--- title: "Bright Dairy, the Third-Place Player in the Dairy Industry, Struggles in the Gap: A Big Gap with Mengniu and Yili" description: "On October 10, Bright Dairy and Food Co., Ltd. (hereinafter referred to as \"Bright Dairy\") announced that it will build a new factory and set up a wholly-owned subsidiary in Chaozhou, Guangdong Province, with a total investment of 349 million yuan. The new subsidiary will be named \"Yuedong Bright Dairy Products Co., Ltd.\" The South China market has always been a battleground for dairy companies, and it is also one of Bright Dairy's main strongholds. However, maintaining a competitive edge in this fiercely contested market is not easy. Besides dairy giants Mengniu and Yili, Bright also faces challenges from local brands such as Yantang Dairy and Fengxing Milk." author: "New Distribution" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2016-10-19" categories: "Capital, Earnings & M&A, Consumer & Categories" language: "en" canonical: "https://xinjignxiao.com/en/articles/bright-dairy-the-third-place-player-in-the-dairy-industry-struggles-in-t-04cfd234/" markdown: "https://xinjignxiao.com/en/articles/bright-dairy-the-third-place-player-in-the-dairy-industry-struggles-in-t-04cfd234.md" original_source: "https://mp.weixin.qq.com/s/gLNjB88p0V23LCOZfqmVZQ" translation: "https://xinjignxiao.com/zh/articles/%E5%A4%B9%E7%BC%9D%E4%B8%AD%E7%9A%84%E4%B9%B3%E4%B8%9A%E8%80%81%E4%B8%89%E5%85%89%E6%98%8E%E4%B9%B3%E4%B8%9A-%E4%B8%8E%E8%92%99%E7%89%9B%E4%BC%8A%E5%88%A9%E5%B7%AE%E8%B7%9D%E5%A4%A7-04cfd234.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/bright-dairy-the-third-place-player-in-the-dairy-industry-struggles-in-t-04cfd234/" citation: "New Distribution. “Bright Dairy, the Third-Place Player in the Dairy Industry, Struggles in the Gap: A Big Gap with Mengniu and Yili.” New Distribution, 2016-10-19. https://xinjignxiao.com/en/articles/bright-dairy-the-third-place-player-in-the-dairy-industry-struggles-in-t-04cfd234/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # Bright Dairy, the Third-Place Player in the Dairy Industry, Struggles in the Gap: A Big Gap with Mengniu and Yili > On October 10, Bright Dairy and Food Co., Ltd. (hereinafter referred to as "Bright Dairy") announced that it will build a new factory and set up a wholly-owned subsidiary in Chaozhou, Guangdong Province, with a total investment of 349 million yuan. The new subsidiary will be named "Yuedong Bright Dairy Products Co., Ltd." The South China market has always been a battleground for dairy companies, and it is also one of Bright Dairy's main strongholds. However, maintaining a competitive edge in this fiercely contested market is not easy. Besides dairy giants Mengniu and Yili, Bright also faces challenges from local brands such as Yantang Dairy and Fengxing Milk. > On October 10, Bright Dairy and Food Co., Ltd. (hereinafter referred to as "Bright Dairy") announced that it will build a new factory and set up a wholly-owned subsidiary in Chaozhou, Guangdong Province. The total investment for this project is 349 million yuan, and the new wholly-owned subsidiary will be named "Yuedong Bright Dairy Products Co., Ltd." The South China market has always been a "must-win" for dairy companies, and it is also one of Bright Dairy's main strongholds. However, maintaining a dominant position in this fiercely competitive market is not easy. Besides dairy giants Mengniu and Yili, Bright also faces challenges from local brands such as Yantang Dairy and Fengxing Milk. Although there is no specific figure for Bright Dairy's market share in South China, dairy expert Song Liang told Times Weekly that the South China market is divided into three parts: one part is Mengniu and Yili, one part is local dairy companies, and the remaining part belongs to Bright and other dairy companies. Despite being called the "third-oldest" in China's dairy industry, Bright seems to have a significant gap with the two giants (Yili and Mengniu). In the first half of 2016, Mengniu Dairy's revenue was 27.26 billion yuan, with net profit of 1.077 billion yuan; Yili's revenue was 30.087 billion yuan, with total profit of 3.807 billion yuan; while Bright Dairy's revenue was 10.270 billion yuan, with net profit of 321 million yuan. In the first half of this year, the dairy farming business was one of the few business segments that achieved revenue growth. In 2015, Bright Dairy's subsidiary Shanghai Bright Holstein Farming Co., Ltd. (hereinafter referred to as "Holstein Farming") acquired the dairy cattle farming business related equity and assets of Shanghai Milk Group and Shanghai Taijie Industrial under Bright Group through equity acquisition and asset purchase. The dairy industry has always been "those who have milk sources win the world," and integrating pasture resources is part of Bright's strategy to "build a full industry chain." Now Bright has made building a full industry chain one of its corporate strategies. However, Song Liang told Times Weekly that Bright's biggest problem has never been the lack of a full industry chain. Zhu Danpeng, a researcher at the China Food Business Research Institute, also told Times Weekly that building