In recent years, China's dairy industry has entered a period of low growth. Data from the first three quarters of 2015 show that domestic liquid milk grew by about 5%, ambient milk by only 2.7%, and imported dairy declined by over 10%; meanwhile, innovative dairy products grew significantly faster than the industry average, with ambient yogurt up 106.3%, fresh yogurt up 10.5%, and lactic acid bacteria drinks up 7.4%. These figures clearly indicate that the future development of the dairy industry will undergo major changes. Prediction 1: Fresh dairy products will continue to lead industry development Currently, the domestic dairy industry has formed a basic pattern dominated by three giants: Yili, Mengniu, and Bright Dairy. However, apart from the first two, dairy companies including Bright and Sanyuan have not fully covered markets at all levels nationwide. The development of China's dairy industry and the reasons for the current pattern mainly include the following:

  • First, Yili and Mengniu adopted an ambient strategy during the golden decade of dairy development, thereby extending product sales cycles and gradually completing consumer education in the domestic market;
  • Second, the rapid development of Yili and Mengniu played a leading role in China's dairy industry, causing regional dairy companies to blindly expand ambient product lines. Over the past nearly 10 years, price wars in ambient dairy products have become the norm in the market;
  • Third, when regional dairy companies realized they could not compete with Yili and Mengniu in the ambient product segment, they began to recognize that their competitiveness lay in "freshness." Since 2008, many regional dairy companies have shifted to low-temperature products, showing a thriving scene. Based on this judgment, the author believes that in 2016, fresh dairy products will be a key category for dairy companies, and from the development trend in recent years, they will continue to lead industry growth. Prediction 2: The share of ambient dairy products will continue to decline The development of ambient dairy products has made a huge contribution to raising domestic consumers' awareness of milk consumption, turning dairy products from a "luxury item" in the planned economy era into an ordinary consumer product. The reasons why the share of ambient dairy products will continue to decline mainly come from the following aspects:
  • Consumer attitudes are changing, and the concept of "freshness" is deeply rooted in people's minds;
  • The main sales areas for ambient products are changing. Mid-to-low-end ambient products are being phased out in first-tier cities and are flowing to lower-tier markets (townships, rural areas) that are more price-sensitive, which will "cultivate" a disaster zone for price wars in ambient dairy products;
  • The result of price wars is that corporate gross margins continue to decline, and distributors are unwilling to put effort into operating such products;
  • Substitute products are emerging, such as brown milk beverages and plant protein drinks, which are replacing dairy products in mid-to-low-end sales markets. Based on the above analysis, the author believes that the decline in the market share of ambient dairy products will start with low-end products, followed by mid-range products, while high-end products will maintain growth. In terms of the composition of ambient products, mid-to-low-end products account for more than 70% of the total, while high-end products (including imported dairy) do not exceed 30%. As long as sales of mid-to-low-end products decline, an overall decline will become a reality. Prediction 3: The milk powder industry will enter a period of sustained growth In October 2015, the Fifth Plenary Session of the 18th CPC Central Committee decided to fully liberalize the two-child policy, meaning a couple can have two children. Currently, the number of newborns in China is about 17 million per year. After the two-child policy is fully implemented, the fertility rate is optimistically estimated to increase by 20%. This means that in 2016 and the coming years, the number of newborns will increase to over 21 million. From this perspective, the growth of infant formula will inevitably see a new peak. Corresponding to infant formula is middle-aged and elderly milk powder. The arrival of an aging society means they need more nutritional products, and milk powder is one of the best choices. According to statistics, in 2014, the population aged 60 and above in China was 210 million, accounting for 15.5% of the total population, which is undoubtedly a huge market. At the same time, in recent years, the state has continuously tightened the rectification of the milk powder industry, especially since 2015, when the China Food and Drug Administration changed the milk powder formula "filing system" to a "registration system." These rectifications will further increase industry concentration, eliminate small and medium-sized enterprises and a batch of OEM brands, and reshape the trust in domestic milk powder brands. Over the years, the annual growth rate of imported milk powder has been relatively high: in 2013, imports increased by 49% year-on-year; in the first half of 2014, they increased by 75% year-on-year; and in the first half of 2015, they increased by 28% year-on-year. From the data, the growth of imports has begun to slow down. These factors will further enhance the sales growth of domestic milk powder brands. Prediction 4: Diversified dairy products will become new growth points The dairy products we pay most attention to are liquid milk and infant formula. Other dairy products, due to their relatively small sales scale, have not attracted widespread attention. However, as competition in the dairy industry intensifies, diversified dairy products will emerge, which will be new growth points for small and medium-sized dairy companies in the future. Among them, the following product categories deserve attention: 01 Milk tablets Around 2004, milk tablets appeared on the market. Due to their portability, rich milky aroma, and characteristics of snack foods, they quickly became popular nationwide. However, with the outbreak of the "toxic milk powder" incident, this category disappeared. But dairy giant Yili has continued to cultivate this category market for many years, with annual sales of over 1.5 billion yuan. There are currently few similar products on the market, but we have seen some companies beginning to increase investment in such products. As a supplement to dairy products, this small category has the potential to achieve a large market. 