How to Make a Commodity Special: Three Squirrels Snack Brand Case Study

Founded in 2012, three squirrels is a Chinese online snack retailer. Six years after it launched, in 2018, the company reported their annual income of more than 7 billion yuan (1 billion US dollars). And in 2019, Three Squirrels raised $85 million in a China IPO and started trading at the Shenzhen Stock Exchange on July 12.

In 2019 CEO Zhang Liaoyuan was  listed as China’s 235th richest person coming in at a net worth of 1.58 billion US dollars. 

“That’s nuts!”  You say? 

Yes it is. It is incredible that Zhang built such a successful business in such a highly saturated industry in only 7 years. 

So how did he do it? How are Three Squirrels strategies different from conventional nut and snack retailers? 

First Understand How Chinese Consumers View Nuts

To understand Three Squirrels’ success we need to understand the Chinese market first.

During the Chinese Cultural Revolution, food shortage was a big concern, a lot of families just had enough rice to survive, so nuts or snacks in general were out of reach for average families.  A few families could afford nuts during the Chinese Spring Festival. So many elderly and middle aged  consumers from that era see nuts as a luxury.

But nowadays, with China’s booming economy, the problem has gone in the opposite direction, and for many consumers there is too much food, especially unhealthy food, and many Chinese people, including children, are facing health issues such as obesity and diabetes. 

With that in mind, a lot of Chinese families see nuts as a healthy snack compared to some other snacks like candy, chips, latiao (spicy strips) etc.

So now during the Spring Festival and other holidays, many families will have nuts on the table or bring them as a gift when visiting family members, as a healthy snack but also as a status symbol.

Three Squirrels hit the market at the right time in 2012 as many Chinese people were becoming more concerned about healthy eating and also had the ability to afford premium snacks. 

Three Squirrels Does Not Have any Farms or Factories

One thing that makes Three Squirrels unique and helps it avoid risk and reduce overhead is that the company does not own its own farms or factories to produce and process all the snacks.

Instead, the company focuses on product design (mix of nuts, flavors, packaging), marketing and branding, and logistics. 

The company essentially is a middleman – but a smart one. They take a commodity and turn it into a snacking experience. 

Using Employees as a Focus Group

Three Squirrels has all the employees eat their products and give feedback to see how they can improve their product and customer experience.

Many of Three Squirrels products include nuts that are still in the shell. However, employees pointed out that the problem with nuts in a shell is that if you just package walnuts, for example, in a bag there’s no way you can crack it open if you don’t have the tools, especially if you are on the go. So to make nuts more snackable and to remove this obstacle, Three Squirrels decided to provide a set of nut cracking tools inside the package. A shell disposal bag is also included so you don’t make a mess. 

Another example is hand wipes, Three squirrels has many lines of products, some of them are flavored, so when you use your hand to pick up snacks from the bag you get flavorings on your fingertips and if you don’t have anywhere to wash your hand it makes you feel very uncomfortable, so a hand wipe is provided in the bag. Also, in case you can’t finish the whole bag at once they also provide you with a reseal clip.

So essentially you buy one bag of three squirrel snacks and you will have all the accessories that come with it. It is more than just a bag of nuts; it is a convenient shopping experience. People see this as a very thoughtful product. 

Leveraging Three Squirrels IP to Drive Brand Awareness

To appeal to children, Three Squirrels took IP marketing to the next level. Not only did they create three cute cartoon squirrels characters as their mascots, they developed toys, cartoon films, games, and apparel. 

Recently Three Squirrels also moved from into offline retail, opening stores across decorated with vivid colors and oversized mascots of the three squirrels making the store in a sense like Starbucks, a trendy place to shop. And a bit like a toy store – kids want to stop in!

They’re also currently building a Three Squirrels theme park to further boost its brand recognition among children and parents alike.