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Today's Headlines

Highlight 1: Tsingtao Beer reportedly to raise prices again, with a 2 yuan increase per case for a key product Our reporter learned that Tsingtao Beer will raise prices again, this time for Tsingtao Premium, with a nationwide price increase of 2 yuan per case for this single product.

Additionally, Tsingtao Beer issued another notice: Qingdao will host the Shanghai Cooperation Organization Summit in June 2018, during which all Tsingtao plants in Qingdao will suspend production and shipments for one month.

After multiple verifications, only some regions in Shandong have received the notice so far. However, according to insiders at Tsingtao Beer, the price increase date is set for May 20, and other brands have not directly raised prices but have only moderately reduced market investment expenses.

Beyond the above reasons, several securities firms' research reports also mentioned that "2018 is a big year for sports"—due to the arrival of major sporting events like the World Cup, beer companies face pressure on sales expenses, prompting them to plan price increases in advance to offset the significant cost pressure.

Highlight 2: Mengniu Dairy grants a new round of equity incentive plan Mengniu Dairy announced on May 7 that it approved the grant of restricted shares under the Restricted Share Award Plan, approving the grant of approximately 6.6931 million restricted shares to selected grantees, equivalent to about 0.2% of the company's issued share capital on the adoption date (adjusted for bonus share issuance). Among them, President and Executive Director Lu Minfang and Executive Director Wu Wenting were granted approximately 88,100 and 66,000 shares, respectively.

On the same day, the company granted a total of approximately 9.5937 million share options under the Share Option Scheme to eligible grantees, with an exercise price of HK$26.05 per share and a validity period of 5 years. Among them, President and Executive Director Lu Minfang and Executive Director Wu Wenting were granted approximately 600,200 and 220,100 share options, respectively.

Highlight 3: Q1 market share: Gaoxin Retail and China Resources maintain lead, Yonghui rises to 3.8% According to the latest report from Kantar Worldpanel, the growth rate of the FMCG market in the first quarter of 2018 slowed compared to the previous quarter, with sales increasing 2.3% year-on-year. The modern trade channel (including hypermarkets, supermarkets, and convenience stores) saw relatively weaker growth, with an overall increase of 0.9%. By city tier, provincial capitals, prefecture-level cities, and county-level cities grew faster, with an overall increase of 2.8%. By region, the western region saw the strongest growth, with an increase of 4.6%.

Among the top five retailers, Gaoxin Retail, China Resources Vanguard, and Walmart all consolidated their leading positions. Yonghui was the only retailer among the top five to achieve double-digit penetration growth, with its market share rising from 3.2% in the same period last year to 3.8% in the first quarter of 2018.

Highlight 4: Yantang invests over 600 million yuan to boost capacity, new flagship plant with annual output of 250,000 tons officially launched, and forms alliances with three international partners Yantang Dairy, the leading dairy company in South China listed on the A-share market, is about to make a series of major moves.

On May 8, Yantang's new flagship plant in Guangzhou Development District was unveiled for the first time, and a signing ceremony for the Food Safety Demonstration Base and International Strategic Cooperation was held. The plant has a maximum annual output of 250,000 tons, more than double that of the original processing plant in Guangzhou.

Our reporter learned that the company's national-level pasture in Shanwei, Guangdong—the Xin'ao Pasture—will also be put into use soon, with an expected annual fresh milk output of over 25,000 tons at full capacity.

In addition, Yantang signed strategic cooperation agreements on-site with international companies such as France's Terra Lacta, Israel's Afimilk, and DuPont Danisco, focusing on cooperative projects across the upstream and downstream of the dairy industry.

New Product Highlights

Highlight 1: Uni-President fully deploys premium "Life Noodles," new "Duhui Xiaoguan" product to launch Recently, our reporter learned that Uni-President will launch a brand-new product under "Duhui Xiaoguan," once again expanding into the premium "Life Noodles" segment.

It is reported that Duhui Xiaoguan has changed from a bowl to a cup, with the capacity reduced to 76 grams per cup, making the packaging more refined and compact. Although the capacity has decreased, the contents are richer: first, the seasonings have increased to three packets—vinegar packet, seasoning packet, and Changfen-flavored sauce packet; second, the biggest innovation is that the product not only includes a noodle cake but also a packet of vermicelli, and with precise proportions of noodles and vermicelli, the product offers a better taste.

It is understood that the product will be launched at the end of May, with a retail price of approximately 5–5.5 yuan per cup.

Highlight 2: Mondelez International launches three limited-edition Oreo flavors, with new flavors designed by consumers themselves Mondelez's Oreo brand recently released three limited-edition new products. These three new products are the flavors that stood out in the My Oreo Creation competition held by Mondelez, an initiative aimed at allowing consumers to better participate in product innovation design, so that Mondelez can create new products that better meet market demand.

Consumers submitted various new flavors to Oreo over the past few months. The judging criteria for the competition included taste, creativity, and uniqueness. Oreo conducted in-depth evaluations and taste tests before selecting three finalists, ultimately choosing Cherry Cola, Piña Colada (a cocktail made with white rum, pineapple juice, and lemon juice), and Popcorn flavors as the finalists.