02 Processed cheese Cheese is a fermented milk product and a traditional food of nomadic peoples in northwestern China. Processed cheese is a dairy product that is re-processed according to consumer taste preferences. Currently, the main processed cheese brands on the market are mainly Yili, Mengniu, Bright, and Sanyuan. Over the years, dairy companies have not carried out large-scale promotion. However, the author believes that with consumption upgrading, the rise of the middle class, and changes in domestic consumption structure, this category meets future consumer demand. 03 Flavored mixed dairy products Such products are mainly composite dairy products, including the addition of various auxiliary ingredients, such as chia seeds, blueberries, etc. Through innovative packaging and taste, they will also become a potential category. For example, dairy products in pacifier bottle packaging, with diverse flavors and tastes suitable for young consumers, will be the favorite of the post-90s and post-00s generations in the future. 04 Small-category dairy products Goat milk is one of the fastest-growing small-category dairy products in recent years. At present, its categories are also relatively rich. The only thing needed is to continuously build consumer awareness and connect goat milk with consumers' lives. Of course, this also includes small-category dairy products such as camel milk and yak milk. Prediction 5: Adjusting product structure becomes a new driving force for enterprise development The current competition in dairy products is fierce. To break through and rebuild their own advantages, enterprises need to adjust their product structure to form a product group that meets current consumer demand and surpass competitors. To this end, enterprises can adjust in two ways: Adjust the structure through the product itself. First, gradually adjust from mid-to-low-end products to mid-to-high-end dairy products, based on the improvement of consumer spending levels and increased attention to food safety; second, adjust from ambient products to fresh low-temperature dairy products, to form differentiated competition with first-line brands. From the growth rate of the dairy industry in recent years, the growth rate of high-end dairy products is much higher than that of mid-to-low-end products, and the growth rate of fresh dairy products is much higher than that of ambient (mid-to-low-end) products. Adjust product structure according to consumer group characteristics. When many companies plan products, their consideration of consumer groups is mainly reflected in product positioning. In fact, consumer groups have always been there; what companies need to do is to create a product that the target consumer group likes. At present, we believe the two groups that deserve the most attention are: first, middle-aged and elderly people. A few years ago, Mengniu launched Huanqing for middle-aged and elderly people, and many companies did not take it seriously, but now it has become an exclusive brand in the segmented industry; second, products for young people. This consumer group has strong personalized characteristics, and creative products are needed to meet their psychological needs. For example, in 2015, the brown milk beverage brand "Youxiaojun" gained consumer recognition through personalized expressions such as "optimistic, often silly, foodie," etc. Prediction 6: E-commerce is fierce, and internet marketing will continue When Junlebao launched infant formula, it operated through e-commerce, quickly establishing its market position in infant formula. In recent years, sales activities under the name of "Milk Festival" conducted by 1号店 (Yihaodian), JD.com, etc., have achieved great success, with sales volumes unimaginable in traditional retail channels. Although dairy products are traditional products, in the current marketing environment, emerging consumer groups live online, and food, clothing, housing, and transportation can all be achieved online. This has become a way of life. New Hope Dairy's attempts on the internet in recent years can be said to be a textbook for internet marketing in the dairy industry. In 2014, it cooperated cross-industry with SF Express to operate "Cloud Pasture" selected milk, becoming a pioneer in internet marketing for domestic liquid milk brands; in 2015, it launched "Hebu Pure Milk," utilizing the characteristics of emerging consumer groups and promoting it through internet marketing, becoming a new hotspot; at the same time, New Hope Dairy's sales on e-commerce platforms such as Suning.com, JD.com, and Tmall are also among the top. The author believes that in 2016, e-commerce will remain fierce, and internet marketing will continue to bring value in terms of brand and sales growth for enterprises. Prediction 7: Scenario marketing will be embedded in the dairy industry We all live in scenarios, and in each scenario, there are solutions that consumers need. The key point of scenario marketing is that the product is the starting point, and through creative naming, concept, packaging, etc., a scenario familiar to consumers is formed. For dairy companies, the significance of scenario marketing lies in enabling consumers to find resonance with their own situations through the scenario-based description of your products. As an emerging marketing method, scenario marketing will become the mainstream marketing concept in the future. Without scenarios, there is no marketing. To break through in fierce competition, dairy companies must create consumption scenarios that competitors do not have, complete trust communication with consumers, and ultimately form their own advantages. -END- Content Selection Reply with the following keywords to categorize and read related articles: Sales Supervisor, Second-tier Management, Regional Manager, Distributor Management, New Channels, City Manager, Competition, 2015, Manufacturer-Dealer Game, Product Stagnation, Terminal Visit Management, Route Management, Deep Distribution, Internal Management, Sales Skills, Profit Improvement, Recruitment, Distribution, Daily Management, Team Motivation, Trade Promotion, Sales Misconceptions, New Product Launch, Township Market, New Product Pricing, Sales Target Achievement, Closing Orders, Market Visit Inspection, Baijiu, Beer, Sales Increase, Agency Products, Cross-region Sales, KA, Terminal Merchandising, New Market, Market Operation, Learning, Book Recommendations, Inventory Management, Sales Novice, Consumer Promotion, Execution, Old Products, Expired Product Handling, Model Market, Investment Promotion, New Media, Distributor Development, Performance Appraisal, Assessment, Annual Planning, Shopping Guide, Morning Meeting, Display, Transformation, Pressure Stock, Festival, Distributor Cost Control, Channel Operation, Marketing Theory and Laws, Brand Truth, Order Meeting, Team Management, Training, Work Report, Work Report.