---
title: "Miao Ke Lan Duo Still Has a Long Way to Go"
description: "In 2024, Miao Ke Lan Duo has faced a series of challenges, including a significant drop in stock price, first-ever decline in annual revenue and profit, and a food safety controversy over trans fatty acids. Despite appointing top celebrity Wang Yibo as brand ambassador, the company struggles with declining sales and increased competition in the cheese market."
author: "程佳"
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published: "2024-05-24"
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# Miao Ke Lan Duo Still Has a Long Way to Go

> In 2024, Miao Ke Lan Duo has faced a series of challenges, including a significant drop in stock price, first-ever decline in annual revenue and profit, and a food safety controversy over trans fatty acids. Despite appointing top celebrity Wang Yibo as brand ambassador, the company struggles with declining sales and increased competition in the cheese market.

Cheng Jia

Entering 2024, Miao Ke Lan Duo has not been having a "wonderful" time. On February 6, the stock price of "the first cheese stock" Miao Ke Lan Duo hit a low of 11 yuan per share, a bottom price for this former "cheese Maotai." On March 25, Miao Ke Lan Duo released its 2023 annual report, showing the company's first dual decline in revenue and profit since listing. On April 26, the company released its 2024 first-quarter report, with revenue continuing to decline. On May 9, in an attempt to reverse the trend, Miao Ke Lan Duo announced top celebrity Wang Yibo as its new brand ambassador. Unexpectedly, fortune and misfortune are intertwined. On the day of the announcement, before experiencing the traffic impact from the top celebrity, the company was hit by a "trans fatty acids" controversy. That day, the Weibo topic "Miao Ke Lan Duo trans fatty acids" surged to the hot search list, reaching as high as the 4th position and staying on the list for 4 hours. Whether "edible oil products" in the ingredient list of Miao Ke Lan Duo's related products is equivalent to "trans fatty acids" has not yet received an official response. As of now, the official Weibo account of Miao Ke Lan Duo is filled with content about the new ambassador Wang Yibo. A search for "trans fatty acids" only yields a Weibo post from 2023, a new product promotion that states "0 trans fatty acids, eat with more peace of mind." It is foreseeable that this storm will eventually subside with the official "cold treatment." Currently, the reading volume and discussion of the topic "Miao Ke Lan Duo trans fatty acids" have dropped sharply compared to May 9, with discussions in recent days totaling less than 100. After the food health controversy, the problems Miao Ke Lan Duo faces are undiminished. Poor performance, lack of confidence in the secondary market, and industry-wide pressure are all heavy burdens on the "first cheese stock."

Miao Ke Lan Duo Not So "Wonderful"

Before the "trans fatty acids" food health issue surfaced, Miao Ke Lan Duo had already fallen into a self-crisis of declining performance. The 2023 annual report shows that in 2023, Miao Ke Lan Duo achieved operating revenue of 4.05 billion yuan, a year-on-year decrease of 16.16%. Among this, the cheese business generated revenue of 3.137 billion yuan, a decrease of 18.91%. Additionally, affected by fluctuations in raw material market conditions and exchange rates, the net profit attributable to shareholders of the listed company in 2023 was 63.4395 million yuan, a decrease of 53.9% year-on-year. "Last year, my financial statements were not good, and I was also sad. Our stock fell from 84 yuan to less than 13 yuan today, losing billions in market value." Recently, Miao Ke Lan Duo founder and CEO Chai Xiu publicly reflected on the company's recent performance at an event, also mentioning profit issues, saying, "Due to supply chain issues, costs increased by over 100 million yuan." However, such reflection is fragile in the face of weak performance. The key point is that 2023 was the first year of negative revenue growth since Miao Ke Lan Duo's listing. From 2016 to 2022, the operating revenues were 512 million, 982 million, 1.226 billion, 1.744 billion, 2.847 billion, 4.478 billion, and 4.830 billion yuan, with year-on-year growth rates of 41.76%, 91.96%, 24.82%, 42.32%, 63.2%, 57.31%, and 7.84%, respectively. But by 2023, the growth rate turned negative at -16.16%. Compared to the disaster of the first negative revenue growth, the near-halving of profitability is even worse. From 2021 to 2023, the net profit attributable to the parent company was 154 million, 138 million, and 63.44 million yuan, with year-on-year growth rates of 160.6%, -10.89%, and -53.9%, respectively. The non-recurring net profit even plummeted by nearly 90% to only 7.17 million yuan. From the latest first-quarter 2024 performance, Miao Ke Lan Duo has not yet stopped its downward trend. During the reporting period, operating revenue was 950 million yuan, a year-on-year decrease of 7.14%, but fortunately, net profit rebounded, increasing by 70.63% year-on-year to 41.3 million yuan. Interestingly, this rebound in net profit is inseparable from the effect of "cost reduction." The financial report shows that in the first quarter of 2024, the operating cost was 635.5 million yuan, compared to 688.4 million yuan in the first quarter of 2023, saving about 50 million yuan. Among this, sales expenses were 212 million yuan and 248 million yuan in the first quarters of 2024 and 2023, respectively. For enterprises, increasing profit and controlling costs are essential. But for consumer goods, sales expenses are strongly correlated with operating revenue, making it hard to imagine how revenue would perform after significantly reducing sales expenses. As shown in the figure below, during the fiscal years 2018-2023, Miao Ke Lan Duo's operating revenue and sales expenses had a certain correlation, especially from 2021 to 2023, where the growth curves of the two indicators were geometrically similar. This means that when sales expenses are higher, revenue is higher, and when sales expenses are lower, revenue correspondingly declines. More critically, Miao Ke Lan Duo's investment in product R&D is far behind its sales expenses, seemingly "putting the cart before the horse." Taking the 2021-2023 fiscal period as an example, the company's R&D investment was 40.09 million, 51.22 million, and 45.54 million yuan, while sales expenses were 1.159 billion, 1.21 billion, and 938.8 million yuan in the same period. From the recent performance in the secondary market, investors have given a negative evaluation of Miao Ke Lan Duo. On May 25, 2021, the stock hit a historical high of 84.5 yuan per share during trading, after which it entered a downward channel. As of May 17 this year, the closing price was 15.3 yuan per share, with the market value evaporating over 35.4 billion yuan from its peak.