Highlight 3: Unilever's Lipton brand launches new Zunyi tea bag series Recently, Lipton launched another new product, and it is the world's first tea bag product with 100% premium tea leaves sourced from the Zunyi tea region. At the China·Guizhou International Tea Culture Festival and Tea Industry Expo held on May 8, Unilever's Lipton brand released the new Zunyi tea bag series—"Zunyi Red" and "Zunyi Green Tea."

It is reported that Lipton's "Zunyi Red" will be officially launched in July.

Financial Report Overview

Highlight 1: JD.com Q1 net profit of 1.5 billion yuan, with both revenue and profit exceeding Wall Street expectations On the afternoon of May 8, JD.com Group released its first-quarter results for fiscal year 2018, with quarterly net profit once again setting a new record for single-quarter profitability.

In the first quarter of fiscal 2018, JD.com's net profit from continuing operations attributable to ordinary shareholders under U.S. GAAP was 1.5249 billion yuan (approximately US$243.1 million). Under Non-GAAP, net profit from continuing operations attributable to ordinary shareholders also reached 1.0474 billion yuan (approximately US$167.0 million), achieving profitability for eight consecutive quarters.

In the first quarter, net revenue reached 100.1 billion yuan (approximately US$16 billion), a year-on-year increase of 33.1%, exceeding market expectations. Among this, thanks to open empowerment, net service revenue grew significantly by 60.0% year-on-year in the first quarter.

Highlight 2: Ausnutria Q1 sales grow 56.8%, Changsha plant to commence production this year On May 7, Ausnutria Dairy released a positive profit alert for the first quarter of 2018. Based on preliminary estimates, the company expects sales revenue in the first quarter to increase by approximately 56.8% year-on-year to about 1.20 billion yuan (RMB, same below); sales of self-owned brand infant formula milk powder and goat milk powder are expected to increase by approximately 82.1% and 78.1%, respectively, to about 500 million yuan each; net profit attributable to shareholders is expected to increase by approximately 53.8% year-on-year to about 100 million yuan.

Industry News

Highlight 1: From COFCO to Yashili to Mengniu, "M&A expert" Li Dongming returns to COFCO Fund after a full circle Latest: Our reporter has learned from internal sources that Li Dongming, Vice President of Investment at Mengniu, will soon return to COFCO Fund to oversee investment and M&A business. He will subsequently focus more on larger-scale infant food and chain operation projects.

From COFCO to Yashili to Mengniu, and now back to COFCO, this shows COFCO's ambition to accelerate its M&A business. We also wish Li Dongming continued success on the battlefield he knows well yet faces new challenges.

Highlight 2: Russia's largest carbonated beverage brand arrives, planning to enter domestic chain supermarket channels Lyudmila Fedorova, President of Skylex Consulting, the official distributor in China for Russia's largest sweet carbonated beverage producer "Chernogolovka Beverages," stated that the company will begin selling products in chain supermarkets and convenience stores in China in May.

She noted that the distribution company has signed pre-orders for supplying the brand's beverages to supermarkets such as Lotus, RT-Mart, and China Resources Vanguard, as well as convenience stores like Kexi and Jialetong, with the first batch of goods scheduled for shipment in early May this year.

Highlight 3: $7.1 billion! IFF acquires Frutarom, a new global flavor and fragrance giant is about to be born News on May 8: International Flavors & Fragrances (IFF) has agreed to acquire Israeli flavor, fragrance, and natural ingredients company Frutarom for $7.1 billion. Upon completion of the acquisition, IFF will become the world's second-largest player in flavors and fragrances, after Givaudan.

This is a new acquisition launched by IFF just one month after Givaudan announced the acquisition of French natural ingredients group Naturex. IFF Chairman and CEO Andreas Fibig stated that Frutarom has an attractive product portfolio, with extensive expertise in natural and diversified areas beyond its core flavor and fragrance business.

Highlight 4: Smart convenience store brand Xiaomaipu accelerates store expansion, opens city partner program On May 5, Quan Bin, Vice President of smart convenience store brand Xiaomaipu, revealed that Xiaomaipu has launched a city partner recruitment program.

According to the city partner recruitment program, Xiaomaipu requires partners to have strong and stable local government resources, as well as high-quality channels for store location selection such as property and real estate. A Xiaomaipu franchise recruiter told our reporter that the franchise fee is 150,000 yuan, and Xiaomaipu headquarters will provide the franchisee with systems and store equipment. Franchisees can order from Xiaomaipu's over 2,000 products, with delivery available twice a day.

It is reported that Xiaomaipu has been operating since June last year and currently has over 30 stores in Beijing. Our reporter learned that Xiaomaipu has already recruited a city partner in Tianjin, and the first store was opened there at the end of April. Leveraging the regional resource advantages of city partners, Xiaomaipu expects to open a cumulative total of 1,500 stores in Tianjin by 2020.

Today's Video

Yili's Pan Gang interviewed by China Business Network