Source: FBIF Food & Beverage Innovation (ID: FoodInnovation) In 2005, Telunsu was launched, starting the battle for the high-end white milk category. From Mengniu's financial reports from 2005 to 2020, it can be seen that Telunsu has accounted for nearly 30% of Mengniu's revenue, becoming an important part of its performance growth. Some Telunsu products (Image source: Telunsu official public platform) The following data shows that by 2021, Telunsu had basically secured victory in the high-end white milk segment. In 2016, revenue was 11 billion yuan; in 2017, sales grew nearly 12% year-on-year; in 2018, revenue was nearly 14 billion; in 2019, growth exceeded 20%; in 2020, growth was 19%, with total revenue around 20 billion yuan. On August 25 this year, Mengniu Dairy (2319.HK) released its interim report showing that Telunsu's growth in the first half of the year reached nearly 40%. It is reported that the organic category grew by over 60%, and some individual products even doubled in 2021. Based on this growth rate, Telunsu's total sales in 2021 are estimated to be close to 30 billion yuan. On December 1 this year, Jindian, the second-largest brand in the high-end white milk category, just announced that its annual sales exceeded 20 billion yuan. What does 30 billion mean in the dairy industry? It is almost enough to build a medium-sized dairy company on its own. The "huge wave of new consumption" has left "old consumption" worried about being washed ashore, and dairy companies are no exception. However, with a growth rate of nearly 40%, Telunsu seems not to be lying flat but running faster. From a "super large single product" to a first-tier brand in the FMCG industry, how was Telunsu born? How did it grow and maintain double-digit growth for over a decade? Breaking out of the Red Sea: Category Upgrade We know that 2005 was a watershed for the dairy industry. The low-price competition that began in 2004 caused the dairy industry to suffer, and most companies were dragged into low-price competition to survive. According to a report by Shanghai Wind Information, in 2005, liquid milk-based dairy products achieved price reductions of about 50% through "buy and gift" promotions. A dairy salesperson said: Today you do three-for-one, tomorrow I do two-for-one, sometimes cheaper than water. [1] It is hard to describe how "bloody and cruel" the red sea was, but Wei Kejia, then executive vice president of the China Dairy Association, pointed out that at that time, 40% of dairy farmers were losing money, and nearly one-third of dairy companies faced losses. [1] To survive, many dairy companies faced two choices: one was to control costs by reducing capacity and lowering worker wages; the other was to raise prices. That year, brands like Sanyuan also tried to save themselves by raising prices, but the "price increase" that did not hit the pain point did not help much. The difficulty of the red sea lies in breaking the situation. From an outsider's perspective today, the birth of Telunsu caught at least two major trends: First, the "change" upstream. Looking back at an article from Mengniu Dairy's official account in 2018: "In 2005, 10,000 fine dairy cows from four continents came to China to take root, and Mengniu began brewing the Gold Milk Plan from that year." [1] Mengniu's financial report also pointed out that in 2005, Mengniu's Aoya International Demonstration Ranch opened, introducing imported equipment and forage, adopting Western management methods and milking robots at the time, and requiring dairy farmers to learn the latest knowledge of raising cows and milking. "Naijue 6 Special Milk" and "Telunsu" are successful examples from this ranch. The structural change on the supply side made "premium" possible. Second, the upgrade of consumer demand and market gaps. Mengniu found that starting in 2005, Chinese people showed a demand for high-protein, better nutrition, and more convenient milk, and the potential demand for high-end milk accounted for about 20% of per capita milk consumption. [1] The subtle change on the demand side put new demands on brands. Mengniu mentioned in its financial report that in 2005, through Telunsu, it established the "ability to take into account the high-end market." This shows that what Mengniu saw was actually consumption stratification in the Chinese market, not just consumption upgrade. Since then, its rival Yili also launched Jindian, using "organic" as a differentiator and continuously strengthening this positioning. In addition to the two leaders, the high-end white milk cake is also attracting new players, such as Modern Dairy, Shengmu, Guangming, Sanyuan... But Telunsu, by seizing the first-mover advantage and continuously strengthening brand building, has firmly held the position of the number one high-end dairy brand. In the 2021 China Brand Power Index (C-BPI) liquid milk brand ranking released by Chnbrand, Telunsu ranked third after Mengniu and Yili. Positioning: Better than "Good" If you have two products in front of you, one tells you "high-end," the other tells you "better," which would you choose? "Not all milk is Telunsu" has been regarded as a classic, but in this article, we are not just talking about this slogan, but also about the brand concept that we have always ignored—"better." Telunsu Better 2021 poster (Image source: Telunsu official public platform) Since 2014, Telunsu has refined its brand concept to "better" and started a series of brand communications around this keyword. How does this seemingly abstract brand concept support Telunsu's journey to 30 billion? Behind "better" is actually a series of positioning principles with routines and methods. First, establish differentiated positioning. Telunsu drew a line with other milk through "Not all milk is Telunsu," which, although not directly telling consumers "better," forms an implication, thereby establishing a leadership position. Second, the universality of positioning. Coca-Cola represents happiness, and Tesla's positioning is not limited to environmental protection but attempts to start an energy revolution, grasping human needs. Coca-Cola represents "happiness" (Image source: Coca-Cola official website) Similarly, the yearning and pursuit of "better" is a common wish of every generation, regardless of time or place, and it will not fade with time. Telunsu's "better" includes both pragmatic product supremacy and spiritual pursuit, which is clearly a more universal positioning. Finally, the extensibility of positioning. People have different standards for "good," and the word "more" in "better" highlights its cleverness. For example, Telunsu's product concept is to continuously provide better nutrition for consumers, but what counts as nutrition changes over time. From simple calcium supplementation needs to high protein, organic... product upgrades are the result of continuously tapping into people's potential needs. Telunsu Desert Organic Milk (Image source: Telunsu official public platform) From a few social elites to a broader affluent population, from simple material affluence to spiritual affluence, this characteristic aligns with the growing consumer base of high-end consumption and the increasing emphasis on higher-order needs. "Better" is not static but dynamic, and its extensibility gives Telunsu more room for imagination. So, how should the brand concept of "better" be practiced and perceived by consumers? Breakthrough: Shaping Core Competitiveness