a full industry chain is very difficult. Now Bright not only faces the impact from Yili and Mengniu but also has to guard against the squeeze from imported dairy products. For Zhu Hangming, who has just been president of Bright for one year, this is a considerable challenge. > **The Third-Place Player in the Dairy Industry** The importance of the South China market to Bright Dairy is self-evident. Song Liang told Times Weekly that although Bright's market in South China is also large, overall, caught between Mengniu, Yili, local dairy companies, and imported dairy products, Bright Dairy is not sailing smoothly in South China. One of the reasons for this situation is Bright's disadvantage in channels. Zhu Danpeng told Times Weekly that although Bright is called the "third-oldest" in the dairy industry, in some areas of the Northwest and North China markets, Bright's performance is even worse than some local dairy companies. According to Bright Dairy's plan, the company will stabilize the Central China market in the coming years, and during this period, the Central China factory with an investment of 1.2 billion yuan will also be put into production in 2017. Zhu Danpeng told Times Weekly that even in these key markets, Bright's products mostly appear in KA supermarkets. Compared with Mengniu and Yili, Bright's channels lack depth. Bright Dairy's home base is in East China, especially Shanghai. In the first half of this year, Bright's revenue in the Shanghai market reached 2.622 billion yuan, while revenue from other domestic regions was 6.130 billion yuan. Song Liang told Times Weekly that Bright's pasteurized milk once held a market share of 40%-50% in East China, but Song Liang admitted that even in its "home base" Shanghai, Bright Dairy faces considerable challenges. First, Bright's advantage is mainly in the low-temperature pasteurized milk segment; in the room-temperature milk segment, Yili and Mengniu's positions are difficult to shake. Second, in East China, especially Shanghai, there are many types of imported dairy products that compete with Bright, and Bright still faces considerable challenges in the squeeze. As a result, Bright's performance shows a state where it has many high-margin products, but the company's net sales margin is lower than that of Mengniu and Yili. > **Integrating Pastures** Song Liang told Times Weekly that because most of Bright's milk sources come from large-scale factories, the purchase price of raw milk is higher than that of Mengniu and Yili, which is another reason for Bright's lower net sales margin. In July 2015, Bright Dairy acquired high-quality assets under Bright Group and the dairy cattle farming business of 13 companies through its subsidiary Holstein Farming. Holstein Farming mainly integrates some pasture resources for Bright, but this acquisition will not have a significant impact on the company because it mainly focuses on East China, while in North China and Northeast China, Bright still relies mainly on large-scale pastures. The integration work of Holstein Farming does not seem to be over. In August this year, Bright Dairy announced that Holstein Farming applied for a one-year loan from banks, with a total loan amount of 650 million yuan. However, Bright did not respond to Times Weekly about the specific use of the loan. In fact, integrating pasture resources is part of Bright Dairy's "full industry chain" strategy. Bright Dairy stated on its official website that the company will connect pasture management, dairy processing, cold chain logistics, and brand sales by building a full industry chain. Zhu Danpeng told Times Weekly that theoretically, building a full industry chain is beneficial for dairy companies. When a company integrates pastures into its supply chain, it can not only reduce product risks but also alleviate cost pressures. However, Song Liang told Times Weekly that currently, even most of Mengniu and Yili's milk sources come from third-party pastures. Even if a few companies can achieve full industry chain production, such companies are mostly small in size. Bright's brand concept is "Joy in Freshness," and "freshness" places considerable demands on the company's cold chain logistics. In June 2015, Zhu Hangming, former chairman, president, and party secretary of Shanghai Haibo Co., Ltd., became the new president of Bright Dairy. Public information shows that Haibo Co., Ltd. is a listed company under Bright Group, with two main businesses: "Haibo Taxi" and "Haibo Logistics," and it began to lay out cold chain logistics business in 2014. Song Liang told Times Weekly that low-temperature pasteurized milk is a major trend in the dairy industry, but it has high requirements for logistics. Zhu Hangming's joining will, to some extent, benefit Bright's layout in cold chain. However, China's cold chain is not yet developed enough, and the development of cold chain logistics is constrained by urban infrastructure. Bright can proactively develop logistics and cold chain, but for a single company, this is difficult. In Bright Dairy's full industry chain plan, New Zealand's Synlait Milk Limited and Israel's TNUVA also play a role. In November 2010, Bright