Restructuring hits Want Want’s bottom line, as top line ekes out growth

The veteran food giant’s revenue began expanding again in its latest fiscal year, but channel reconstruction, new product promotions and rising costs depressed its profit

Key Takeaways:

• Want Want’s revenue for its fiscal year through March rose 3.8% to 24.4 billion yuan, but its profit fell by 11.5% to 3.84 billion yuan
• The food veteran’s distribution costs rose 16.9% as it restructured its sales channels, dragging down its profitability

By Lee Shih Ta

Food giants in the past could coast along for years simply by banking on established distributor networks and a few blockbuster products. But the collective rise of specialty snack makers, content-based e-commerce, on-demand retail and discount business models have thrown a major spanner into that time-tested model. Today’s brand owners can no longer merely push products into tried-and-true channels like they once did, and must instead constantly redesign their products, pricing, and consumption scenarios for changing tastes.

For stalwarts like Want Want China Holdings Ltd. (0151.HK) that rely heavily on classic products and extensive distribution, channel overhauls have become a new operational flavor of the day as they race to keep up with the changing times. The company’s latest annual financial results show Want Want’s transformation has already put the company back on a growth track, at least on its top line. Yet it still remains in a painful transition characterized by pressure on its bottom line.

Want Want’s revenue reached 24.4 billion yuan ($3.59 billion) in its latest fiscal year through March, up 3.8% year-on-year, while its sales volume also recorded high single-digit growth. But its gross margin dipped from 47.6% to 46.3%. Reflecting the financial pressures it’s feeling, the company’s operating profit fell 14% year-over-year to 5.02 billion yuan, and its net profit slipped 11.5% to 3.84 billion yuan.

Such laborious top-line growth is the result of Want Want’s ongoing channel overhaul over the past two years. The company launched its “conquering cities and winning the world” strategy at the end of its 2024 fiscal year, reorganizing its product categories and establishing a new product business division. The steps were aimed at changing a past model that relied heavily on wholesalers, supermarkets, and the widespread distribution of blockbuster products, into a new approach more closely tailored to a wider range of channels and consumption scenarios.

Under the overhaul, Want Want subdivided its traditional wholesale business into finer segments, seeking new customers based on smaller regions and product combinations. At the same time, it also pushed its products into more youth-oriented scenarios such as areas around schools, e-sports arenas, and billiard halls. At the convenience store level, its primary focus has become ready-to-drink and single-serving products. In supermarkets, it strengthened its family-sized packaging and gift boxes. And for specialty snack retail, it increased the number of items suitable for high-volume sales.

In its latest fiscal year, traditional and modern channels still accounted for nearly 70% of total revenue, though both segments declined by high single-digits. By comparison, specialty snack retail channels grew rapidly to account for about 15% of revenue, while emerging channels also grew by low double-digits. Traditional channels remain the company’s base, but growth is clearly shifting toward specialty snack retail, e-commerce, on-demand retail, vending machines and social media platforms.

Blockbuster product slowdown

The company’s product mix has also changed in tandem with the channels. Dairy and beverages remain the company’s largest segment with 12.34 billion yuan, up 1.9% year-over-year, accounting for about half of total revenue. But the dairy segment fell by a slight 0.3%. The company’s real growth drivers were beverages and other minor categories, which rose nearly 40% and made up over 80% of sales volume growth. The rice cracker segment recorded 5.94 billion yuan, up just 0.5%, acting as a stabilizer for the overall revenue base.

Want Want has always possessed the organizational DNA to open up markets by relying on blockbuster products. In its early years, the company manufactured canned foods in Taiwan. It later went to Japan, where it learned about rice crackers, building its Want Want brand on the success of products like its Shelly Senbei Rice Crackers. After entering Mainland China, its Want Want Hot-Kid Milk Drink established it as a national brand.

But while such blockbuster products can establish a foundation, they eventually plateau. Conversely, the company’s new beverage products and niche categories such as candies and ice products under the snack foods segment recorded faster growth.

Among those, the most outstanding performer was the snack foods segment, whose revenue climbed 10.4% to 5.92 billion yuan, as sales volume also achieved double-digit growth. Benefiting from increased volume for new products such as gummies, squeeze candy and compressed milk candy tablets, revenue from the company’s candies category reached an all-time high. That shows Want Want’s growth narrative has shifted toward more niche categories and diverse consumption scenarios.

As for last year’s profit decline, the drop owed to a confluence of factors, including rising costs and transitional expenses. Among these, the cost of goods sold rose by 6.3% to 13.1 billion yuan, which was primarily the result of rising costs for imported whole milk powder and palm oil. At the same time, distribution costs increased by 16.9% to 3.54 billion yuan, as the company developed new channels and promoted new products, while administrative expenses also grew by 11.4% to 3.35 billion yuan.

When compared to its peers, Want Want’s split situation of rising revenue but falling profits looks awkward. Tingyi (0322.HK) saw its revenue drop by 2% to 79.07 billion yuan in 2025, but its net profit rose by 20.5%. Similarly, Uni-President China’s (0220.HK) profit also rose by 10.9%. By comparison, Want Want’s failure to convert revenue growth into profit growth shows its channel overhaul and marketing investments are still weighing on its margins.

Fortunately, Want Want remains a cash-rich company. The company’s cash and long-term bank deposits totaled 15.86 billion yuan at the end of March. Its total borrowings fell to 2.66 billion yuan, giving it net cash of 13.2 billion yuan. The company recorded net cash inflow from operating activities of 4.5 billion yuan for the year, which is enough to support its continued investments in new channels, new products and overseas expansion.

Still, investors appear impatient to see better post-overhaul results. Want Want’s stock plunged by 18.7% over the two trading days after it published its latest results, bringing its losses to 32.5% over the past six months. The shares currently trade at a trailing price-to-earnings (P/E) ratio of about 8.5 times, lower than Tingyi’s 11 times and Uni-President’s 12.7 times.

Investors may be worried over the high price Want Want is paying for its revenue growth. To change that, the company needs to show that specialty snack retail, emerging channels and new products are not solely generating sales volume, but are also capable of recapturing the same kind of lucrative profits that Want Want’s blockbuster products commanded in an earlier era.

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