1. Pricing

In terms of pricing, Telunsu adopted a skimming pricing strategy. At launch, the price was about twice that of ordinary white milk, with a box of 12 packs, each 250ml, almost no bulk sales, priced at 32 yuan per box, which translates to at least 2.6 yuan per pack, and later gradually increased to about 65 yuan per box, reaching 5-5.8 yuan per pack. At that time, most white milk on the market was priced around 2 yuan. Mengniu's room-temperature white milk pyramid (Image source: Telunsu High-end Marketing Department "Telunsu Brand and Product Overview")

2. Creating a New Category with a New Brand

When Telunsu was established, it did not use the Mengniu name but adopted a new brand. This was a very special practice at the time. Generally, sub-brands of dairy products, such as Mengniu Suan Suan Ru and Yili QQ Star, had the parent brand as a prefix, but Telunsu uniquely did not use the parent brand name Mengniu. (Later, Suan Suan Ru and QQ Star became independent brands.) As an independent sub-brand, Telunsu's name means "Gold Milk" in Mongolian, but for most people, it was a new concept. Based on a multi-brand strategy, Telunsu differentiated itself from Mengniu in both packaging and products. Telunsu (Image source: Telunsu official public platform)

3. Channel Strategy

We believe that dairy is a category that can reuse channels, and Telunsu's rapid success cannot be separated from Mengniu's early investment in channels. Although Telunsu initially laid out high-end channels such as top office buildings and airports, it did not focus only on first- and second-tier cities due to its high-end positioning. Instead, it used existing channels for full-market penetration to meet the differentiated needs of different markets. In its 2005 financial report, Mengniu stated that it already had 2,500 exclusive third-party channels. In addition to continuously improving consumer awareness of the Mengniu main brand, developing sub-brands was also one of its growth strategies. It formed joint ventures with larger local companies and integrated their mature sales channels into the group's own channels, thereby rapidly expanding market share. In the 2020 annual report, Telunsu also emphasized the channel refinement strategy and stated that the comprehensive "town-village pass" model launched in 2019 had helped add more than 100,000 rural sales outlets during the year. In new retail channels, in addition to deep cooperation with mainstream e-commerce platforms such as Alibaba and JD.com, it also laid out home delivery services, fresh food shopping platforms, community group buying, etc., and established more than 100,000 WeChat communities during the pandemic. From publicly available online information, for terminal display and sales, Telunsu also specifically formulated eight principles for brand promotion. The implementation is specific: when the number of stack displays in a single store is greater than or equal to two, one independent Telunsu stack must be ensured; unpacking and selling individual packs is not allowed; stores over 1,000 square meters must have a dedicated Telunsu brand promoter... To this day, we can still see "imposing" Telunsu displays in most supermarkets.

4. Using Product Strength to Differentiate

Price is only the first step in positioning; high prices need to be matched with "quality."

