Click 'Read Original' for details At this year's Food & Hospitality China, I noticed a clear change: food shelf lives are getting shorter, especially in dairy products. In the past, dairy manufacturers rarely attended Food & Hospitality China because the boxed ambient milk market was dominated by Yili and Mengniu, and low-temperature milk couldn't be sold far due to distribution constraints, making such national/international exhibitions meaningless for smaller players. But over the past two years, more have started attending, and they share a common trait: they're all promoting short-shelf-life fresh milk and plain yogurt, typically requiring refrigeration below 4°C with a shelf life of 5-7 days. For instance, one brand that was promoting 6-month shelf-life ambient milk a few years ago shifted to 16-day low-temperature milk, and at this year's exhibition, it was promoting pure fresh milk with about a 7-day shelf life. What's behind this change, and what impact will it have on the dairy industry? I've gathered some information and would like to share some perspectives for discussion. -01-'Short Shelf Life' Is the Future of Dairy First, my view: short-shelf-life low-temperature milk might be the future of China's dairy industry. Some friends will surely object: ambient milk is still mainstream domestically, with overwhelming market share, and low-temperature milk is just a niche segment constrained by many factors—how could it overtake? In reality, two main factors are driving low-temperature milk toward mainstream: infrastructure development and natural shifts in consumer demand. I. The 'Shelf Life' Revolution Driven by Rapid Logistics Development I'm sure everyone has a strong sense of logistics development. Take the just-concluded Tmall Double 11: Tmall records annually the day when the 100 millionth package is delivered. In 2013, it was 9 days; by 2019, it took only 2.4 days; this year, it's even faster. Logistics capability, especially cold chain, has been and remains the main factor limiting the distribution radius of short-shelf-life foods. But technology is advancing, and today our cold chain logistics is rapidly improving and becoming more sophisticated, as seen in the rapid growth of fresh produce in community group buying over the past two years. The key point is that China's strong logistics capability, especially in fresh cold chain distribution, is not a private capability of giants like Yili or Alibaba but has become a quasi-public good. This creates conditions for the simultaneous rise of 'short-shelf-life' food categories across multiple regions. II. Every Category's Rise Originates from Consumer Demand When ambient milk rose, what was the demand of Chinese consumers? It was demand from nothing. China's milk sources are concentrated in the north, while demand markets lean toward the south, so only ambient milk could meet nationwide distribution needs, creating today's ambient milk dominance. At that time, dairy companies like Yili and Mengniu made tremendous efforts to get milk to people nationwide; they are heroes. But today, with improved living standards, consumers seek fresher, healthier, and better-tasting food and beverages. Short-shelf-life low-temperature milk signals that fresher means less need for preservatives, and better taste and health. Shortening shelf life actually reduces the difference in taste and nutritional restoration between industrial and natural products, aligning with the trend of consumers wanting better taste and more natural, healthy options. Looking at domestic dairies, New Hope Dairy's Q3 report shows single-quarter revenue of 2.1 billion yuan, up 39% year-on-year; net profit attributable to shareholders was 108 million yuan, up 45.46%; during the reporting period, its 24-hour pasteurized fresh milk, the top fresh milk brand, continued high double-digit growth. Another low-temperature milk giant, Bright Dairy, saw nearly 10% revenue growth in the first three quarters this year and stated it would continue upgrading low-temperature products and maintain strong momentum. Overall, more than 400 domestic enterprises operate low-temperature dairy products, and regional leading dairies see around 20% growth in low-temperature dairy. In contrast, ambient milk: Euromonitor data shows ambient milk growth has slowed since 2014; consumption volume growth slowed from 2015, with negative growth in 2017 and 2018. Looking internationally, in developed countries like Japan, Europe, and the US, low-temperature milk is mainstream, accounting for over 60%. Thus, the rise of low-temperature milk is an irreversible trend. -02-Giants' Dilemma and Regional Dairies' Advantages Currently, the top three low-temperature milk brands are Bright, Sanyuan, and New Hope. Why haven't Yili and Mengniu, the two dairy giants, made the list? I. The Two Giants Are Too Burdened In my view, in today's low-temperature milk market, the two giants lack core advantages; in fact, their past strengths may become shackles hindering their shift to low-temperature milk. Data shows that Yili and Mengniu's ambient milk business is their main revenue source, and together they once held over 65% of China's ambient milk market share. This leads to the two giants, before there's greater consumer demand, even if they know low-temperature milk is better, being unwilling to promote it. After all, if low-temperature milk is better, it would undermine ambient milk and significantly impact their existing market. Indeed, their attitude toward low-temperature milk is