Analysis of Three Squirrels' Price Increase Strategy for the Spring Festival Peak Season

Based on the latest market data and industry research reports, I will conduct a comprehensive analysis of Three Squirrels’ price increase strategy for the Spring Festival peak season.

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On January 16, 2026, Three Squirrels’ Mini Store and Distribution Division issued a price adjustment notice to partners, announcing that it will adjust the ex-factory prices of some nut gift box products in offline distribution channels starting from January 19. The new prices shall be subject to the specific quotation sheets issued by the company[1][2]. This price adjustment has the following characteristics:

Dimension	Details
Price Adjustment Scope	Limited to some nut gift box products in offline distribution channels
Channel Protection	Prices for online channels and other product categories remain unchanged
Effective Date	January 19, 2026
Buffer Period	A 3-day buffer period is reserved for partners to plan orders and adjust inventory
Core Reasons	Rising transportation costs due to tight logistics capacity, and climbing labor wages and service costs[1][2]

This price adjustment was announced on the eve of the Spring Festival peak season for New Year’s goods consumption, and the timing is highly intentional:

1. Support from Peak Demand
   : As a “hard currency” for New Year’s goods, the market demand for nut gift boxes continues to rise before the Spring Festival. The supply-demand contradiction in the peak demand period provides market support for the price increase[1]
2. Cost Pass-Through Window
   : Phased price adjustments in the consumer goods industry due to rising costs before the Spring Festival are a normal market phenomenon. Reasonable cost pass-through helps enterprises achieve sustainable operations[1][2]
3. Channel Relationship Maintenance
   : The reserved buffer period reflects the company’s consideration for the channel ecosystem and helps reduce channel resistance

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From the perspective of financial data, Three Squirrels is facing significant cost pressures:

Financial Indicator	Data	YoY Change
Total Operating Revenue in the First Three Quarters of 2025	RMB 7.759 billion	—
Net Profit Margin on Sales	1.97%	Limited profit margin
Gross Profit Margin on Sales	25.27%	—
Gross Profit Margin of Nut Category	23.91%	Down 2.64 percentage points YoY[2]

As the core business, the nut category achieved operating revenue of RMB 2.731 billion in the first half of 2025, accounting for approximately 50% of total revenue, but its gross profit margin decreased by 2.64 percentage points YoY, and cost pressures have become evident[2]. The company’s ROE is 7.69%, and the net profit margin is only 2.03%, leaving relatively limited profit space[3].

This price adjustment focuses on offline distribution channels, which is closely related to Three Squirrels’ market layout in recent years:

:

• In the first half of 2025, the operating revenue of offline distribution business reached RMB 938 million, a YoY increase of 40.21%, becoming the core driver of offline business growth[2]

:

• As of the first half of 2025, Three Squirrels has 450 offline stores, including 333 People’s Snack Stores, accounting for over 74%
• As the core carrier of transformation, Three Squirrels Life Hall targets the community instant retail track, with the slogan “Freshness is a Way of Life”, and builds a “Second Kitchen at Your Doorstep”[2]
• As of January 16, 2026, a total of 16 Life Hall stores have opened in 8 locations in Anhui and Jiangsu provinces, showing a trend of “dense penetration”[2]

:
The Life Hall is the core carrier of the transformation from a “vertical snack brand operator” to an “all-category private label retailer”. It integrates more than ten categories including fresh bakery, fresh produce, freshly made snacks, and daily necessities, covering the high-frequency demand of residents for “five meals a day”[2].

Against the background of diversified and fragmented channels, Three Squirrels maintains channel pricing power through the following methods:

1. Differentiated Price Adjustment Strategy
   : Only increase prices for offline distribution channels while keeping online channel prices stable to avoid chaos in the omni-channel price system
2. Focus on Ex-Factory Price Adjustment
   : Focus on adjusting ex-factory prices instead of directly interfering with terminal retail prices, giving channels a certain degree of pricing autonomy
3. Buffer Period Setting
   : Reserve a 3-day adjustment period to facilitate partners’ order planning, inventory adjustment, and pricing connection

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The cost side of the snack food industry shows a differentiated trend:

• Fields with Falling Costs
  : Prices of some bulk commodities such as flour and soybeans continue to decline, relieving some cost pressures for related enterprises[4]
• Fields with Rising Costs
  : Prices of core raw materials such as sunflower seeds and nuts fluctuate and rise due to supply-demand or weather factors, causing phased pressure on the gross profit margins of enterprises with a high proportion of single raw materials, such as Ganyuan and Qiaqia[4]

:

• Affected by the reduction in sunflower seed production caused by heavy rains in Inner Mongolia, the cost of sunflower seed raw materials increased by 10%-15% YoY in the first half of 2025, directly dragging down the profit growth of Qiaqia Food[5]
• The gross profit margin of Three Squirrels’ nut category decreased by 2.64 percentage points YoY[2]

Channel diversification has become an irreversible trend, but it also brings the challenge of “price system collapse”:

1. Channel Fragmentation
   : The traditional circulation chain of “manufacturer → distributor → terminal outlet → consumer” has undergone a disruptive restructuring[5]
2. Prominent Price Gap Issue
   : The online purchase prices of 60g Liuliu Plum prunes and 136g bayberries are RMB 3.54 per bag and RMB 8.625 per bag respectively, while the prices of the same products at Lianhua Supermarket are RMB 5.5 per bag and RMB 12.5 per bag, with a maximum price gap of nearly RMB 4[5]
3. Frequent Diversion of Goods
   : The past growth path relying on “B-end inventory pressure” has triggered price system chaos and frequent diversion of goods across all categories and the entire industry[5]

In 2025, the snack industry fell into multiple short-term predicaments of “loose price system, high inventory, and rising raw material costs”, and corporate profit margins continued to narrow[5]:

