How should regional milk enterprise move forward?
In the past two years, the dairy products of local dairy enterprises have started the trend of “Internet celebrity”. The new generation of consumers have the courage to try, so that some relatively minority brands and products have been adequately displayed on the Internet.While they succeed in piquing consumers’ curiosity, they don’t do enough to keep them in touch.In the face of future development, some regional milk enterprises in addition to their own hard strength, lack of brand, but also external environmental influence, such as online and offline synchronous force of head milk enterprises and other factors, jointly caused the development of some regional enterprises is not ideal.Consumer demand for dairy products has increased as a result of the outbreak.According to Data from Euromonitor, the sales volume of dairy products in China reached 638.5 billion yuan in 2020, an increase of 0.9% compared with 2019, with a compound annual growth rate of about 10% in the past 14 years.In addition, Euromonitor expects China to surpass the U.S. as the world’s largest dairy market by 2025.The increase in demand for dairy products means a corresponding increase in demand for milk supply.Some small and medium-sized dairy enterprises relying on external pasture supply cannot meet the supply to the market, while for medium and large enterprises, with milk source supply and their own pasture supply, they are less affected and have the ability to cope with market changes.According to the White Paper on The Marketing Development of China’s Dairy Industry 2021, the epidemic has expanded market demand, but due to the shortage of raw milk supply, small and medium-sized dairy enterprises lack sustainable growth, and medium-sized and large dairy enterprises have become the biggest beneficiaries of the epidemic.In the face of the sudden impact of the epidemic, the disadvantages of regional milk enterprises appeared. The price of raw milk rose, the coverage of products was weak, and the sales volume was not high. In addition, regional milk enterprises could not raise prices significantly in the face of the suppression of the head enterprises, and the combined factors led to the decline of profits.According to the livestock products and feed market prices in the first week of February 2022 released by the Ministry of Agriculture and Rural Affairs of the People’s Republic of China, the average price of fresh milk in Inner Mongolia, Hebei and other 10 major producing provinces was 4.26 yuan/kg, down 0.2% from the previous week and 0.5% from the same period last year, showing a downward trend.But prices remain high, putting pressure on regional dairy companies that need external supplies.The performance of unlisted dairy companies is not transparent, but it can be glimpsed in the performance of some companies that are about to go public.Zhejiang Liziyuan Food Co., LTD. (” Liziyuan “for short), for example, saw its net profit rise 45.99% that year and only 18.12% by 2020, according to its ipo prospectus.In 2021, the net profit increased 35.42% year-on-year in the first three quarters.According to the prospectus of Zhejiang Yiming Food Co., LTD. (referred to as “Yiming Food”) published on the official website of CSRC for the first time, the annual net profit rose by 10.51%, and the net profit in 2020 showed negative growth, with a year-on-year decrease of 23.88%. According to the report of the third quarter of 2021, the net profit in the first three quarters decreased by 37.79%.Since its listing in 2017, the net profit of Manor Ranch has been in a state of negative growth. From 2017 to 2020, the net profit decreased by 9.96%, 7.05%, 19.22% and 79.63% respectively compared with the same period last year. However, in the report of the third quarter of 2021, the net profit showed a significant growth, with a year-on-year growth of 418.81% in the first three quarters.And as xinjiang city accounted for 35% of the tianrun milk enterprise growth rate has also been continuously reduced, 2019-2020 net profit growth 22.25%, 5.62%, and according to the report in the third quarter of 2021, net profit negative growth, net profit in the first three quarters of 6.13% year-on-year reduction.With the rise of the Internet and e-commerce, logistics efficiency has been continuously improved, and consumers have shifted part of their consumption power to online. Online terms such as “cloud life”, “cloud shopping”, “cloud car” and “cloud house” have been frequently used.In the face of the changing market, the head enterprises constantly make changes and strive to cover consumers through all channels.Among them, compared with the popular “live