First coverage of Mingming Busy and Wancheng Group, Goldman Sachs: Discount stores are “structurally changing” Chinese retail.
China’s retail industry is undergoing a quiet structural shift. Over the past decade, online e-commerce has continuously squeezed offline channels with its price advantage; but as consumer behavior becomes more rational, a new offline model is regaining pricing power—a model known as Hard Discount Retail.
According to Wind Trading Desk, Goldman Sachs has, for the first time in its latest report, covered China's two leading bulk snack players—Mingming Hen Mang and Wancheng Group, assigning both a Buy rating with target prices of 496 HKD and 269 RMB respectively, representing upside potential of 23% and 33% over current prices.
Goldman Sachs noted in its report that the discount retail model, represented by bulk snacks, is disrupting traditional supermarkets, convenience stores, and even e-commerce, through extremely low prices, direct supply chain procurement, and high turnover systems, and could become one of the most important structural changes in China's retail sector over the next decade.
Goldman Sachs expects GMV of the snack discount industry to achieve a 13% annual compound growth rate from 2025 to 2028, with market size reaching 319 billion RMB and store numbers expanding to about 70,000 by 2028. By 2035, snack discount stores' share of the overall snack and beverage market will increase from the current 5.6% to 7.5%, with store numbers expanding to about 98,000.
The key driver behind this growth is the penetration of private-label (self-operated) brands, which currently comprise a much lower proportion of China's discount channel compared to US supermarkets' 20%-30%, while private-label products generally boast gross margins 8-10 percentage points higher than branded goods, offering long-term margin expansion flexibility.
Ten-Thousand Store Scale: Snack Discount Track Rises Rapidly
The bulk snack segment has witnessed near "explosive" expansion over the past two years.
Through integration and franchise expansion, China’s market has swiftly formed a landscape dominated by two giants.
Mingming Hen Mang resulted from the merger of “Ling Shi Hen Mang” and “Zhao Yi Ming Snacks,” and has become China's largest chain retailer of leisure foods. According to industry data:
- Store count: about 14,000
- Coverage: 28 provinces nationwide
- Annual GMV: about 55 billion RMB
The other leader, Wancheng Group, rapidly expanded leveraging brands like “Haoxianglai”:
- Store count: over 15,000
- Annual GMV: over 40 billion RMB
Goldman Sachs believes the two companies together command about 70% share of China’s bulk snack market, with industry competition gradually evolving into a duopoly structure.
This indicates the bulk snack segment has progressed from early regional competition to a national scale competition phase.
Repricing Offline Retail
The core appeal of bulk snacks boils down to one thing: low prices.
But Goldman Sachs points out, this low price is not simply a promotional tactic, but is based on a fundamental restructuring of the supply chain.
Traditional retail systems generally involve multi-layer distribution: Brand → Regional Agent → Wholesaler → Supermarket → Consumer. Each layer raises the price, eventually resulting in high terminal prices.
Bulk snacks dramatically shorten this chain by direct procurement: Brand → Bulk Snack Channel → Consumer. Meanwhile, companies further squeeze costs through three mechanisms:
First, scale buying. As store counts exceed ten thousand, leading firms can use centralized orders to gain significant bargaining power.
Second, centralized warehousing and logistics. A nationwide warehousing and distribution network reduces per-item logistics cost.
Third, high-turnover product structure. Bulk snack stores typically carry 1,800–2,000 SKUs, with frequent product refresh and quick phase-out, raising inventory turnover efficiency.
Under this system, prices for similar products are usually 20%-30% lower than supermarkets and convenience stores. Goldman Sachs notes this means bulk snacks now enjoy price advantages over e-commerce platforms for many products.
Consumer Shift: Quality-Price Ratio Becomes Core Variable
The deeper reason for the rise of bulk snacks is a real change in China's consumption structure.
Goldman Sachs believes that in recent years, Chinese consumer behavior has shifted markedly—from 'brand priority' to 'value for money.'
