Dairy giant expansion accelerated industry "involution" new dairy breakout

China's dairy industry is entering a more "involutional" era.

In recent years, with the industry's two giants Yili shares and Mengniu Dairy in the milk, production base layout gradually improved, began to accelerate the entry into the field of low-temperature fresh milk, breaking the previous national dairy enterprises and regional dairy enterprises product differentiation competition market pattern.

Dairy "involution" intensified

In the past a long time, the two national dairy enterprises Yili and Mengniu, and regional dairy enterprises, although there is a market overlap, but it is the overall presentation of a pattern of **** survival.

Previously, the milk source layout of the nationalized dairy enterprises is mainly in the north, away from the sales area, and the products are mostly room temperature; while the regional dairy enterprises are centered around the urban market, mainly low-temperature fresh milk products. However, from 2019, this market balance has been broken. As the milk source layout of nationalized dairy enterprises continues to expand to the south, coupled with the rapid development of the domestic cold chain logistics and transportation industry in recent years, the two major nationalized dairy enterprises have launched low-temperature fresh milk business.

On the one hand, the nationalized dairy enterprises to use their own advantages in brand and channel, and regional dairy enterprises to carry out a fierce channel and price war; on the other hand, the nationalized dairy enterprises to use their own advantages in the northern milk source, and constantly promote the product of the key indicators, such as protein, milk calcium and other upgrades, attempting to form a product leading edge in the product value of the regional dairy enterprises. The company's main goal is to provide the best possible service to its customers," he said. "The company has been working on a number of projects in the past few years, and has been working on a number of them.

Under a series of combined punches, the performance growth rate of regional dairy enterprises and nationalized dairy industry also opened the gap, 2021 Yili realized total operating income of 110.6 billion yuan, an increase of 14.2% year-on-year, net profit of 8.73 billion yuan, an increase of 23% year-on-year; during the same period, Mengniu Dairy realized revenue of 88.46 billion yuan, an increase of 15.9% year-on-year, net profit of 5.03 billion yuan, an increase of 42.6% year-on-year. 42.6%, while most of the major domestic regional dairy enterprises performance growth rate is relatively low or only equal to the two giants.

It's worth noting that the two nationalized dairy companies have further plans to take their industries south.

In 2021, Mengniu invested 2 billion yuan in Wuhan, built the world's largest low-temperature single-unit plant, outside of central China, will cover the southeast, south China, southwest market. Yili is accelerating the layout in northern China, in addition to the large-scale construction of 10,000-head farms in Shandong, in May this year, Yili Group plans to invest 15.2 billion yuan in Cangzhou, the construction of 4,000 tons of daily processing of fresh milk, with an annual output of 1.5 million tons, the world's largest dairy products processing base.

In the opinion of independent dairy analyst Song Liang, as the nationalized dairy industry base continues to go south, it will accelerate the penetration of the regional dairy market, the next step in the development of regional dairy enterprises are facing greater pressure.

Rebuilding differentiation

For regional dairy enterprises, in the case of increased competition in the fresh milk market, how to rebuild the advantages of differentiated competition has become the focus of the next step in the development of the face of changes in the market competition, the new dairy (002946.SZ) has also become a special sample of the breakout of regional dairy enterprises.

In addition to the traditional product and channel competition, the new dairy industry has taken a more proactive mergers and acquisitions strategy, and in 2021 launched the "fresh cube" strategy and three-year multiplication plan, through digitalization, mergers and acquisitions integration, consumer operations, continuous product iteration, etc., to build a composite three-dimensional competitive ecology to rebuild the Differentiation.

In 2021, the new dairy industry to achieve revenue of about 9 billion yuan, an increase of 32.9%, net profit of 310 million yuan, an increase of 15.2%, the performance of the leading growth rate in the regional dairy enterprises, which is based on the Southwest market to achieve revenue of 3.61 billion yuan, an increase of 17.3%, and in the fresh milk "fierce battle" in the East China market, the new dairy industry will be the first to achieve revenue of 3.61 billion yuan, an increase of 17.3%. In the "fierce battle" of fresh milk in the East China market, the new dairy revenue of 2.19 billion yuan, an increase of 29.9% year-on-year.

The financial report shows that in 2021, the fresh milk business of the new dairy industry grew 35% year-on-year. In the industry's view, the growth of the new dairy is closely related to the differentiation of its low-temperature products.

In the most competitive fresh milk business, the mainstream fresh milk products in the market are mainly short-term (about 7 days) and long term (about 15 days) products, the new dairy launched the "24-hour fresh milk", the product shelf life of no more than 24 hours, which is a big difference from the traditional low-temperature fresh milk shelf life of 7 days to sell 5 days. 2021, the new dairy launched the "24-hour fresh milk", the product shelf life of no more than 24 hours, which is a big difference from the traditional low-temperature fresh milk shelf life of 7 days to sell 5 days. In 2021, New Dairy's high-end and ultra-high-end low-temperature fresh milk products achieved about 50% growth.

In the low-temperature yogurt segment, New Dairy is turning to healthier, sugar-controlled segments, functional and casual snacking attributes to develop new products.

For example, in 2021, New Dairy further launched zero-sugar crystal ball and gastrointestinal dual-protection double-crystal ball new products on the basis of the popular probiotic yogurt product "Live and Run" crystal ball yogurt, and the sales of that year increased by 113% year-on-year. New Dairy 2021 new product sales revenue overall contribution of more than 10%.

According to Zhu Chuan, president of the new dairy industry, every year in July and August, the new dairy industry will open a seminar on new products to determine the future direction and focus of the product, this year, the new dairy industry's new product research and development direction will be further developed to the product functionality, precision nutrition, the application of advanced production technology, and so on.

It is worth noting that the new dairy product innovation strategy behind the new dairy in the upstream of a series of mergers and acquisitions related to investment.

Regional dairy enterprises backed by first- and second-tier cities, the supply of milk has always been a difficult point. In this round of low-temperature fresh milk competition, New Dairy has advanced the layout of the upstream raw milk industry through investment and shareholding, etc. Since 2019, New Dairy has participated in Modern Dairy, Aoya Dairy, acquired Ningxia Xiajin Dairy, and invested in 2 new 10,000-head farms in Gansu and Qinghai, which has also allowed New Dairy to keep up with the level of raw milk supply of nationalized dairy enterprises.

The next round of competition is ecological?

Therefore, after completing a series of layout adjustments of the company, factories, and farms in place, the management of the new dairy industry will focus the next competition on the construction of a new ecology.

And in the digital operation, the new dairy 2021 e-commerce revenue growth of 80%, and achieved a breakthrough of 10 million digital users.

In Xigang's opinion, through digitalization and intelligent transformation, enterprises have the ability to establish direct contact with users, and the next step is to integrate the two, more timely insight into user needs, and intercept consumer demand in advance through a flexible supply chain.

To this end, in January 2021, the new dairy industry announced the acquisition of 60% of the equity of the domestic yogurt tea drink brand "a sour milk cow" for 231 million yuan, and in 2021 has invested in a plant-based drink some plant, dessert yogurt brand Da Vinci, etc., in the hope that with the help of the industry downstream more direct insight into consumer demand.

On the other hand, different from the previous regional dairy enterprises continue to mergers and acquisitions, in order to grow the volume of income and scale, and nationalized dairy enterprises to compete with the "sand into a tower" mode, the new dairy industry in the creation of regional characteristics of the product, hoping to form a "micro-ecological" with the national dairy enterprises in the small regional market. "

This is the first time I've ever seen a company like this one.