1) Visual Image

Regarding white milk packaging in 2005, an industry insider once recalled: "The milk on the market was only one type of white milk, either Baili pack or Tetra Pak pillow." In terms of packaging design, the initial version of Telunsu used a 250ml Tetra Pak slim package, which looked more fashionable. The basic color scheme of "blue + white + gold" was more mysterious and high-end compared to the green and white color schemes of most products on the market at the time, reflecting Telunsu's differentiation and high-end positioning. Telunsu pure milk (Image source: Telunsu official WeChat account) Later, Telunsu gradually launched a dream cap packaging, changing the drinking method from a straw to a cap, to solve problems such as difficulty in carrying after opening and waste due to inability to seal. Dream cap 250 launched in 2018 (Image source: Telunsu official public platform)

2) Milk Source

The content of dairy products is actually the milk source. Telunsu mainly differentiates in milk source and product processing to strengthen "quality." At that time, the resources Telunsu could use mainly included the origin of China's dairy capital, high-tech dairy bases, introduction of the world's most famous dairy cow breeds, and imported forage. In addition, there were imported production equipment, such as intelligent milking equipment, AGV automatic guided vehicles, Japanese carton automatic conveying systems, Tetra Pak filling machines, Italian homogenizers, and world-advanced milk clarifiers. It is reported that the cost of a Telunsu production line at that time was as high as 50 to 60 million yuan. These resources were ultimately reflected in product strength.

  • In 2005, the national standard was 2.9g, but no one thought to exceed this standard, so Telunsu used 3.3g milk protein as the core differentiator;
  • In 2008, the organic concept gradually became known to consumers, and Telunsu launched organic milk;
  • In 2019, Telunsu upgraded the entire dream cap series. Currently, the brand's product line covers pure milk, low-fat milk, organic milk, grain milk, high-calcium milk, and other categories. We see that this year Telunsu played another milk source card, launching Desert Organic Pure Milk, trying to create a new moat product. Different from previous organic milk, Desert Organic Milk proposed four new standards:
  • Origin: milk source from Ulan Buh limited oasis, fed with natural groundwater from the upper Yellow River;
  • Nutritional content: each 100ml contains 3.8g milk protein and 125mg natural high calcium;
  • Production environment: 30-80 km natural desert barrier, isolating external pollution;
  • Packaging: emphasizing sustainability, using wooden packaging and desert oasis design. Desert Organic Milk (Image source: Telunsu official public platform) Based on the pricing of nearly 9.9 yuan per bottle, in the short term, we do not think it can contribute much sales to Telunsu, but in the long term, this may be a strategically significant product for Telunsu to convert product strength into brand strength. Strengthening Positioning: "Better" We believe that all of Telunsu's marketing and brand building is for one sentence: Not all milk is Telunsu. That is the brand concept later refined as "better." No matter how marketing media changes or how the marketing closed loop forms, we believe that Telunsu's path to strengthening positioning cannot escape the saturated infusion of information to different target customer groups.

1. Focus: Saturated Infusion of Brand and Product Concepts

From the changes in Telunsu's slogans, we can see that from "Find your nutrition, start your better 2015" in 2015, to "Be a better self" in 2019, and then to "Support every better you, there is no standard answer for better" in 2021. The keyword "better" remains unchanged; what changes is that the connotation of this word has become richer. The transmission of product concepts also requires saturated infusion. As mentioned earlier with Desert Organic Milk, through various communication channels, we found that this year Telunsu tilted a large amount of communication and marketing resources to this single product (although we have no evidence). Desert Organic Milk Image source: Weibo @Telunsu This year, Telunsu has been the exclusive title sponsor for the third consecutive year of the slow variety show "Life of Longing," which matches its brand tone and concept, and Desert Organic Milk is the protagonist. On April 1 this year, on the day of Desert Organic Milk, Telunsu combined the April Fool's Day hotspot, using topics like "Telunsu sells sand" and "Today's sand is limited supply," launched a desert gift box, with a bottle of desert sand, a set of sand painting tools, and a freshwater pearl attached. Telunsu desert gift box (Image source: Telunsu official WeChat account) This topic gained 100 million reads on Weibo and also flooded Moments at the time. Telunsu's advertising slogan leaves a deep impression on consumers (Image source: Weibo @Gougou Wang) In addition, Telunsu also told the "better" industry chain story on the 818 Ming Shi Hui member day. Through live shooting of the Ulan Buh desert oasis ranch, consumers could immersively perceive the industry chain of Desert Organic Milk. On that day, Telunsu also launched a pumpkin giveaway activity, sending out Baby pumpkins from the desert oasis ranch as a Qixi Festival surprise without consumers knowing, attracting a large number of consumers to share their orders. Telunsu sends Baby pumpkins (Image source: Weibo)