Dairy acquired its first overseas subsidiary, New Zealand's Synlait, and Bright's high-end infant formula Pei'er Beirui is produced at Synlait. On the evening of September 18, Bright Dairy announced that it would invest 196 million yuan to participate in Synlait's rights issue and placement project. After the capital increase and placement, the equity in Synlait will remain unchanged at 39.12%. In March 2015, Bright Group indirectly acquired 76.73% of TNUVA through Bright Food Singapore Investment Pte. Ltd. It is reported that TNUVA is Israel's largest dairy company, with dairy products as its business focus. Bright Dairy has publicly stated that it will select products from TNUVA that have advantages in technology and cost and are suitable for the Chinese market, and introduce them to the Chinese market. At the same time, Bright Dairy will support TNUVA's continued development in overseas markets such as Europe and the United States. Bright Dairy originally planned to acquire all the equity of Bright Food Singapore Investment Pte. Ltd. through a non-public issuance of A shares, thereby indirectly holding TNUVA's equity. However, in March this year, Bright announced that it would terminate the plan, and TNUVA is currently managed by Bright Dairy. Times Weekly noted that in August this year, Bright Dairy announced that it would provide a guarantee of 65 million US dollars for its wholly-owned subsidiary Bright International, with a guarantee period of one year. It is reported that Bright International's main business is investment holding. As for Bright International's next steps, Bright responded to Times Weekly that everything is subject to company announcements. > **Overseas Mergers and Acquisitions** In fact, besides Bright Dairy, Mengniu and Yili are also actively conducting overseas mergers and acquisitions. However, Zhu Danpeng told Times Weekly that compared with Mengniu and Yili's revenue-oriented mergers and acquisitions, Bright Dairy's overseas mergers and acquisitions are, to some extent, influenced by national strategies, which has also prevented these cross-border mergers and acquisitions from having a significant positive impact on the company's operating performance. Regarding the potential impact of the full industry chain, Song Liang told Times Weekly that in some companies' understanding, the full industry chain means connecting upstream and downstream, and they believe this can achieve intensive production. This view is biased. Because for companies, it is enough to achieve professional division of labor and effective allocation of resources. Zhu Danpeng also told Times Weekly that theoretically, the full industry chain can help dairy companies optimize the industry chain and correspondingly reduce costs and risks, but it is very difficult to achieve full industry chain production. Song Liang believes that Bright's current predicament mainly stems from fierce external market competition. If this "third-oldest" dairy company wants to achieve a breakthrough, it needs to innovate in channels and products, but "this has certain difficulties." Zhu Danpeng also said that Bright needs to adjust its thinking to adapt to the needs of the new generation of consumers. Recently, Bright hired Wang Kai and Hu Ge as image spokespersons for two of its products. Zhu Danpeng also said that consumers not only have functional needs when purchasing products but also certain emotional needs. When industry products are highly homogeneous, emotional needs may, to some extent, influence consumers' choices. However, he also said that emotional needs and functional needs are intertwined, and "Bright also needs to make certain adjustments to its product line." -END- The best FMCG distributor learning platform in China Focusing on providing professional, practical, and useful tutorials for companies and distributors Committed to helping Chinese FMCG distributors grow rapidly **The most professional and practical knowledge base in the FMCG industry** Reply with the red number below to get the corresponding content Reply with number 1 to view the complete knowledge base | **001** Excellent article selection | **002** Distributor market operations | **003** Terminal visit management | **004** Sales supervisor skills | **005** Sales improvement techniques | **006** Channel expansion | **007** Managing distributors | **008** Distributor development | **009** Distributor internal operations management | **010** Team management | **011** Efficient distribution techniques | **012** Sales manager's eighteen skills | **013** KA operation methods and strategies | **014** First lesson for new salespeople | **015** Internet, brand | **016** Distributor B2B transformation | [Long press to follow QR code] --- ## Citation metadata - Publisher: New Distribution - Author: New Distribution - Published: 2016-10-19 - Canonical: https://xinjignxiao.com/en/articles/bright-dairy-the-third-place-player-in-the-dairy-industry-struggles-in-t-04cfd234/ - Original source: https://mp.weixin.qq.com/s/gLNjB88p0V23LCOZfqmVZQ ## Copyright and AI use This article is sourced from New Distribution. 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