45 stores, with annual sales of each store reaching CNY 8 million. The company has announced its plan to open 10,000 stores in the next five years.

On the other hand, Be & Cheery’s revenue from offline shops reached CNY 450 million, accounting for 11.3% of its total revenue.

Online and offline services represent the industry’s future trend. According to ebrun , it is estimated that snack food’s market size for China will reach CNY 2 trillion in 2020, indicating the huge potential for these companies to expand further in this nascent market.    

Editor: Luke Sheehan

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