Click to read the original article for details Mengniu and Coca-Cola's "marriage" not only achieves mutual benefits but also plays a key role in both companies' product structure adjustments. On October 30, Tianyancha showed that Keniule Dairy Co., Ltd. was recently established with a registered capital of US$68.8594 million. The legal representative is VENKATA VAMSI MOHAN THATI. The business scope includes the production, sales, and marketing of low-temperature milk products. The company is jointly held by Mengniu and Coca-Cola. Relevant persons in charge of Mengniu and Coca-Cola told Beijing Business Today reporters: "The Keniule Dairy Co., Ltd., jointly funded by Coca-Cola and Mengniu, has completed the industrial and commercial registration procedures and obtained a business license." The newly established joint venture will fully leverage the advantages of both investing parties in dairy R&D, dairy processing technology, brand influence, and distribution channels to bring a brand-new low-temperature milk brand to Chinese consumers and promote the upgrading of China's dairy consumption. In the first half of this year, the joint venture established by Coca-Cola and Mengniu received the "Decision Letter on Not Conducting Further Review of Concentration of Undertakings Anti-Monopoly Review" from the State Administration for Market Regulation, approving the establishment of the joint venture to produce and sell low-temperature milk products domestically. Regarding the name and specific launch time of the future low-temperature milk products, the person in charge of Mengniu said there is no information yet. "Both parties have a common interest foundation to carry out multi-faceted cooperation." In the view of Shen Meng, director of Chanson Capital, both Mengniu and Coca-Cola have COFCO backgrounds. Under COFCO's facilitation, they have deepened cooperation, leveraging each other's strengths for integration, and jointly exploring the potential of the Chinese market. Data shows that in 2019, the scale of China's dairy consumption market reached 419.63 billion yuan, with a compound annual growth rate of 8.6% from 2010 to 2019. By 2024, the consumption scale of China's dairy market may exceed 550 billion yuan. Among them, the low-temperature milk market has become the focus of competition for many dairy enterprises. Currently, more than 400 enterprises in China operate low-temperature dairy products, and the growth rate of low-temperature dairy products of regional leading dairy enterprises has reached about 20%. According to reports, the top three low-temperature milk brands are currently Bright, Sanyuan, and New Hope, while the two giants Mengniu and Yili are also making efforts to catch up. As is well known, the reason behind the "scramble" for the low-temperature milk market is that its gross margin is 10%-20% higher than that of room-temperature milk. It is also predicted that in the next four years, the compound growth rate of low-temperature milk will reach 7.4%, higher than the 1.9% of room-temperature milk. However, low-temperature milk has high entry barriers in terms of regional brand barriers, transportation distance, and cold chain equipment. Generally, delivery can be achieved within 300-500 kilometers around the milk source. If the distance increases, the delivery cost will also increase significantly. This has also become one of the reasons why many dairy enterprises are scrambling to seize milk sources. "Low-temperature milk is currently a must-fight area in the domestic dairy industry and an important component of the dairy market. After receiving support from Coca-Cola, Mengniu has further enhanced its competitiveness. Although it is difficult to surpass the leader Yili, it may change the market share of other enterprises," Shen Meng said. Recently, Mengniu announced its three-year development plan. At the 11th China Dairy Conference and 2020 China Dairy Exhibition and the 2020 China Dairy Top 20 (D20) Summit, Mengniu President Lu Minfang stated that according to the plan, in the next three years, Mengniu will actively respond to the national milk source layout strategy, focus on advantageous regions, and build 8 large-scale planting, breeding, and processing industrial clusters. Following the 136 project plan, it will establish more effective interest linkage mechanisms, promote the construction of three major service platforms: "Digital Milk Source • Smart Ranch," "Dairy Research Institute," and "Ai Yang Niu" Internet centralized procurement platform, and achieve mutual development mechanisms such as industrial interconnection, resource integration, and capability sharing. Coca-Cola has also announced a plan to eliminate about 200 of its sub-brands, hoping to reduce its portfolio and focus on the most profitable products. Industry insiders say that Mengniu and Coca-Cola's "marriage" not only achieves mutual benefits but also plays a key role in both companies' product structure adjustments. Source: Beijing Business Today, Authors: Qian Yu, Bai Yang