Cailian News | New Consumer Daily News November 14th (Researcher Liang Youyun), following the incident with Northeast Yu Jie, another brand encountered problems with the ingredient list.

Recently, several anti-counterfeiting internet celebrities, such as 'Song Ge Da Hu', on their personal accounts, successively released multiple videos to report that the snack brand Bestore Co., Ltd. had fake ingredient lists.

According to the video content, from January to June this year, their team successively purchased multiple Bestore Co., Ltd.'s lotus root powder and spicy powder products nationwide and conducted inspections to confirm if there were differences in product ingredients. Their team suspects that Bestore Co., Ltd. is suspected of falsifying ingredient lists and adding other suspicious ingredients to the food, compromising consumer food safety.

On November 4, Bestore Co., Ltd. officially announced that, after preliminary investigation, the various indicators of the related products in our company and the manufacturer's multiple batches of inspections this year have all qualified. The local regulatory authorities have conducted investigations on our related products by sampling.

At the same time, the staff of the JinYinLake Branch of the Wuhan Market Supervision and Administration Bureau also responded to various parties, stating that the relevant reports from the blogger have been accepted and are under investigation. Samples are being tested, and the official investigation results will prevail.

Internet celebrities are exposing counterfeit products at the headquarters of the brands.

Due to the previous incident where the well-known internet celebrity and e-commerce live streamer 'Northeast Yu Jie' was criticized for using tapioca starch as sweet potato starch, and suffered a collapse in image, this time Bestore Co., Ltd. has received a lot of attention due to similar reasons for being reported.

It is reported that on October 30th, "Song Brother Dahu" brought multiple prepared products, monitoring equipment, monitoring reports, fair reports, and other complete evidence chains to the bestore co.,ltd. Wuhan headquarters for safeguarding their rights.

"Song Brother Dahu" presented inspection results showing that in multiple product batches produced before June this year by a certain OEM factory under bestore co.,ltd., there was counterfeit behavior of substituting low-cost cassava flour for lotus root powder as a raw material. According to the on-site instrument observation results from bloggers, the lotus root powder products had both lotus root powder and cassava flour raw materials.

At the same time, in a certain hot and sour powder product cake under bestore co.,ltd., the ingredient list showed sweet potato starch, but the related components were not actually detected, and even low-cost cassava and potato components were not detected. The blogger raised doubts about whether the composite formula of this cake meets safety standards for use.

While "Song Brother Dahu" was in the Hubei bestore co.,ltd. headquarters advocating for their rights, introducing the suspected illegal situation of the enterprise to the local market supervision and management department, they encountered what appeared to be forced eviction by security guards and other personnel. Video footage shows that the two sides were involved in physical conflicts at one point, and eventually they went together to the local police station to explain the situation. They directly submitted the relevant testing and reporting materials to the local market regulatory department afterwards.

After the incident escalated, bestore co.,ltd. quickly removed the reported lotus root powder and hot and sour powder related products from multiple platforms, and temporarily disabled the comment feature in their brand's Douyin live broadcast room. However, bestore co.,ltd. officials soon stated that the related products are still available offline, and online removal is only temporary for inventory clearance.

According to the response from the bestore co.,ltd. brand's customers, regarding the incident of counterfeit cassava flour in the raw materials, some consumers have provided feedback to us on October 30. There is no problem with the products. Our products have been tested and comply with national food safety laws before being sold. This matter has been reported to the company's senior management, the local market supervision department has intervened in the investigation, and there are currently no results, still under verification. In addition, we have provided feedback to the relevant authorities regarding the false statements in the video, and we are resolutely defending the company's legitimate rights and interests.

"Song Brother Dahu" responded to the rumors about bestore co.,ltd., stating that their report focused on product batches produced before June this year, while the brand responded with testing results from recent production batches, which is not a direct response. The truth behind this matter still awaits the judgment of relevant authorities.

In-depth investigation into the involved OEM factory of Bestore Co.,Ltd.

The New Consumer Daily found that in a video, Song Ge mentioned that the manufacturer of Bestore Co.,Ltd.'s lotus root powder products had been reported for mixing other ingredients into the products in the past.

However, through various public searches, Anhui Yanzhifang Food Co., Ltd., the OEM factory of Bestore Co.,Ltd.'s lotus root powder, has not received any penalties in recent years due to product quality issues. Only in mid-May 2017, JD.com disclosed that the company's Coix Seed Red Bean Powder had excessive E. coli detected, which led to rectification orders by the Hefei food supervision and management department. It quickly adjusted and resumed production to a qualified status.

Even though it has not been proven whether the situation of adulteration is true, Anhui Yanzhifang Food Co., Ltd. has faced doubts from netizens. Several accounts related to lotus root powder products have been taken down. When questioned by the media, Yanzhifang personnel are unclear about whether Bestore Co.,Ltd. has dispatched on-site personnel to supervise production, or whether there is any specific situation of adulteration.

