In a retail store on Huangxing Road in Shanghai, a clerk named Xiao Liu is changing the price tags in the nut section. "Recently, each small packet has been nearly 2 yuan cheaper, and they're selling particularly well," Xiao Liu said, referring to a 35-gram package of pecans in the store, which has always been sold at 8.8 yuan. Occasionally, during promotional sales, the price was around 7 yuan. Starting from March this year, the price was uniformly reduced to 6.5 yuan, and the takeout channels also adjusted to the same price.
The trend of nut prices going down is stepping into consumers' line of sight.
"Two 160-gram packages of pecans were 37 yuan and 8 jiao last September, but recently they have been 24 yuan and 9 jiao," said Ms. Li, whose payment records on a shopping platform A confirmed her perception of the price drop. She found that the retail price of the same brand of pecans had decreased by nearly 13 yuan within half a year.
Similar to Ms. Li, college student Xiao Zhang, who has been buying nuts as snacks for a long time, also noticed this trend. "They're getting cheaper and cheaper, and it's not because of Double Eleven or promotions, but the regular prices," Xiao Zhang said. In December 2021, he ordered a 500g large jar of mixed nuts on shopping platform B for 29.9 yuan; by April this year, the price had already dropped to just over 20 yuan.
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According to the "Ma Shang Ying" offline real-time retail monitoring network, the average price per unit of six typical tree nut products all showed a year-on-year decline in 2023 compared to 2022. Ignoring the regular cyclical price fluctuations brought by the peak seasons of nut sales (the first and fourth quarters of the year), compared to the fourth quarter of 2022, the price of macadamia nuts in the fourth quarter of 2023 decreased by 26.31% year-on-year; the average prices of walnuts, cashews, almonds, and other products also decreased by varying degrees.
In the category of leisure snacks, nuts have always been at a relatively high price level. Both consumer perception and market data show that the average price of nuts has decreased over the past year, becoming more affordable.
Why are nut prices gradually becoming more "affordable"?
From the demand side, it seems that consumers' enthusiasm for nuts is "not what it used to be."
Going back to around 2019, with the introduction of the "daily nuts" concept, nuts, which are both "portable" and "healthy," became the favorite of various consumer groups such as office workers, students, and even parents and elders. The entire nut industry also flourished under the influence of this momentum, showing a prosperous scene that was unparalleled at the time.However, following the boom came the weak consumption during the three years of the pandemic. On one hand, nuts have always targeted the "portable" feature, which no longer fits the scenario of long-term home confinement; on the other hand, facing the relatively high prices of small packaged (25g) nuts ranging from 3 to 5 yuan, people's consumption decisions have become more rational.
The innovation in form seems not to have brought sustained prosperity to the nut industry.
The e-commerce low-price mentality has swept the entire snack industry. In the past few years, the joint drive of e-commerce platform marketing strategies and the low-price group purchases by top live streamers has formed a substantive "everyday low price." The snack industry, which has become increasingly "fourth meal" oriented, can no longer attract a large number of consumers with the word "high-end." The nut industry, which once made a fortune by relying on leisure and health attributes, is no exception. Cost-effectiveness, and even "quality-price ratio," has become an important criterion for consumers to choose nuts.
In the past, high prices were a common positioning for nuts among consumers. But when the entire industry rushes towards low prices and everyone can afford them, nuts have become a mass product. When consumers drive the entire supply system with their demands, top players, if they do not want to give up the market, have to lower their prices and join the low-price race. Relying on the good brand image of "high quality" in the minds of consumers, combined with the "low price" strategy, they strive for more sales volume to compensate for the loss of profit per item, turning to a development model of small profits but quick turnover.
From the perspective of external competition, the rapid expansion of discount snack stores in the short term has also brought considerable pressure to the nut industry.
Zhao, a student from County A in Liaocheng, Shandong, mentioned that within three months before the New Year of 2024, three snack discount stores opened successively in her county. The prices of many well-known brands in the store were lower than those in offline supermarkets and online e-commerce channels. "The price of a bag of pistachios in the supermarket can buy two bags in this discount store."
By leveraging the scale advantage of store expansion, snack bulk stores have reduced the distribution and wholesale links in supermarkets, compressed costs, and turned "affordable" into their core advantage, embedding it into the consumption logic of the lower-tier market. In recent years, snack discount stores have rapidly expanded in lower-tier cities, counties, and rural areas, growing rapidly in the lower-tier market like mushrooms after rain.
The rise of snack discount stores has directly impacted the price system of the entire snack industry. The snack industry has a low moat and strong replicability, especially in the field of nuts. There are very limited types of common nuts, the processing is simple, and the degree of homogenization is high. Faced with nuts with similar raw materials and flavors, consumers have contributed more choices to snack discount stores. In addition to working on segmented flavors and comprehensive snack product lines, joining the price war seems to be the only remaining choice for merchants.
Under the siege of snack discount stores, the top nut companies first gave their response - price reduction. As early as the beginning of 2023, Brand A, a representative of the top nut companies, determined the "high-end cost-effectiveness" strategy, achieving product quality improvement and price reduction through optimization of the entire supply chain and improvement of operational methods. Officially disclosed data shows that macadamia nuts, as a super single product, have been reduced by 30%.
At the end of 2023, Brand B also gradually began to implement a low-price strategy. Since the implementation of the strategy, the average price of more than 300 products sold in Brand B stores has been reduced by 22%, with the highest reduction reaching 45%, which is the largest price reduction since Brand B was established in 2006. The reduced products are mostly presented in the form of member prices, such as the original retail price of 9.9 yuan for a bag of peeled fragrant melon seeds (150g), which was reduced to 7.9 yuan a bag in December 2023, a reduction of 20.2%.Supply chain advantages have created significant room for price reductions for leading brands. Taking Brand A as an example, which previously opted for contract manufacturing, has begun to build its own nut category demonstration factory, established a joint venture with the Fortune 500 company, Olam International, to produce cashews, and has established a deep cooperation with Ocean Spray, the world's largest cranberry brand. Similarly, Brand B is also optimizing its own supply chain to reduce costs. According to Brand B's financial report for 2023, by supporting suppliers in building factories, refining production methods, and direct factory shipments, costs have been reduced at various stages of the production chain, such as raw material procurement, production, and distribution, to achieve price reductions on the sales end.
The strong signals released by the leading players indicate that a low-price strategy in the nut race has become a consensus. The continuation of this trend of nut price reductions has allowed many consumers to witness the "people-friendly" aspect of nuts and to truly enjoy the benefits of price cuts. However, is the relentless "price war" a sustainable development strategy? From planting, processing, to transportation and sales, what kind of structural innovations will occur under the guidance of low prices? This is a new set of answers that the nut industry needs to provide after shifting towards low prices.
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