Can Bright Dairy reverse its decline? Competition in China's dairy market has intensified in recent years, leading domestic and foreign dairy companies to compete fiercely across various segments. In this battle, Bright Dairy, headquartered in Shanghai, was once seen as a strong contender. However, looking at the competitive landscape in recent years, Bright Dairy seems to have fallen behind, and this trend has become more pronounced, especially after it went all-in on the low-temperature milk market this year. -01- Milk Sources Grip the Throat Latitude is a key factor determining climatic conditions, which directly affect whether the local environment is suitable for pasture growth. Climate also determines whether dairy cows and goats can adapt, maintain robust reproduction, and produce high-quality milk. Global milk source distribution maps show that the world's best pastures are mostly concentrated in temperate grasslands between 40° and 50° north and south latitude. It is the high-quality milk from these premium pastures that occupies the majority of the global high-end dairy market share. In China, the regions most suitable for dairy farming, with high milk production and quality, are the "Three Norths"—the northeastern, northwestern, and northern China grassland belts—which concentrate 70% of the country's dairy cows and over 60% of raw milk, and are known as the "Golden Milk Source Belt." Against this regional resource backdrop, whoever holds high-quality milk sources in the "Three Norths" region can secure a dual advantage in market competition: sufficient milk production and high milk quality. Bright Dairy naturally understands this. To address its shortcomings, it expanded milk source bases in the north in earlier years. For example, in 1996, it acquired a dairy factory in Fuyu County, Heilongjiang, renamed it Bright Songhe, and later built it into a "central factory" far from its home base. Wang Jiafen, then general manager of Bright Dairy, stated bluntly that the advantage of pastoral areas lies in feed costs, and such milk source bases can "maintain a comparative cost advantage of 10% to 20% for products." On the other hand, low-temperature milk requires storage at 2-6°C and typically has a shelf life of 5-20 days. This determines that the market for low-temperature milk is limited to a certain sales radius, forming a production and sales model with "milk source as the center and cold chain as the radius." High-quality distributed milk sources combined with cold chain logistics and transportation systems often cover a radius of no more than 300 kilometers. In the low-temperature milk market, the king often achieves a winner-take-all situation. Perhaps seeing this business opportunity, Bright Dairy has continued to increase its focus on low-temperature milk. Pu Shaohua, chairman of Bright Dairy, recently stated publicly that the launch of its 15-day shelf-life fresh milk product "Fresh Pasture" effectively blocked competitors, expanded the sales radius, and drove double-digit growth for Bright Dairy. Attentive readers may have noticed that Bright Dairy publicly claims its low-temperature milk products have a shelf life extended to 15 days, rather than the industry standard of 7 days. In other words, to expand its sales radius, Bright Dairy has more than doubled the shelf life. In fact, Bright Dairy had no choice but to do this because, due to the bottleneck of milk source locations, it is naturally constrained by long-distance transportation of dairy products. Only by extending shelf life can it achieve cross-regional sales of low-temperature milk products, thereby maintaining market share. -02- Frequent Quality Crises The "black swan" event that China's dairy industry once suffered caused huge losses across the entire industry, making quality an insurmountable lifeline for dairy companies. As early as 2012, Bright Dairy experienced a quality crisis, and it involved the food safety of primary school students. According to media reports, in June 2012, students from two primary schools in Yingshang County, Fuyang City, Anhui Province, felt unwell after consuming milk distributed by Bright Dairy. 78 students reported discomfort after consumption, with 6 experiencing vomiting symptoms. A few days later, Bright Dairy issued a statement on its official website saying that the same batch of products involved had factory inspection reports showing they met quality standards. This was not an isolated incident. The same year, Xinmin Evening News reported that a Shanghai citizen, Mr. Zhou, ordered Bright milk, expecting to receive Bright Dairy milk, but the delivered milk bottles bore the "Bright Commercial" logo, and the packaging of the two milks was also very similar. The citizen questioned whether the ordered Bright milk was a knockoff product. Subsequently, Bright Dairy clarified that both Bright Commercial and Bright Dairy are subsidiaries of Bright Group, but at different levels. Bright Dairy is a subsidiary, while Bright Commercial is a third-level company under the Milk Group. The milk sold was branded "Zhenyuan." At that time, Bright Group had already required it to stop using existing packaging, and new packaging would make "Zhenyuan" larger and "Bright Commercial" smaller. However, this was not the first time "Zhenyuan" milk had faced quality complaints. In another report titled "Two Large Cockroaches Found in Fresh Milk, Shanghai Milk Company Says It Will Rectify," Xinmin Evening News mentioned that a Shanghai citizen complained about quality issues with the "low-fat high-calcium milk" they had ordered. They called the complaint hotline on the "Dairy Factory No. 7 Co., Ltd. Zhenyuan Milk Payment Receipt" but were passed around. Only after media intervention did the manufacturer respond with "strengthen supervision and further standardize." In addition, the internet is flooded with similar complaints about Bright Dairy's quality issues, and some have even created encyclopedia entries. The entry for "Bright Milk Spoilage Incident" states that small-bottle fresh milk produced on September 7, 2012, showed signs of rancidity. Bright admitted to 952 complaints, attributing it to substandard vehicle temperatures that caused some products to spoil. Strangely, that same year, it was also reported that the president of Bright Dairy complained, "If you inspect dairy products like this, it will kill people." According to China National Radio's "News Panorama," the then-president of Bright Dairy said at the 18th Annual Meeting of the China Dairy Industry Association, "The state's inspection of dairy products has reached an unprecedented level! Inspecting like this will kill people!" At that time, in the view of Bright Dairy's president, domestic dairy companies faced stricter quality supervision than foreign companies. "Try using this standard to inspect foreign companies? I believe if you use this standard to inspect foreign companies, if they don't have problems, I can resign on the spot! It's impossible!" Four years after publicly making the above remarks, in 2016, the president was sentenced to six years in prison for corruption and bribery, and fined 600,000 yuan. His tenure at Bright Dairy spanned from 1999 to 2014, during which he served as production technology director, deputy general manager, and president. Source: No. 1 Company (ID: yhgs_2018), Author: Camus Tips will be paid 400-2000 yuan once the tip is adopted.