As the 2025 earnings season concludes, the first three quarters' reports of 19 listed dairy companies have been released. Data shows that the dairy market overall remains in an adjustment phase, with over 60% of companies experiencing year-on-year revenue declines and profitability continuing to narrow.
Among them, only four companies achieved growth in both revenue and net profit in the first three quarters: New Hope Dairy, Milkground, Yiming Food, and Knight Dairy.
Six companies saw declines in both revenue and net profit: Bright Dairy, Tianrun Dairy, Royal Group, Yantang Dairy, Joyvio Health, and Li Zi Yuan. Among them, Tianrun Dairy suffered a significant loss of 10.6145 million yuan, its first loss in nearly a decade, primarily due to capacity reduction and the disposal of 12,900 low-yield cows, resulting in a biological asset disposal loss of 198 million yuan.
Two companies experienced "increased revenue but not profit": Yili Co., Ltd. and Panda Dairy.
Meanwhile, seven dairy companies saw "revenue not growing but profit increasing": Sanyuan Foods, Beingmate, Western Pastoral, Zhuangyuan Pastoral, Pinwu Foods, Maiquer, and Sunshine Dairy.
Liquid milk continues to decline, dragging down overall revenue performance
Amid the structural transformation of China's dairy industry, among 19 A-share listed dairy companies, over 60% saw year-on-year revenue declines, accounting for 68.4%. Continuing the trend from the first half of the year, the decline in liquid milk (mainly ambient milk and flavored milk) remains the core factor dragging down overall revenue.
This trend is more evident in the data of large dairy companies:
Yili's liquid milk revenue decline has been apparent for some time. Starting from 2024, Yili's liquid milk revenue was only 75 billion yuan, a direct decline of over 10 billion yuan from 85.5 billion yuan in 2023.
Mengniu has not released its third-quarter report, but based on its 2025 interim report, its liquid milk business revenue in the first half of 2025 was 32.192 billion yuan, down approximately 11.22% year-on-year from 36.262 billion yuan in the same period of 2024.
For regional dairy company Royal Group, which focuses on ambient milk business, its first three quarters revenue was 1.314 billion yuan, down 12.97% year-on-year, further demonstrating the performance volatility caused by the weak liquid milk main business.
Numbers are superficial; exploring the truth behind them is the goal.
Behind the obvious decline in liquid milk is the reality of substitution. The B-side tea beverage sector is accelerating its share of the dairy beverage pie; this profound impact is reflected in the growth of the food delivery market squeezing the living space of traditional dairy or beverage companies, which is no longer new.
At Yili's 2025 interim report performance briefing, a senior executive admitted: "Multiple food delivery platforms have triggered a food delivery war through subsidies. Even including delivery fees, a cup of milk tea may cost about the same as some Ambrosial products."
Clearly, as the intensity of the food delivery subsidy war leads to a continuous decline in the unit price of tea drinks, it has exerted significant suppression on the terminal consumption of packaged liquid milk.
According to industry insiders, even without the food delivery subsidy war, freshly made tea drinks may squeeze out about 10% of dairy consumption. Data shows: during the three-day promotion starting from the beginning of autumn, the two major food delivery platforms received over 600 million orders in total, of which more than half were tea and coffee drinks, occupying half of the total food delivery volume.
Now, with the rise of the food delivery war, this pressure has reached its peak. Under the premise of basically constant consumer demand, the growth of food delivery orders means that the demand for packaged liquid milk beverages has been reduced to a certain extent.
The large-scale pasture expansion and production increase that began in 2020 pushed the entire Chinese dairy industry into a painful downward cycle from 2022, coupled with weak consumer demand, resulting in a severe supply-demand mismatch.
By the third quarter of 2025, the chill in the dairy consumption market has further spread: weak terminal consumption, intensified industry competition, and the massive substitution of tea and coffee drinks have made the ceiling for liquid milk growth increasingly apparent.
Of course, liquid milk is only a fluctuation in some categories, not a complete halt, and sub-categories such as dairy beverages and low-temperature fresh milk continue to grow.