Records show that Anhui Yanzhifang was established in 2001, operating with the business model of "company + base farmers + stores + e-commerce." It has strategic partnerships with 65 chain supermarkets, both internationally and domestically, with a market network covering 20 provinces and cities nationwide.

On Douyin platform, Yanzhifang has over 0.684 million fans, with hot-selling mixed grain porridge products selling more than 2.668 million portions; on the Taobao Tmall platform, it has over 0.7 million fans, with hot-selling mixed grain porridge products selling over 0.1 million portions.

Another product, the Bestore Co.,Ltd. spicy and sour powder, reported by a blogger, has been delisted from its official e-commerce channel, but is still available on some platforms.

In a link to the Bestore Co.,Ltd. same spicy and sour powder on a certain platform, the New Consumer Daily found that in comparing the after-sales evaluations of the past few months, the product indeed has two different powder cake structures. One is the spicy and sour powder cake with only "sweet potato flour" ingredient as mentioned in the blogger's video, while the other is made by mixing "edible corn starch, edible cassava starch, edible wheat starch, and edible sweet potato starch" to create the spicy and sour powder cake.

According to incomplete statistics, products with earlier production dates (before August 2024) are generally labeled as "sweet potato powder" cakes, while most products afterwards are made with mixed ingredients, with a few still being "sweet potato powder" cakes. Due to the packaging upgrade of bestore co.,ltd's hot and sour powder products in the past six months, the possibility of new products with mixed ingredients cannot be ruled out.

Regardless of the ingredients, the OEM factory for these products is Henan Pinzheng Food Technology Co., Ltd. According to the introduction, the company was established in 1996 and is a well-known local food condiment, dining recipe, and convenience food R&D OEM manufacturer in Henan. It has a large production base in Henan covering an area of over 140 acres, with a production workshop area of 80,000 square meters, equipped with modern food centers for research and development, laboratory testing, quality control, and more.

Publicly available penalty information shows that this company was publicly reported in the first half of 2023 for the fat content labeling of the scalded noodle fabric it produced not complying with food safety regulations. After verification by the Wenxian Market Supervision Administration of Jiaozuo City, Henan Province, it was confirmed that there were indeed problems with the company's labels. However, due to the company's minor violation and prompt correction without causing harmful consequences, no case was filed.

However, looking at the historical administrative penalty information of Pinzheng Food, the company has not received any penalties or rectification notices for production or food processing safety issues before.

The price war faced by bestore co.,ltd

In addition to the questioning of the supply chain selection this time, bestore co.,ltd has been under considerable pressure in the market and operation aspects in recent years. According to the company's latest financial report data, in the first three quarters of 2024, the company's revenue was 5.48 billion yuan, a year-on-year decrease of 8.66%; the net income was 19.3903 million yuan, a year-on-year decrease of 89.86%.

Just looking at the third quarter of this year, bestore co.,ltd achieved revenue of 1.594 billion yuan, a year-on-year decrease of 20.81%; a net loss of 4.5003 million yuan, which changed from profit to loss compared to 2023, and the loss significantly narrowed compared to the second quarter of this year.

Regarding the financial performance, bestore co.,ltd stated that the reason was due to implementing price reduction strategies for some products in the store channel since November 2023, affecting the gross margin of price reductions and a decrease in revenue compared to the same period last year. On the other hand, this year, the company terminated the 2023 employee stock ownership plan prematurely, and the expenses to be amortized for the canceled equity instruments in the remaining waiting period were recognized in this period, and from the beginning of the year to the end of the reporting period, government subsidies received by the company decreased year-on-year.

Currently, Bestore Co., Ltd. is still in the price transformation adjustment phase, and as time goes by, the pressure faced by the company is increasing.

Since November 2023, after Bestore Co., Ltd. announced a 20% large-scale price reduction for snacks, the price has not completely reversed the sales situation. Even though Bestore Co., Ltd. actively controlled costs through refined management, the net profit growth brought by it still struggles against the decline in revenue, gross margin, and rising operating costs.

While performance declined recently, one of the major shareholders of Bestore Co., Ltd., Dayong Limited, has gradually reduced its holdings of the company's shares over a period of 5 months starting from November 2023, with a reduction percentage of 1.28%. After the reduction, Dayong Limited's holding of Bestore Co., Ltd. shares decreased from 23.05% to 21.77%. According to the announcement, the reason for the reduction by Dayong Limited is its own capital needs, which will not affect Bestore Co., Ltd.'s normal operation.

Huaxin Securities' research report believes that in the short term, due to price and brand positioning adjustments, Bestore Co., Ltd.'s profit is under pressure, but the effect of increasing the number of customers is more obvious. The company continues to explore optimizing the store model, reducing costs and increasing efficiency through the supply chain to align with development strategy, increasing supplier scale to lower costs, extending product selection to the source, establishing supply chain barriers, improving operational efficiency in multiple aspects. In the long term, the new positioning and supply chain optimization are expected to help boost sales growth and profit enhancement.