ambiguous. Yili's vice president Liu Chunxi even predicted that consumers would still prefer ambient milk in the future. Thus, Yili's organization, resources, and manpower are inevitably focused on ambient milk, which directly leads to Yili's slow moves in low-temperature milk. With most resources concentrated on ambient milk, low-temperature milk layout is slow, and limited development is foreseeable. Worse, for Yili, the biggest enemy in this low-temperature milk battle is not its familiar 'old rival' Mengniu. And Mengniu faces a similar dilemma. Moreover, with current technology, low-temperature milk can only be distributed within 300-500 kilometers of the milk source; if distance increases, distribution costs rise significantly. So even if Yili and Mengniu invest heavily in low-temperature milk, they cannot easily achieve strong nationwide competitiveness in the short term. II. Core Advantages of Regional Dairies So in the low-temperature milk arena, what advantages do regional dairies have that the giants lack? As we just learned, low-temperature milk distribution is limited to 300-500 kilometers, and shelf life is generally only 7 days. Setting aside milk sources and cold chain resources, this means selling low-temperature milk requires strong direct-to-consumer capabilities. In other words, in the low-temperature milk market, companies need refined services and channel operations. Because only by mastering consumers can you ensure sales certainty and smooth supply chain operations. In the past, Yili and Mengniu's scale and capital advantages were strengths, but in low-temperature milk competition, they are not core. **-0****3-Challenges in Developing Low-Temperature Milk Currently, it's imperative to lay out low-temperature milk. But while developing it, some issues still need resolution. Why didn't low-temperature milk develop rapidly from the start? Even today, its market share is far below ambient milk. Three main factors limit its growth: I. Price Factor The high cost of low-temperature milk is the most core issue. The ultra-short shelf life makes it easy for products to become unsellable near expiry, and even though cold chain logistics has matured and costs have dropped, the comprehensive cost of low-temperature milk still far exceeds ambient milk. Currently, low-temperature milk prices are still 1-1.5 times higher than ambient milk. This makes low-temperature milk more advantageous in first- and second-tier cities, while acceptance in third- and fourth-tier cities is insufficient, making penetration difficult. II. Infrastructure Limitations Nearly 50% of China's dairy sales come from rural and township areas, yet our cold chain transportation still cannot cover these markets today, and it's hard to predict how long full coverage will take. III. Milk Source Limitations China is vast, but over 70% of high-quality milk sources are concentrated in the north, while consumption markets lean toward the south. Giants like Yili and Mengniu cannot cover the whole country with low-temperature milk; regional dairies' capital, milk sources, logistics, and processing capabilities may also constrain development. Thus, China's low-temperature milk sector has yet to see a true national leader; fragmentation is evident: Bright holds 40% in East China, New Hope leads in the Southwest, Mengniu and Yili dominate in North China, and Sanyuan is first in Beijing... -04-**How to Respond to the Changing Landscape? Low-temperature milk development faces many constraints, but with technological progress and rising national income, these issues are gradually being resolved, and this category is developing at a visible pace. So how should companies and distributors in the industry respond to this unstoppable change? Here are my personal views, hoping to offer some inspiration. 1. Regional Dairies: Given the current dairy market structure, the ambient milk duopoly is set, and regional brands have almost no chance. Gradually reduce investment in ambient milk, fully and rapidly develop short-shelf-life low-temperature products, intensively cultivate regional markets, and refine services and channel operations. Seize the time in the coming years to build your own user and channel barriers to face the coming waves. 2. Dairy Distributors: For distributor friends currently in dairy or planning to enter, my advice is to quickly build cold chain distribution capabilities and develop your team to be able to handle short-shelf-life products in the near future. This will prepare you for the potential explosion of the low-temperature milk market, avoiding missing out on market dividends and being replaced by distributors with such capabilities. 3. Dairy Giants: For the giants, I dare not offer advice, but I'll share some possible scenarios and a simple prediction. In the future, once low-temperature milk rapidly rises, it's possible that Mengniu and Yili might merge or acquire regional dairies. They could establish footholds in various regions and then use their strong channel capabilities to launch a new round of national market offensives. With their strength and brand power, they might achieve this quickly, and the two 'old rivals' could also widen the gap in the process. Or perhaps another brand could emerge and create a three-way standoff—who knows? The low-temperature milk transformation has begun. It's not just dairy; short-shelf-life pastries, frozen foods? With technological development and changing consumer needs, a 'shelf life' revolution is coming, and time for the weak is running out.