Three Squirrels' Transformation Reflects Trends in the Trillion-Yuan Snack Market

Recently, the topic of new employees at Three Squirrels being asked to adopt the 'Squirrel' surname went viral on Weibo. This immersive role-playing approach to brand recognition sparked heated online discussion. Born at the dawn of the internet e-commerce boom, this snack brand leveraged online channel dividends to rapidly become a market leader and successfully went public, earning the title of 'the first national snack stock'.

How did Three Squirrels develop? What is the current status and trend of the snack industry it represents? We have compiled several reports to help you understand.

Three Squirrels' Development Path

Three Squirrels was founded in 2012 at the dawn of the internet e-commerce boom, with its headquarters in Wuhu, Anhui.

The company focuses on the R&D, packaging, and sales of casual snacks such as nuts. It rose rapidly by leveraging internet channels. Through IP-based branding, a highly iterative multi-category product matrix, and aggressive marketing, it became the top-selling food brand on Tmall during its first Double 11 and has maintained the top spot in the snack category for many years.

After 2020, due to the decentralization of e-commerce platforms and restricted offline retail scenarios, the company entered a period of negative revenue growth.

At the end of 2022, the company pivoted to a 'high-end cost-effectiveness' strategy, driving a new operational model through internal supply chain reforms and entering a new stage of growth.

In terms of revenue, Three Squirrels surpassed the 10 billion yuan mark in 2019. During the challenging period of 2022, revenue shrank to 7.29 billion yuan, but after shifting to 'high-end cost-effectiveness,' it achieved a breakthrough, with revenue stabilizing and recovering quarter by quarter in 2023.

On the channel side, Three Squirrels started as an e-commerce platform and possesses deep experience in online operations and traffic acquisition. Amidst the decentralization of online traffic, the company adopted the 'D+N' strategy ('D' for short video, 'N' for omni-channel). This means using short video platforms with the highest communication efficiency as a foundation to build scale and content, then rapidly deploying to all channels, empowering shelf e-commerce, offline distribution, and physical stores. Since actively focusing on Douyin in 2023, the company has seen significant growth in online revenue.

In offline channels, the company began store expansion in 2016, exceeding 1,000 stores by 2020. Under the pressure of limited consumption scenarios and the trend toward value-based consumption, original stores were closed in favor of national snack shop formats. In 2021, the company launched offline distribution, achieving impressive results with nut gift sets during the Chinese New Year season. With the 'high-end cost-effectiveness' strategy, daily consumer goods in distribution channels continue to contribute incremental growth.

Regarding products, Three Squirrels covers nuts, baked goods, meat products, and dried fruits. After streamlining the supply chain through 'product-sales integration,' it accelerated new product launches, introducing 1,000 SKUs since implementing the 'high-end cost-effectiveness' strategy in March 2023. As of the first half of 2025, nuts remain the core profit pillar. The company has successfully created star products with over 100 million yuan in sales, such as daily nuts and macadamia nuts, as well as key products like purple-skin cashews and pistachios with sales exceeding 10 million yuan. Additionally, it has expanded into high-frequency categories like 'freshly baked goods + fresh food + household chemicals,' with private labels accounting for over 90%, enhancing product stickiness and average transaction value.

In production, Three Squirrels previously relied entirely on OEM manufacturing. It is now deepening its layout in secondary processing, forming a 'self-manufacturing + joint factory + OEM' composite model. Nuts are produced on self-built lines, core snack categories are covered by partner-built factories, and other categories remain supplied by OEMs, achieving comprehensive coverage and flexible new product launches.

In summary, led by the 'high-end cost-effectiveness' strategy, Three Squirrels is market-oriented, restructuring its supply chain model to achieve total cost leadership and terminal value, while adjusting its organizational structure to realize refined category operations.

Trends in the Trillion-Yuan Snack Market

The casual snack market is rich in variety, covering nuts, crispy snacks, biscuits, candy/chocolate, baked goods, meat snacks, fruit snacks, seasoned flour products, and infant snacks. Nuts hold the largest market share, accounting for 21.5% in 2024, followed by crispy snacks and biscuits at 18.26%.

In recent years, China's casual food consumption market has continued to expand, exceeding one trillion yuan. According to Three Squirrels' prospectus and Frost & Sullivan, the market size reached 1.344 trillion yuan in 2024, a year-on-year increase of 5.32%. The CAGR from 2019 to 2024 was 4.4%, with a projected CAGR of 5.5% for 2025-2029.

Overall, China's per capita consumption of casual food is 954.4 yuan, significantly lower than in developed countries like the US and Japan—about one-fourth of the US and one-half of Japan. There is substantial room for growth in per capita consumption.

Due to the vast variety of snacks and the different development stages of each category, the industry competition is highly fragmented, with low overall concentration. According to the prospectus and Frost & Sullivan, the top five and top ten companies accounted for only 5.9% and 10.4% of the market share by sales in 2024, respectively. Compared to overseas markets, China's snack industry is highly fragmented, leaving significant room for consolidation.

Among domestic listed companies, Bestore, Three Squirrels, and Qiaqia Food firmly occupy the first tier. The market is differentiated by segments, with head effects emerging in nuts (Qiaqia, Three Squirrels), spicy snacks (Weilong, Jinzai), and baking (Taoli, Dali).

With technological progress and rising consumer demand for quality-to-price ratios and convenience, channels are undergoing disruption. Traditional retail channels like supermarkets are losing share, while emerging formats like discount snack stores, content e-commerce, and instant retail are rising rapidly. According to the prospectus, the market share of supermarkets has declined from 2019 to 2024, while content e-commerce rose from 0.31% to 6.12%, and snack stores rose from 5.17% to 8.97%, with further expansion expected.

The trend toward healthy eating is deepening, with consumer demand evolving from generic 'low oil, salt, and sugar' to more precise, scientific requirements. A CBNData survey shows that taste and safety/health are the most important factors for consumers. Sales of health-related snacks grew by 23%, significantly higher than the overall category. High-growth segments include konjac (high fiber, low calorie) and quail eggs (high protein).

Future opportunities lie in segments that deeply tap into health needs, such as the following three types:

• Ingredients with health benefits: Scientific understanding of functional ingredients like dietary fiber, probiotics, and collagen will drive a new wave of product innovation.
• Products for specific health goals: Snacks designed for gut health, weight management, sleep aid, stress relief, and anti-aging, providing 'health solutions'.
• Foods for specific groups: High-calcium, easily absorbed snacks for the elderly, high-protein snacks for health-conscious individuals, and professional, diverse snacks for children.

Furthermore, as consumers demand higher quality, better prices, and faster innovation, the light-asset model relying solely on outsourcing can no longer control quality, costs, or supply stability. Consequently, more leading companies are vertically integrating their supply chains—moving upstream to control raw materials and downstream to reach consumers directly, thereby improving efficiency.

Amidst intensifying domestic competition, leading snack companies are looking overseas for new growth. Although still in the early stages, globalization has become a shared strategic direction. Currently, companies are primarily focused on Southeast Asia, with recent forays into Europe and the US.

The trajectory of Three Squirrels is a microcosm of the evolution of China's snack industry. Today, in a trillion-yuan market, health, segmentation, vertical supply chain integration, and globalization are keys to breaking through. The industry is moving from 'barbaric growth' to a new stage of 'refined cultivation.' Whether through global exploration or niche innovation, these efforts will drive a more promising future for the industry.