Against a backdrop of slowing macroeconomic growth and more rational consumption, consumers increasingly value quality-price ratio.
This trend is highly similar to the period when hard discount retailers rose in Europe and the US; for example, Costco and Aldi both expanded rapidly during phases of rationalized consumption, ultimately altering retail industry dynamics.
Goldman Sachs suggests China’s bulk snack model may currently be in a similar early phase.
Lower-Tier Markets: Key Soil for Expansion
The speed at which bulk snacks have expanded is closely linked to consumption potential in China’s lower-tier markets.
Presently, consumption in China’s counties is close to half of total retail sales, and growth rates in cities below Tier 3 generally outpace Tier 1 cities.
Bulk snack stores are heavily concentrated in these areas. For example, about 60% of Mingming Hen Mang's stores are located in county and township markets.
This “rural encirclement” expansion path allows companies to: avoid high rents in Tier 1 cities, reduce direct competition with large supermarkets, and quickly build dense regional networks.
Goldman Sachs points out, once store density is achieved, supply chain costs will further decline, forming a scale flywheel effect.
If the industry’s store density is benchmarked against Japan and Korea’s small-scale modern retail formats, Goldman Sachs’s scenario analysis shows China could have potential for another 220,000–390,000 snack discount stores, with total industry store numbers possibly reaching 770,000–940,000. The current scale of about 55,000 is still in the early growth stage.
A Game for Brands, a Threat for Convenience Stores
Discount channels are not antagonistic to brands, but growth doesn’t come without cost.
According to Goldman Sachs’ value chain estimates: Brands' gross margins through discount channels are generally compressed by about one-third compared to traditional wholesale channels.
Meanwhile, certain traditional channel costs are eliminated outright, including: distributor rebates, KA (key account) entry fees, display fees, terminal promotional expenses.
This model is especially attractive for mid-sized brands and white-label suppliers, who usually pay higher channel costs in traditional routes, but with discount stores, they can achieve higher output with lower total chain costs. This co-created SKU approach is changing the traditional logic of brand development and sales.
For brands, it’s a game; for convenience stores, it’s direct competition.
Bulk snack stores and convenience stores overlap in many respects: similar store area (about 130 sqm), comparable product structure (packaged snacks, beverages), and highly consistent customer bases.
Consulting firm KPMG found in a 2023 industry survey: 89% of convenience store businesses report their GMV has been significantly eroded by snack discount stores.
Thin Margin Business: Scale Determines Winners
Despite rapid industry expansion, bulk snacks is not a high-profit segment.
The industry generally follows a classic “high-volume, low-margin” model: gross margin about 7%-8%, net margin about 2%. This means corporate profitability is highly dependent on scale effects and supply chain efficiency.
Goldman Sachs believes future industry competition will focus on three pillars:
Store scale: Whoever first builds a national network stands to gain procurement advantages.
Supply chain capability: Direct procurement ratio, logistics efficiency, and inventory turnover will directly determine cost structure.
Private-label capability: Following the path of overseas discount retailers, private-label brands are expected to become an important profit source.
Bigger Imagination: From Snacks to Community Retail
Goldman Sachs believes the real value of bulk snacks extends far beyond snacks themselves.
More importantly, this model has proved one thing: offline retail can still win price competition through efficiency advantages.
Once supply chain and store systems mature, the discount retail model could well expand to more categories, such as community food retail, daily consumer goods, and instant consumption items.
This means bulk snacks may just be the first step in China’s discount retail revolution.
Goldman Sachs sees the past ten years’ main narrative in China’s retail sector as the rise of e-commerce. In the coming decade, offline channels may undergo another major restructuring.
Bulk snack firms such as Mingming Hen Mang and Wancheng Group are challenging traditional retail price structures with supply chain efficiency and scale advantages.
If this model can continue to replicate, the competitive logic in China’s retail sector may fundamentally shift: from brand premium competition to efficiency and cost competition. This is exactly what Goldman Sachs refers to—discount retail is “structurally transforming” China’s retail.
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