Increased revenue but not profit
Yili's first three quarters revenue reached 90.56 billion yuan, up 1.7% year-on-year, but net profit attributable to shareholders was 10.43 billion yuan, down 4.1% year-on-year. The other company is Panda Dairy, with revenue of 586 million yuan, up 3.0%, and net profit of 72 million yuan, down 8.17%.
- Terminal price bands shift downward, squeezing profit margins;
Although raw milk prices have been declining in recent years, giving the intuition that dairy companies with downstream advantages and scale would benefit from lower raw material costs, the actual situation is not the case.
The financial reports of leading dairy companies clearly list this trend: the reduction in revenue from liquid milk business due to price changes is greater than the cost reduction from lower raw material prices and product structure adjustments, thus confirming that the magnitude of revenue decline is still greater.
In other words, even though lower raw milk prices save some costs for dairy companies, they have to cut prices and promote sales to cope with market pressure, resulting in "earning less but losing more."
Panda Dairy, which focuses on condensed milk and is supported by cheese and cream businesses, has grown due to the expansion of the B-side catering chain, but intensified competition has led to the use of "promotions and display rewards" to maintain its core business market position, thereby dragging down overall profit performance.
- Deep integration with channel private labels and custom OEM, seeking volume with thin margins;
With the rapid emergence of private label dairy products and channel custom businesses in supermarkets in 2025, many dairy companies have entered the field, engaging in two-way binding private label or custom models with channel operators. Lowering their stance to "work for" channel operators is another important outlet to alleviate excess milk supply.
For example, in a convenience store in a first-tier city, the channel custom product "7S Milk" has a content specification only a few milliliters less than a brand product from the same manufacturer and batch number, but its price is nearly half.
In Hema membership stores, custom and private label products with both Hema and manufacturer logos occupy most of the shelf space, covering categories such as pasteurized milk, flavored milk, yogurt, cheese, and cream.
These products involve numerous manufacturers, not only leading dairy companies like Yili and Mengniu, but also most cross-regional and local dairy companies, such as New Hope Dairy and its sub-brand Asahi Premium, Sanyuan, Zhongken Huashanmu, and Jiangsu Tianmei Dairy.
Similar custom models are also prevalent in other channels, such as Aldi's "Youbai," Meituan's Xiaoxiang Supermarket, and Dingdong Maicai.
It is reported that since Dingdong Maicai launched custom products last year, their share will exceed 30% this year. These custom products are similar in specification and selling points to brand products from the same manufacturer, but their prices are almost halved.
Custom product orders are stable and scalable, which helps to fully utilize dairy companies' excess capacity. Among them, large dairy companies with scale, intensive operations, and supply chain advantages are more likely to receive olive branches from channel operators, but due to lower supply prices, profit margins are thin.
Maintaining net profit growth becomes the top priority
With the overall market shrinking, maintaining net profit growth will become the top priority for many regional dairy companies. For example, seven dairy companies: Sanyuan Foods, Beingmate, Western Pastoral, Zhuangyuan Pastoral, Pinwu Foods, Maiquer, and Sunshine Dairy.
The data can be interpreted as: dairy company decision-makers are well aware that with slowing consumption, stock competition, and market contraction, it is not easy to gain incremental growth through price cuts, subsidies, or external expansion.
Now, as the dairy market environment enters a deep adjustment period, the strategic directions and paths of regional dairy companies are quietly changing, and the pace of external expansion has significantly slowed.
For example, from January to June, Tianrun's number of distributors outside Xinjiang increased by only 8. From a large-scale, point-to-point national market distribution, they have shifted to selecting channels and slimming down. Although distributor channel sales declined by 4.57%, direct sales channels grew against the trend by 1.88%, and channel structure optimization is progressing simultaneously.
Meanwhile, Sanyuan, a veteran state-owned enterprise based in the Beijing-Tianjin-Hebei region, focuses on its main business and product streamlining as key strategies for breaking through. For example, implementing the "Focus on Beijing, Focus on Low-Temperature" strategy, streamlining ambient milk SKUs, strengthening regional market penetration, and using organizational optimization and remote office contraction to enhance profitability.
How can dairy companies navigate the cycle?