• Intensified Competition
  : Fierce industry competition coupled with channel structure iteration has led enterprises to actively lower the average product price or bear higher channel costs to seize new channel shares or cope with price wars[4]
• Increased Expenditures
  : As Q1 is a peak sales season combined with concentrated industry activities such as new product launches in spring, enterprises have increased investment in brand promotion and channel penetration[4]
• Net Profit Margin Under Pressure
  : Factors such as changes in channel structure, product structure optimization, and changes in expenditure intensity have led to fluctuations in the industry’s net profit margin[4]

Leading brands are exploring transformation paths one after another:

Enterprise	Strategic Direction	Practical Results
Qiaqia Food	Channel-customized SKUs	The high-end nut gift box co-developed with Sam’s Club achieved sales of over RMB 100 million during the Mid-Autumn Festival period[5]
Laiyifen	Warehouse Club Model	The proportion of franchise stores increased to 53%[5]
Yanjin Shop	“Return to Supermarkets” Strategy	Upgraded from a traditional supplier to a “growth partner” for supermarkets[5]
Mingming Henmang	Private Label Layout	The mass sales channel has transformed from a traffic ally of traditional brands to a competitor[5]

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:

• Ease cost pressures and improve gross profit margin
• Maintain interest relationships with offline channels and ensure stable supply during the Spring Festival peak season
• The short-term impact on the stock price remains to be seen (as of the close on January 16, Three Squirrels closed at RMB 24.45 per share, with a total market value of RMB 9.821 billion[2])

:

• Strengthen the strategic position of offline channels and accelerate channel structure optimization
• Provide profit support for the transformation to an “all-category private label retailer”
• Enhance supply chain stability and ensure product quality

:

1. Repair of Cost Pass-Through Mechanism
   : If Three Squirrels’ price increase is accepted by the market, it may promote the formation of a healthier cost pass-through mechanism in the industry
2. Reassessment of Channel Value
   : Against the background of channel diversification, the interest game between brand owners and channel partners will become more refined
3. Rational Competition in the Industry
   : Reasonable cost pass-through helps enterprises achieve sustainable operations and promotes the healthy development of the industry[1]

:

1. Differentiation of Competitive Strategies
   : Other brands may adopt two different strategies: following the price increase or maintaining price competition
2. Restructuring of Channel Relationships
   : The price adjustment will accelerate the transformation of the relationship between brand owners and channel partners from a “goods-selling relationship” to a “growth partnership”[5]
3. Upgraded Supply Chain Competition
   : The snack industry is moving from the “era of hit products” to the “industrial era”, and the supply chain has become the core competitiveness of brand owners and channel partners[5]

:

1. Channel Dividend Entering the Late Stage
   : The industry is facing problems such as slowing revenue growth and intensified downstream competition squeezing upstream profit margins[4]
2. Intensified Category Differentiation
   : Health-oriented and functional sub-categories are rising strongly, with the konjac snack category leading with a YoY growth rate of 17.45%[5]
3. Accelerated Overseas Layout
   : Leading brands such as Qiaqia Food, Jinzai Food, Panpan Food, Bestore, Weilong, and Ganyuan Food have all established a presence in the Southeast Asian market[5]

:

1. Precise Channel Adaptation
   : Precisely adapt to channels based on their own product characteristics and target groups, and balance the interest demands of all parties[5]
2. Strengthening Supply Chain Capabilities
   : Strengthen the foundation of the supply chain through capitalization and internal adjustments to support product innovation and channel expansion[5]
3. Deepening the Core Product Strategy
   : Continue to deeply cultivate core products, and build consumer mental barriers through precise positioning, technological innovation, and digital empowerment[5]

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Three Squirrels’ price increase strategy for the Spring Festival peak season is a choice driven by both cost pressures and strategic transformation:

1. In the Short Term
   : The price adjustment helps ease the pressure brought by rising logistics and labor costs, and improve the predicament of limited profit space
2. In the Medium Term
   : The price adjustment strategy focusing on offline distribution channels is highly aligned with the company’s strategy of deepening offline layout, which helps strengthen channel pricing power
3. In the Long Term
   : Against the background of the snack industry moving from the “era of hit products” to the “industrial era”, supply chain capabilities will become a core competitive factor

For the snack food industry, Three Squirrels’ price increase reflects the cost pressures and channel transformation challenges commonly faced by the industry. In 2026, snack brands need to base themselves on their own positioning, precisely adapt to channel needs through customized SKUs, multi-channel collaborative layout, etc., find a balance of interests in cooperation with distributors, mass sales channels, supermarkets, and other parties, and transform from a simple “goods seller” to a “growth partner” for channels, in order to achieve sustainable development in the complex competitive landscape.

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[1] Securities Times - “Costs Rise Before Spring Festival: Three Squirrels Adjusts Ex-Factory Prices of Some Nut Gift Boxes in Offline Distribution Starting January 19” (https://www.stcn.com/article/detail/3598379.html)

[2] East Money - “Costs Climb Before Spring Festival: Three Squirrels Raises Prices of Some Nut Gift Boxes Offline to Deepen Offline Layout and Seek New Opportunities” (https://m.dtm.com.cn/news/202601/175928.html)

[3] Jinling AI - Company Profile and Real-Time Quotation Data

[4] Guojin Food and Beverage - “Food and Beverage Industry Weekly: Moutai’s Price System Continues to Recover” (https://finance.sina.com.cn/roll/2025-12-30/doc-inhewuuw9368695.shtml)

[5] DoNews - “Snack Industry in 2025: Breaking Through, Transforming, and Paths to Long-Term Growth” (https://www.21jingji.com/article/20260108/herald/418d3b4e1c9304f30804a0927f9f8774.html)