broadcasting with goods” in the past two years, the turnover of e-commerce reached 43.8 trillion yuan in 2020, and the live broadcasting e-commerce exceeded one trillion yuan, while the pan-e-commerce channel also began to become a new growth point for dairy enterprises.Xi Gang, chairman of New Hope Dairy, launched the live broadcast in 2020, led netizens to visit the production factory of New Hope Dairy, and interacted with the blogger Lian Mai, which attracted many viewers. The first live broadcast attracted nearly 100,000 onlooker within 2 hours and reached 4.6 million fans.In addition to the relevant leaders of the enterprise personally “go to the front”, it is also common to ask Internet celebrities to recommend grass planting, and some dairy enterprises open their own broadcast rooms and so on.In addition to increasing exposure, consumers can also learn about the company and the product, thus creating trust in the brand.Rare consumer “heart” because of local characteristics, so consumers rely on regional dairy enterprises partly from “feelings”.Among them, the white rabbit as a childhood memory of many consumers, bright choice and jointly launched the white rabbit candy flavor milk;Weigang, as a characteristic dairy enterprise in Jiangsu and its surrounding areas, is a national memory point for several generations in Nanjing.Although this can win the hearts of some consumers, but serious limitations, and head milk companies continue to increase publicity.In terms of celebrity endorsements, Yili brands have been represented by Dou Jingtong, Yang Ying, Wang Yibo and Dilreba, while Youchu has been represented by Times Youth Group, Zhou Dongyu, Chen Linong and Song Weilong.Mengniu is represented by recent Olympic champion Gu Ailing, as well as by Zhang Yixing, Zhao Liying and Zhang Guoli.In the advertising, the head milk enterprises are also under sufficient efforts, subway, major supermarkets, bus billboards can see their figure, which in the invisible strengthening of the brand in the hearts of consumers.In addition, in the show of brand love, head milk enterprises show a large amount of donations, increasing the brand reputation in the hearts of consumers, although small and medium-sized enterprises are also actively responding to the donation action, but the impact is small.Therefore, mental resources began to converge towards large dairy enterprises, and consumers have a higher sense of identity for head dairy enterprises.How to break through in the future?For regional dairy enterprises, low temperature milk market is developing well, while head dairy enterprises are also competing for “fresh” layout, improving cold chain technology, and opening up the sinking market.For example, Jingdong Home cooperated with Yili and Yihai Kerry to create a live broadcast of “Weekly Healthy Private Kitchen”. Users placed orders in the live broadcast room, and the goods were sent out from the retail stores 3-5 kilometers away from users. The delivery time was shortened to hours.In addition, the layout of large dairy enterprises for low-temperature milk with long shelf life is also constantly opening up the sinking market and refining consumer demand.For the feelings, it is difficult to walk out of the regional milk enterprises, the growth of future performance is difficult to break through.Song Liang, an independent dairy analyst, told Dairy Finance that for regional dairy industries to achieve better development, they first need to be able to innovate, build brands, adapt channels, and quickly expand with the help of new retail.At present, the market share of leading enterprises such as Yili and Mengniu is about 60%, and their future development may also be maintained at 60-70%. Therefore, there is still about 30% space left for small and medium-sized dairy enterprises and regional dairy enterprises, which has certain development space.And the consumption level of low-line cities has further space to improve, refined channels, deep channels, for regional milk enterprises have a good development opportunity.Brief comments & Cognition: At present, the development of dairy market cannot be separated from regional dairy enterprises. The trial spirit of the new generation of consumers also drives its development, such as Tianrun Dairy, Mychore, Kedi Dairy, Yantang Dairy and other enterprises. In addition, Xinjiang dairy has a strong momentum of Internet celebrities.However, in the face of the extrusion of the head milk enterprises in all aspects of the layout, it is not easy for regional milk enterprises to survive in the cracks. The fame of “Internet celebrities” is transient, so we cannot rely on it too much. How to play the next step should be cautious.