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Preface: Cheese is becoming the next growth point for dairy companies. Looking back at the 2018 financial reports of Mengniu and Yili, both dairy giants have increased their focus on the cheese market and established independent "cheese business divisions." Recently, media reported that Mengniu has transferred Song Jidong, the general manager of the marketing management center of the ambient products division who led the star products Telunsu and Purezen, to serve as the general manager of the cheese business division. This shows how much Mengniu values its cheese business. In 2017, Junlebao pioneered the new category of "cheese yogurt," and "Zhang Zhishi La" sold 500 million packs in just two years. Although it is still a yogurt category, the success of cheese yogurt is inseparable from consumers' recognition of the value of cheese. This article focuses on the cheese category, deeply analyzing the evolution of demand, market conditions, and competitive landscape, providing a panoramic view of the category's growth trends.
Key Reading:
- Why is cheese becoming popular?
- Cheese imports have grown 10-fold in two years!
- In the cheese market competition, Yili and Mengniu are still newcomers.
Why is cheese becoming popular? Cheese, also known as芝士 or 起司, is a block product formed by fermenting milk and removing water. Due to its processing technology, cheese naturally carries a premium label: high protein, rich nutrition, healthy, Western-style diet. Benefiting from the popularization of "A glass of milk a day, strengthening Chinese people," consumer demand for related dairy products has increased year by year. In this process, cheese, as a sub-category of dairy products, has its inevitable development factors.
1. Influenced by Western diets, basic consumer awareness has been established. With overall consumption upgrading, more and more middle-class and above consumers have been traveling abroad and studying overseas frequently in recent years. This group has relatively more open consumption concepts and is willing to spend money on quality. In this process, influenced by major cheese-consuming countries such as Europe and the United States, they have developed a basic awareness of cheese consumption. At the same time, in daily life, through various apps and KOLs, consumers' awareness of cheese has been deepened intentionally or unintentionally, even forming consumption preferences in some fixed scenarios. For example, this middle-class group pays very high attention to the refinement of children's diets. As parents, they need to find nutritious and healthy food, and in this process, they tend to prefer Western-style nutritional supplements for their children. Cheese, as a dairy product high in protein and calcium, is a good choice for children's nutritional supplementation. Its rich flavors also make it more attractive to children.
2. Dairy product upgrades, cheese conforms to the laws of industry development. Looking back at the market development curve of dairy products, from the increase in economic income to the slogan "A glass of milk a day" resounding across the country, the education of the milk category, accompanied by the rise of Yili and Mengniu, has formed a nationwide trend. Due to improvements in transportation conditions and processing technology, dairy products have gone through the development process: milk powder—ambient liquid milk—chilled liquid milk—chilled yogurt. From liquid milk to chilled yogurt, one fact needs attention: people with lactose intolerance. In China, there are approximately 350 million people with lactose intolerance, so yogurt has become a good substitute category for pure milk. But yogurt still has its drawbacks: heavy product specifications, short shelf life, but not high unit price, and due to its semi-solid form, the concentration of nutrients is not high. Therefore, for consumers, an upgraded category is needed to satisfy nutrition and taste. At the same time, for brands, an upgraded product is also needed to improve quality and unit price. Against this background, cheese has entered the brand's vision. The processing of cheese determines its excellent nutritional and convenience attributes; at the same time, its technology also determines the product's pricing, meeting brands' needs for high unit prices and low transportation costs (still cold chain transportation, but compared to liquid products, the transportation cost of this category is greatly reduced). And compared to yogurt, the shelf life has also been greatly improved. In summary, with consumption upgrading, the establishment of consumer awareness, and conformity to the laws of industry development, cheese is becoming the new favorite of the dairy industry. At the same time, existing market data also indirectly verifies the explosive power of the cheese market!
Cheese imports have grown 10-fold in two years! Currently, the cheese consumption market is divided into foodservice and retail markets. Thanks to the growth of Western-style pastries, pizza, and other categories in China, the demand for cheese in the foodservice market has greatly increased. Currently, many new foodservice businesses are also using cheese to create products, such as Heytea's cheese tea. According to public data, the overall foodservice market accounts for about 70% of total cheese consumption. Although the retail market currently accounts for a relatively low proportion, the overall strong growth trend can still be seen. This article focuses on analyzing the retail market for cheese. Currently, domestic cheese products show the following trends:
1. Low per capita consumption: According to data released by the Dairy Association, China's current per capita cheese consumption is only 0.1 kg, far behind Japan and South Korea's 2.4 kg and 3.1 kg, and far from Europe's 18.7 kg per capita cheese consumption. The cheese market has huge potential space.
2. Small category base, high growth rate: Observing the growth of dairy products in recent years, yogurt and cheese have become the fastest-growing categories in domestic dairy products, with growth rates exceeding 20%. But at the same time, it can also be seen that compared with other dairy products, cheese has a relatively small overall market size and still has much room for growth.
