Analysis from Orient Securities indicates the discount snack retail market is projected to reach approximately RMB 223.4 billion in 2025, marking a 72% year-on-year growth, with a duopoly structure now established. The expansion of scale is further strengthening the leading players' bargaining power for bulk procurement and reverse customization with upstream suppliers, accelerating the concentration of channel influence towards the top firms. The firm primarily recommends the discount snack retail channel, focusing on the theme of earnings certainty. This channel combines high growth momentum with strong performance delivery, and at the current juncture, attention is advised on leading channel operators; simultaneously, the firm recommends upstream snack manufacturing brands that benefit significantly from the expansion of the discount channel. The key viewpoints from Orient Securities are as follows:

Market Momentum Sustained with Rapid Store Expansion, Industry Competition Returns to Rationality

According to data from Qianzhan Industry Research Institute, the industry scale is estimated to be around RMB 223.4 billion in 2025, a 72% increase year-on-year, forming a duopoly pattern with southern-based Mingming Hen Mang and northern-based Wanchen Group. Wanchen Group had approximately 20,000 stores by the end of Q1 2026 (with a net addition of over 1,150 stores in the first two months), adhering to a strategy of high-quality store expansion. Mingming Hen Mang reached 21,948 stores by the end of 2025, with a net addition of 7,554 stores for the year, and was listed on the Hong Kong Stock Exchange on January 28, 2026. In early June, both Mingming Hen Mang and Wanchen Group issued statements opposing improper competition and disorderly internal rivalry, signaling an industry shift from competing for scale to competing on quality.

Channel Efficiency and Long-Term Influence Trump Short-Term Store Growth

The core advantage of the discount channel lies not in short-term store-opening benefits but in efficiency-driven channel substitution, with medium to long-term growth potential and supply chain influence continuing to rise. Qianzhan Industry Research Institute forecasts the industry scale could reach RMB 962 billion by 2031, implying a compound annual growth rate of approximately 25% from 2026 to 2031. The strengths of the discount model include high sales turnover, low inventory, short payment cycles, and strong replicability: inventory turnover days for discount snacks are about 10-20 days (only 11.6 days for Mingming Hen Mang), significantly better than the roughly 50 days for traditional supermarkets, creating a positive cycle of "low price - high turnover - stronger procurement bargaining power - even lower prices." Scale expansion further enhances bargaining power for bulk procurement and reverse customization capabilities with upstream suppliers. Mingming Hen Mang has customized SKUs accounting for 34% and a logistics expense ratio of only 1.7%, indicating accelerating concentration of channel power among leading players.

Improved Single-Store Economics and Category Expansion Enhance Earnings Visibility

The Hong Kong listing prospectus of Wanchen Group shows that average monthly retail sales per store increased from RMB 371,000 in the first half of 2025 to RMB 392,000 in the second half, and further rose to RMB 406,000 in January-February 2026, showing sequential improvement. In Q1 2026, average single-store revenue continued its year-on-year double-digit growth, driving total revenue to RMB 16.634 billion (+53.7%) and net profit attributable to shareholders to RMB 630 million (+193.1%). Concurrently, Wanchen Group is improving its single-store model by adding higher-frequency or higher-value-added categories such as bakery items, frozen goods, trendy toys, personal care and daily chemicals, and rice, flour, and oils to increase store visit frequency, average transaction value, and household penetration. Mingming Hen Mang is also advancing category expansion initiatives including hot food, refrigerated items, frozen products, and private labels. The synergy between single-store improvement and scale expansion results in high earnings delivery certainty for the leading companies.

Risks include intensifying industry competition, store expansion and single-store revenue falling short of expectations, food safety incidents, and rising raw material costs.