- Breakthrough in category structure;
The low-temperature milk segment continues its high penetration trend, becoming the most certain growth engine. New Hope Dairy, which focuses on the low-temperature track, performed particularly well, with first three quarters revenue of 8.434 billion yuan, up 3.5% year-on-year, and net profit of 623 million yuan, up 31.48%; in the third quarter alone, revenue was 2.908 billion yuan, with year-on-year growth increasing to 4.42%.
The B-side value is further amplified. According to Hua'an Securities estimates, the coffee track has brought 26.5 billion yuan in expansion to the dairy industry this year, and the market size for custom milk bases for new tea drinks has exceeded 12 billion yuan, with demand for milk bases growing over 20% annually. This trend continued in the third quarter. Yili's B-side business revenue share rose to 15% in the first half, with gross margin 6 percentage points higher than the C-side, becoming the core driver of profit improvement.
However, it is worth noting that although the B-side milk base market is expanding rapidly, due to the high technical barriers to entry for milk base raw materials, nearly 80% of the market relies on imported raw material suppliers. Further, to break through with B-side categories, dairy companies' technical reserves will be more tested.
Driven by the silver economy, the sunset red harbors a new blue ocean, and adult nutrition products perform well. Yili Co., Ltd. performed prominently in this area, with third-quarter single-quarter revenue from milk powder and dairy products of 7.68 billion yuan, up 12.6% year-on-year; Bright Dairy's other business revenue in the first three quarters was 1.079 billion yuan, up 28.72% year-on-year, with the core driver being milk powder business growth; Sanyuan Foods' solid milk business also achieved 4.5% year-on-year growth.
The structural transformation from drinking milk to eating milk continues to deepen. Following children's cheese sticks, cheese snacks are entering all-age and casual consumption.
"Cheese leader" Milkground focuses on product paths for more segmented cheese snack scenarios, continuously innovating and exploring, showing stronger growth resilience; cumulative revenue in the first three quarters was 3.957 billion yuan, up 10.09% year-on-year; net profit was 176 million yuan, up 106.88% year-on-year.
- New channel model transformation;
Veteran regional dairy companies, such as Bright Dairy and Sunshine Dairy rooted in the Jiangxi market, rely on the barriers established by 24-hour next-day "milk delivery to home" or "periodic subscription" models. Although the intermediate chain is shorter and gross margins are rich, they are being impacted by new consumption habits and channel models.
Fresh milk consumption scenarios are diversifying: traditional fresh milk channel models, whether "periodic subscription" or "milk delivery to home," mainly serve the family breakfast scenario.
Nowadays, a large amount of fresh milk consumption occurs in convenience stores during commutes or nearby breakfast shops or bakeries. Formats like freshly drawn milk have successfully diverted a large number of target customers by closely binding these offline outlets.
As fresh milk sales channels continue to be disrupted, the self-operated home delivery systems that dairy companies have long relied on, such as "periodic subscription" and "milk delivery to home," although solving the last-mile problem at relatively economical costs through "planned delivery," the core of competition has now shifted from products to channel convenience.
The entry of instant retail platforms like Meituan and Ele.me has put enormous pressure on "24-hour planned delivery" in terms of convenience when facing "30-minute instant delivery," thus completely changing the rules of the game.
For example, some dairy companies cooperated with Meituan's Xiaoxiang Supermarket as early as 2021, using its cold chain and rider network to achieve "fresh milk delivered to home within half an hour." Yili's first three quarters report shows that emerging channels now contribute over 30% of total revenue.
Conclusion
In the current cycle of excess raw milk in China, growth is not easy and is difficult; no one is spared.
On the surface, it appears to be overcapacity and weak revenue growth for dairy companies, but in reality, it is the exposure and presentation of various problems. Issues such as unreasonable category structure, aging marketing channels, and weak industrial chain resilience have become the biggest challenges during the current transition from "structural growth" to "universal growth" in China's dairy industry.
At the same time, the financial reports also show some growth opportunities. Dairy companies that focus on high-growth tracks (such as low-temperature milk, deep processing, adult nutrition, etc.) and implement strategies that focus resources and business can better sustain healthy development and highlight the opportunities brought by the rise of emerging channels.