The Issuance Appraisal Committee of the China Securities Regulatory Commission announced at its 39th and 40th work conference that Three Squirrels (三只松鼠) and two others companies passed initial public offering (IPO) screening on May 16.
As of today, there are already 30 companies that have submitted applications for the IPO on eighteenth CSRC, 28 companies have been accepted thus far, with a passing rate of 93.3 percent.
Founded in 2012, Three Squirrels is a leading snack brand that achieves USD 1.5 billion sales in 2018 through selling nuts, seeds, dried fruits and other snacks. It is not only the first food brand tapping into e-commerce, but also currently the largest snack retailer on major Chinese online retail sites. The company has successfully turned a relatively mundane product into a successful and recognizable domestic brand.
The Chinese snack industry has entered a fast lane of development. Its gross output value is expected to grow by about 20 percent a year, hitting CNY 3 trillion (USD 444 billion) by 2020, according to a report released in December by the Circulation Industry Promotion Center, which is affiliated to the Ministry of Commerce.
Benefiting from the secular growth of e-commerce, snack sales have partially shifted from offline mom-and-pop shops and retail stores to online venues. The online penetration grew to 11 percent in 2017. Assuming the online penetration of snack sales will grow at the current pace, reaching 15 percent by 2022, the online addressable market for Three Squirrels is approximately CNY 93 billion (USD 14 billion).
Now Three Squirrels is focusing on a comprehensive upgrade to innovate 20 to 30 percent of their products into distinctive flavors. With the IPO on schedule, hopefully, the upgrading of its products will sustain the leading position in China's snacks market in the long run.
These days, leading Chinese snack firms are all turning to more delicate products aiming at a younger generation. With the consumption upgrading of the Chinese Millennial, it is a way not to become embroiled in a profit-hitting price war, or compete with imported products.