3. Large import demand, domestic brands are catching up: Currently, domestic cheese accounts for less than 50%, with imports being the main source. Cheese imports increased from less than 10,000 tons in 2016 to 108,300 tons in 2018, a 10-fold increase. Among them, New Zealand accounts for over 50% of imports, followed by Australia, the EU, and other regions. Currently, domestic dairy companies are also deploying and actively promoting cheese business. Between 2013 and 2017, the proportion of new cheese products increased from 7% to 17%, while the proportion of new yogurt and liquid milk products remained relatively stable. The domestic cheese industry is showing rapid growth, with a growth rate of 47% in 2017 alone. At the same time, Yili and Mengniu established cheese business divisions in 2018, which is enough to show its potential. Currently, the CR5 of China's cheese market is 54.1%, all of which are foreign-funded or Sino-foreign joint ventures, while domestic brands Mengniu, Miaokeland, Bright, and Sanyuan rank 7th to 10th, with a combined market share of only 6.5%.
In the cheese market competition, Yili and Mengniu are still newcomers. Frankly speaking, the overall domestic cheese market is still in the introduction stage. Overseas companies, based on strong product and brand strength, play a role in consumer education and have a high market share. Currently, domestic cheese companies mainly include Miaokeland, Yili, and Mengniu. Among them, Miaokeland is the first domestic brand focused on cheese and has successfully gone public. In brand communication, "For cheese, choose Miaokeland" shows its ambition. As the first listed company in the cheese business, it is clear that occupying the first position in the category is the best brand positioning strategy. Miaokeland's sales performance: In the first half of 2019, cheese business revenue reached 340 million yuan, a year-on-year increase of 113.5%, and the core single product cheese stick business revenue was 170 million yuan, an increase of 449.38%. In the 2019 JD.com and Tmall 618 events, cheese sticks ranked first in sales in the same category. Regarding Yili, in addition to the 2018 financial report showing the establishment of an independent business division, the latest information is that in March 2019, Yili acquired New Zealand's second-largest dairy company to supplement resources in goat milk and cheese. Currently, Yili's cheese product line is relatively limited, with core layout direction in high-quality natural cheese products for children and adults. Regarding Mengniu, in addition to transferring a general to serve as the general manager of the cheese business division, the current overall cheese business layout is limited to children's products, and it has a dedicated cheese flagship store on Tmall. Overall, Miaokeland currently has a clear momentum, whether in brand communication strategy or actual sales performance, occupying a leading position in the cheese business. Although it has taken the lead, it is not without crisis. Yili and Mengniu, as domestic dairy giants, although they started later in the cheese business, their strong brand power and channel power behind them cannot be ignored. Especially in channels, both Yili and Mengniu have already laid out nationwide channel networks. In addition, judging from the past investment strategies of Yili and Mengniu, it cannot be ruled out that they may acquire or invest in foreign cheese brands "on the eve" of category explosion, shortening the cycle and increasing their presence in the domestic cheese market.
Final Thoughts From the current layout of various brands, children's cheese is the main focus point for all brands. Nielsen found that the main purchasers of cheese are mothers over 30 years old or middle-aged men and women over 40. Brands are binding with animation IPs through rich flavors and differentiated packaging, which is currently becoming the mainstream form in the market. In terms of adult cheese, as the post-90s and post-95s become the mainstream in the workplace, their Westernized consumption concepts, potential demand for cheese, and consumption scenarios are expected to expand to office afternoon tea, weight-loss meal replacement energy products, and pre-exercise supplementation. For example, developing cheese snacks suitable for adults. The future research and development direction of cheese products can refer to the following three points:
1. Scenario-based product development: Current cheese products focus on nutrition, highlighting high protein and high calcium. Combined with the nutritional attributes of cheese products, more targeted products can be developed, such as adding dietary fiber and other raw materials to meet the needs of nutritional balance and meal replacement; developing high-casein cheese products suitable for exercise scenarios.
2. Product development for specific groups: Cheese products currently focus more on children. In fact, the rich nutrition of cheese products also has good nutritional supplementation effects for special groups such as pregnant women and the elderly. Some special elements can be added in product development, such as folic acid and iron supplements for pregnant women, to develop cheese products for special groups.
3. Demand for richness in cheese snacks: On the basis of cheese, add jam, nuts, and other ingredients to make the taste richer.
In summary, with the help of consumption upgrading, achieve cross-level growth of dairy products, further upgrading from "drinking milk" to "eating milk." At present, many companies have started cheese businesses. At the same time, it must be recognized that the current domestic cheese development status is vastly different from mature countries. Currently, it is mainly concentrated in first- and second-tier cities, and the consumption habits of users in lower-tier cities are not yet mature. In the future, various brands need to work together to complete brand education, channel improvement, and market sinking. The future market is promising, and we will wait and see!
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