2. Communication: Contentizing the "Brand Concept"

Telunsu's early "Not all milk is Telunsu" was a "concept" expression, mainly describing product advantages, while the current "Better self, starting from Telunsu" establishes a connection with consumers at a spiritual level. Taking Telunsu's brand story output in 2021 as an example, Telunsu launched a series of commercials with the core element of "better," showing "better" lives from different dimensions. For example, "Better Youth" for Youth Day, Telunsu joined hands with director Zhang Dapeng and invited actors Zhang Chenguang, Wallace Chung, and Gao Hanyu to launch the movie "Better Youth," paying tribute to the new generation of "May Fourth Youth." The movie tells the story of two brothers with different dreams, from misunderstanding each other to being encouraged by their father, and finally choosing different paths of youth. It conveys that young people hope to pursue the "better" self in their hearts, not the self in others' eyes. "Better Childhood" for Children's Day, tells the story of a boy with a "tear incontinence" constitution who is accepted by his parents and teachers, breaks the idea that "a real man doesn't cry," and grows into a better self. It ends with "A better childhood has no standard answer; every child is a better answer." "Better Gift" for Teachers' Day, tells the story of a teacher Li who respects students' differences and is good at discovering their diverse strengths. With a "secret gift that cannot be said," she hopes that students who receive it will want to become better, and those who want to know what the gift is will work harder to get it. At the end of the movie, it is revealed that the gift is "sincere encouragement"—Teacher Li encourages every student to persist in learning and bravely pursue their ideals. It points out that "There is no fixed formula for life; if you persist, you can always become a better self." "Better self, starting from Telunsu" has become more specific and easier to perceive because of this series of commercials, no longer a vague slogan. Moreover, although these commercials revolve around the core of "better," the protagonists have their own characteristics. Through dialogue with different circles, they convey to consumers that "better" can have different definitions, and there is more than one choice in life. This open and inclusive attitude is exactly what the current young consumer group appreciates. In today's fragmented internet, telling a good story once is easy, but it is difficult to continue telling good stories; it requires finding a communication fulcrum among consumers, brand concepts, and products. Consumption stratification represents not only the stratification of purchasing power but also the stratification of consumer circles. Today, different circles have different views, and simple "shouting" is hard to move consumers. Telunsu chose to communicate with consumers from different circles, symbolizing the evolution of marketing methods.

3. Play: Diversified Communication Methods

In the era of self-media where consumer attention is scattered, topic marketing, co-branding, peripheral products, and other diversified and youthful play methods give brands the possibility to enter different circles. In addition to the topic marketing of Desert Organic Milk mentioned above, on Children's Day and the 5th birthday of Shanghai Disney Resort, Telunsu Hi Milk 0-fat milk co-branded with QQ and Duffy family, launching limited packaging, and combined with blind boxes, peripheral products, and other marketing methods to communicate with young people, shaping a trendy and playful young image. Telunsu co-branding with Duffy family and QQ (Image source: Weibo @Telunsu) These marketing methods that conform to young people's aesthetics and have a sense of freshness easily make consumers establish a sense of "the brand understands me." Telunsu's brand concept has also penetrated more different circles in this process. Conclusion When an industry is extremely "involutionary," the decisive factor that truly allows one to jump out depends on cognition and thinking. On the "eve" of mass consumption upgrade, Telunsu took a brand-new path. On the one hand, Telunsu is a beautiful self-attack (self-upgrade) by Mengniu, thus finding a second growth curve; On the other hand, it always focuses on the core positioning and concentrates resources to fight the battle for mind share. We see that Telunsu's success also symbolizes the rise of brand awareness among Chinese enterprises and the comprehensive upgrade of the upstream and downstream industry chain. Among the top ten global dairy companies, Chinese brands now occupy two seats, gradually gaining the right to speak. However, Telunsu also faces challenges: first, the close pursuit of followers; second, the rise of low-temperature milk. But we believe that room-temperature milk still has an absolute advantage in specific scenarios and specific groups. Whether Telunsu can face the challenges head-on depends on whether it can adhere to long-termism and maintain its "leadership" position in the industry. References: [1] "The Chinese Dilemma of Milk Price Increases: Oversupply and Vicious Competition" [2] "Tribute to Reform and Opening-up | Not All Milk Stories Can Touch People's Hearts" Are you "watching" me?