Click the image for details Text | Zhang Zhiwei Nowadays, Yili and Mengniu are leading the first tier of China's dairy industry; Bright Dairy leads the second tier, which starts at 10 billion yuan in scale and has quickly absorbed three new members in the past two years: Junlebao, Feihe, and H&H Group. This should be the most "exhilarating" stage in the modern development history of China's dairy industry: the first tier is sprinting toward the 100 billion yuan goal, while the second tier is racing to break through 10 billion yuan, unleashing the potential of China's dairy industry! As Long Yongtu said: In such a large country with a population of 1.4 billion, if we cannot create prestigious "Chinese brands," we would be ashamed of such a huge market and such a great era. Today, we will mainly interpret the "expansion" of the second tier of China's dairy industry, as well as their development direction and space. Only by clearly understanding the landscape and changes can we avoid confusion on the road ahead and walk steadily on our own path. Currently, Bright Dairy, with annual revenue close to 22 billion yuan, leads the second tier. Junlebao Dairy, with revenue close to 13 billion yuan (the total revenue for 2018 will be announced at the Beijing media communication meeting; according to prior verification, it should be within this range), ranks second in the second tier. Feihe Dairy, which has no liquid milk business and only produces and sells milk powder, achieved revenue of 11.5 billion yuan in 2018, successfully rising to third place in the second tier and fifth place in China's dairy industry. H&H Group, which focuses on both infant formula and nutrition products, achieved revenue of 7.3 billion yuan in the first three quarters of 2018. With a year-on-year growth rate of nearly 30%, it is highly likely to break through 10 billion yuan for the first time in 2018. Excluding Yili and Mengniu, the above four dairy companies with revenue above 10 billion yuan form the second tier of China's dairy industry, followed by the third tier led by Sanyuan and Ausnutria (the next issue of Food Insight will interpret the landscape and development trends of the third tier). In this issue, we will further interpret the landscape and future development trends of the second tier. Bright Dairy's Strengthening and Expansion Bright Dairy's growth potential lies in two aspects: 1. Adhering to freshness, focusing on low-temperature products, and deeply cultivating the Yangtze River Delta and East China markets; 2. Leveraging pasture resources to build a series of super brand matrices such as "Youbei" fresh milk, and expanding nationwide. In early January 2019, Bright Dairy successfully held a press conference in Shanghai, where it clearly defined its positioning, which can also be seen as a keynote: Bright Dairy is the king of fresh milk in China, the NO.1 in the fresh milk market. With dairy companies such as Mengniu and New Hope Dairy making efforts in the low-temperature dairy sector, Bright Dairy has realized that they need to consolidate their "freshness" advantage and accelerate their lead in the low-temperature dairy market. After all, the Yangtze River Delta base market has an excellent market environment, and they must seize the "geographical advantage" and turn it into a market advantage. Unlike New Hope Dairy, which acquires regional brands everywhere, Bright Dairy's national expansion route is pasture first, factory follow-up, and market advancement. Bright Dairy has self-built pastures in key regions across the country, and its pasture management level is among the best in the industry. Therefore, Bright Dairy has the advantage of high-quality milk sources. Next, according to the national expansion plan, steadily build the entire industry chain, upgrade production processes through high-quality milk projects, and let more people across the country drink Bright milk. This is the most important task for Bright Dairy at present. Junlebao's Ambition and Aspiration Through years of observation, Food Insight has found that Junlebao is a company that is geographically remote but unwilling to be ordinary. Its ambition and aspiration are mainly reflected in its involvement in the milk powder business and its rapid rise. In 2014, Junlebao milk powder made its debut. It is still difficult to fully and clearly reconstruct the fact: Why did Junlebao enter the milk powder business? But from the fact that the supreme leader of the country visited Hebei Province and Qizhi Dairy during the Spring Festival of 2017, it can be seen that Junlebao milk powder has shouldered a noble mission since its birth. This mission mainly comes from the expectation of the Hebei Provincial Government: Where you fell, you must get up, stand up, and become strong! In fact, from the wave of economic transformation, it is not difficult to see that Hebei Province is striving to reverse the extensive development model of steel and cement, and the dairy industry, which is related to people's livelihood, poverty alleviation, and revitalization, has become the province's new hope. It is understood that Hebei Province is about to introduce a local version of the dairy industry revitalization plan. Among the national target of 45 million tons of milk production by 2025, Hebei Province is to undertake and achieve 10 million tons, showing its determination. To this end, Hebei Province will increase investment in policy and funds, and tilt toward leading enterprises. It can be said that Junlebao has ushered in the best development environment in history. Wei Lihua and the people of Junlebao are not striving for themselves; every corner of their factory is pasted with a slogan: Let