Research on Current Situation and Development Trend of Dairy Industry in China (I)

In recent years, the dairy industry in China has experienced extraordinary periods. While maintaining rapid development, it has withstood severe tests and become one of the focus industries. So, what is the status of China's dairy industry? What are the trends? What problems, opportunities, and challenges still exist? The following writer discusses what he sees, hears and thinks.

Part I: Development Status of Dairy Industry Looking at China's dairy industry, we can use the words “invigorating”, “comforting”, and “thinking” to describe its current situation, namely: the increasingly large market scale is exciting and increasingly mature. The situation is gratifying, but the problems in development are also thought-provoking.

I. Size and growth rate of the industry The dairy industry in China has entered a period of rapid growth since 1998 and has maintained double-digit growth until 2008. In particular, during the period of gold development from 2005 to 2007, the average output growth rate of the industry reached about 16%, and the total output in 2007 exceeded 17 million tons (Figure 1).


However, the melamine incident that broke out in 2008 caused a fatal blow to the dairy industry. In particular, from September to November of that year, the production of many dairy companies fell into a state of shock, and the total output of the entire industry was negative. The total output in 2008 benefited from the development in the first half of the year and was barely equal to that in 2007.

However, due to the state's proper rectification measures for the dairy industry and the enhancement of safety awareness among leading companies, 2009 and 2010 have become the recovery period for China's dairy industry, and in particular, dairy production reached 11.7164 million tons in the January-July 2010 period, a year-on-year increase. 9.24%, of which: 10.1165 million tons of liquid milk, an increase of 9.07%; dry dairy products 1.639 million tons, an increase of 10.26%.

What needs to be mentioned is that the milk powder that was hit hard by the melamine incident has also seen a significant recovery from January to July this year. In particular, the output in June and July was significantly higher than the same period of last year, with an average growth rate of about 15% (as shown in the figure). 2).

In addition, after years of development, yoghurt has also grown to become the dominant category of China's dairy industry. By the end of 2009, the total size of the yoghurt market was close to 10 billion yuan, and the average annual growth rate in January-July 2010 reached 27%. This extraordinary period brought radiance and hope to the development of China's dairy industry.

It should be pointed out that the total output of many industries has experienced an upsurge or decline due to the impact of the global financial crisis in 2009, and at least from the above statistical data, the dairy industry is not affected by this degree, even if it is the most serious. In 2009, it still maintained a growth rate of about 6%, which laid a good foundation for the recovery of the entire industry.

II. Market Concentration and Brand Development In the development process of the past 10 years, the Chinese dairy industry has experienced multiple and complicated historical periods such as price wars, crisis events, and industry reshuffles. At present, a relatively orderly competitive pattern has formed. The market concentration continues to increase and the brand development is relatively stable.

Classified according to the nature of the company, the competitive landscape can be divided into base, urban and comprehensive competition. Among them: base-type enterprises produce more normal-temperature milk, represented by Yili and Mengniu; urban-type enterprises produce more and more short-lived pasteurized milk, represented by Shanghai Guangming; comprehensive enterprise product lines cover a wide range, but unit sales It is not too big to be the type of core competitive advantage to be determined. No name is given here.

In contrast, because of the scale and raw material cost advantages of base-type companies, they have a greater advantage in future development. In particular, from the data for the first half of this year, the sales of Yili and Mengniu both exceeded RMB 14 billion in the first half of the year, and they maintained a growth rate of around 20% compared with the same period of last year, becoming a typical industry leader.