Who Wants to Move Miao Ke Lan Duo's "Cheese"?

Judging from Miao Ke Lan Duo's four core strategies of "product leadership, brand positioning, channel cultivation, and management upgrade," at least in the short term, the company will continue to increase sales expenses. Once upon a time, Miao Ke Lan Duo created the "cheese stick" trend with a catchy advertising jingle. Few know that before this, Miao Ke Lan Duo was already a giant in the cheese industry and had gone public through a backdoor listing in 2016, earning the title of "the first cheese stock." For Miao Ke Lan Duo, the turning point in corporate development occurred in 2021, when the company's strategy shifted to "focus on cheese." It began to "focus on the four core strategies of 'product leadership, brand positioning, channel cultivation, and management upgrade,' continuously focusing on product leadership development, increasing brand building investment, continuously promoting channel expansion and deep cultivation, and further promoting management upgrades." Under the "brand positioning" strategy, Miao Ke Lan Duo began to increase marketing and advertising investment. In 2021, the company increased digital media investment, conducting multi-dimensional brand marketing on platforms such as Weibo, WeChat, Xiaohongshu, and Douyin, and actively interacting with consumers to raise awareness. The company believes that terminal display is the best brand manifestation, so it spares no expense in display resources. The multi-faceted brand investment has made the brand slogan "Cheese, choose Miao Ke Lan Duo" deeply rooted in people's hearts. To this day, Miao Ke Lan Duo continues to implement this strategy, and inviting celebrity Wang Yibo as spokesperson can be seen as an implementation of this strategy.

Some products of Miao Ke Lan Duo. Source: Company official website

But as the "children's cheese stick" market matures, more and more companies see the opportunities behind it. The children's cheese brand Miaofei, favored by Hillhouse and Sequoia, completed two rounds of financing in 2020; Sequoia and Hillhouse supported Junlebao in 2020; Meituan Longzhu, KKR, and DCP Capital invested in Yi Yang Yi Niu; "VC Queen" Xu Xin's Capital Today took a fancy to the emerging cheese brand "Cheese Doctor"... The market share of the "cheese leader" has been divided. According to Euromonitor data forecasts, in 2023, the two strongest players in China's cheese industry are Miao Ke Lan Duo and Baijifu, with market shares of 25.3% and 17.8%, respectively. Yili follows closely with 10.1%. Looking further, brands such as Cheese Doctor, Bright, Arla, and Panda Dairy are ready to make their moves, and a new round of market competition is imminent.

**A 30 Billion Yuan Market Spawned by Capital**

**How Long Can It Prosper?**

Cheese, this white business, is an industry with broad prospects. The China Dairy Association has formulated a "three-year action plan" (2023-2025) for the cheese industry, with the overall goal of reaching a national cheese production of 500,000 tons by 2025 and a retail market size exceeding 30 billion yuan. Huaxi Securities research reports predict that based on 30% of liquid milk consumption, China's cheese consumption may have more than 6 times growth space. The long-slope, thick-snow cheese track also has obvious pressures. First, the product structure is too single. Euromonitor data shows that processed cheese, especially cheese sticks, dominates the market. The high concentration of this single product makes the consumer group and consumption scenarios relatively narrow, mainly concentrated on leisure snack consumption between parents and children, bringing greater risks to the future development of the cheese industry. Second, cheese lacks the attribute of being a necessity in Chinese consumers' daily lives. Compared with Western countries, cheese sticks are more often seen as leisure food rather than essential consumer goods, and they have no advantage in taste and cost-effectiveness compared to other leisure foods, leading to a significant decline in the popularity of cheese sticks in the context of post-pandemic consumption recovery. Finally, as an imported product, cheese is difficult to quickly form long-term stable consumption habits in the Chinese market like coffee, because it is neither addictive nor can it replace other foods in terms of efficacy. The growth dividend that cheese sticks have brought to the cheese industry over the past decade may be coming to an end. As for the prospects of the entire domestic cheese industry, the report "China Cheese Industry: Market Demand May Be Experiencing Structural Challenges" released by SPDB International points out that the sustained growth of the cheese industry in the future must rely on major dairy enterprises. "Increasing product innovation and enriching product portfolios; shifting the consumption scenarios of cheese products to the dining table, thereby enhancing the necessity attribute of cheese; and increasing consumer education through marketing means to accelerate the formation of cheese consumption habits." These are naturally the problems Miao Ke Lan Duo currently faces. Inviting celebrity endorsements may bring short-term traffic and sales growth, but in the long run, product quality is the top priority. The "effect" of the "catchy advertising jingle" has passed, and Miao Ke Lan Duo needs more "wonderful points."

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