the next generation of the motherland drink good milk powder. If you think that with government support, anything can be achieved, you are too naive. First, not any enterprise can shoulder such a noble mission. Before this responsibility was placed on Junlebao's shoulders, it must have been the result of detailed investigation. Second, the dairy industry chain is too long. This industry, which keeps people on tenterhooks, cannot achieve success overnight. With policy, you need funds; with funds, you need a team; with a team, you need management; with management, you need strategy; with strategy, you need execution... Junlebao's milk powder division, from initially only Liu Senmiao to a team of over 4,000 people now, in these four years, who knows what they have gone through! In 2018, Junlebao milk powder revenue increased by 100% year-on-year, breaking through 5 billion yuan for the first time. Although no target for doubling was set for 2019, at least a 60%-70% year-on-year growth is expected, and the goal is to achieve the industry's "sales volume" first place in 2019, with 75 million cans for the year. When other companies are aiming at the high-end market, Junlebao, which focuses on quantity, market share, and affordable pricing, is inherently a differentiated competition, isn't it? Feihe Wants to Keep a Low Profile, but Its Strength Doesn't Allow It Running a business is like being a person. Generally, when a person is smooth sailing and continuously achieving results, he will involuntarily "float." But in Feihe, we don't seem to see such "frivolity." Some time ago, Feihe Dairy Chairman Leng Youbin attended Wu Xiaobo's New Year's Eve show and gave a live speech. After returning, he told the team that he hoped they would avoid promoting him in the future, as he felt uncomfortable. Leng Youbin, who comes from a background in industry, is used to keeping a low profile. Although at this important stage of Feihe's development, as the helmsman, he indeed needs to come out to convey confidence to the outside world, the pragmatic Leng Youbin still needs some time to adapt to this new rhythm. In 2018, Feihe milk powder broke through 10 billion yuan for the first time, with the final data fixed at around 11.5 billion yuan. This is a milestone for domestic milk powder. Finally, a domestic milk powder company has achieved a new breakthrough, which is of great significance for boosting consumer confidence in domestic milk powder! Food Insight has learned from multiple channels that in the first half of 2019 or mid-year, Feihe will indeed go to ring the bell, and it is time to start a new journey. Once Feihe enters the capital market, it will upgrade in multiple aspects such as funds, brand power, and corporate governance. Feihe will use the raised funds to refine the entire industry chain, channel terminal service experience, consumer education, and team building, striving for excellence and becoming a better version of itself. H&H Group, Leading Step by Step H&H Group started with probiotics and officially launched Biostime high-end infant formula in 2008. Note the time point of 2008, which shows their keen sense of opportunity and decisiveness in seizing it. In 2010, H&H listed on the Hong Kong Stock Exchange, and since then, it has had more resources to layout globalization. When the infant formula business developed to a certain extent, H&H expanded into the nutrition industry, fully acquiring Swisse, Australia's largest nutrition brand, in two installments in 2015 and 2016. In the first three quarters of 2018, H&H Group achieved revenue of 7.3 billion yuan, with infant nutrition and care products and adult nutrition and care products accounting for 58.2% and 41.8% of revenue, respectively. According to H&H founder Luo Fei's previous vision, the two businesses were expected to achieve a 50-50 split in 2018, but due to the favorable new policies, the growth of H&H's infant formula business exceeded expectations. However, he admitted that Swisse has greater growth potential. From initially cooperating with French companies to now having resources, business, and market layout globally, every step H&H has taken in the past 20 years has been leading in the industry. This state depends on the founder's experience, ability, broad vision, and strategic foresight. If we were to conduct a risk analysis of current milk powder and nutrition companies, H&H is undoubtedly one of the companies with the highest risk resistance. This is mainly because their product structure, industrial layout, global layout, and team building are all relatively solid, like a horse stance, sturdy and reliable. Source: Food Insight Media, the new media leader in the global nutrition and health food industry New Distribution will hold the 2019 (5th) FMCG + Internet Conference during the Chengdu Spring Sugar and Wine Fair from March 16 to March 18. This conference will focus on the topic of "Breaking the Game" and conduct in-depth discussions with numerous brand owners, supply chain service providers, distributors, retailers, and others. Compared to previous conferences, this summit will be fully upgraded. In addition to the original topics such as channel innovation, city distribution logistics, and distributor transformation, it will also add multiple parallel forums on new marketing cases, IP + FMCG empowerment, community group buying, and innovative retail. Through three days of ten high-density, high-quality expert sharing and exchanges, we believe that every brand owner and distributor can learn the latest business models, expert opinions, and practical methods, find new tools and methods for breaking the game in 2019, and return to the track of rapid growth. -END-