The rapid growth of goat milk in recent years has raised market expectations, leading to continuous expansion of upstream production capacity, while downstream consumption has been lackluster over the past three years, unable to absorb the large volume of upstream supply. The imbalance between supply and demand, coupled with price wars, has led to a rapid spread of price cuts. "The goat milk powder market has already seen a wave of price reductions," Li Jian, a domestic goat milk practitioner, told us at the 2023 NBM Zhongtong Maternal and Baby Products Expo · Food Exhibition. "It will be difficult to curb price cuts in the short term, and this year will be a cold winter period." Goat milk powder has maintained a high growth rate over the past many years. According to data from the Chinese Academy of Social Sciences, the goat milk powder market size in China was only 3.5 billion yuan in 2014, and has since grown at a rate of over 20% annually, currently becoming the second largest milk powder category after cow milk powder. **With the strong entry of traditional dairy giants such as Yili, Feihe, and Junlebao, competition in the goat milk powder market has become increasingly fierce. Against the backdrop of severe product homogeneity and almost no difference in formulas among various companies, "price wars" have become the only weapon to defeat competitors. **At the same time, the high growth of the past few years has raised market expectations, leading to continuous expansion of upstream production capacity, while downstream consumption has been lackluster over the past three years, unable to absorb the large volume of upstream supply. The imbalance between supply and demand, coupled with price wars, has led to a rapid spread of price cuts. Many goat milk powder companies have begun to focus on adult milk powder, and the concept of "whole family nutrition" has been mentioned by more people. Dairy analyst Song Liang analyzed that by 2028, the domestic adult milk powder market will gradually mature. However, before that, goat milk powder companies need to consider how to stabilize in the present.****The Ten-Year Rise and Fall of Goat Milk More than one interviewee mentioned the period around 2010, which was a turning point for China's goat milk powder industry. Before that, only a few scattered companies such as Meike Gaote and Karotani were focused on goat milk powder business. Around 2010, the shadow of melamine still hung over domestic milk powder, and foreign milk powder took advantage of the situation. Brands such as Abbott, Mead Johnson, Dumex, Friso, and Wyeth were firmly at the forefront of the industry, while domestic milk powder was beaten back and had to retreat to third- and fourth-tier markets to find a way out. At this time, a group of dairy companies born in Shaanxi sensed the opportunity of goat milk powder. On the one hand, domestic milk powder, whose reputation had been severely damaged, was mainly cow milk-based; on the other hand, Shaanxi had unique geographical advantages and a long history of dairy goat farming. Data shows that Shaanxi's goat dairy product output accounts for more than 85% of the national total. With this regional advantage, local Shaanxi goat milk companies represented by Yubao began to rise. Yubao was established in 2005, founded by Yang Lixin and Meng Baiyue. Yang Lixin came from Hunan and had previously served as the Guangxi regional manager and southwest regional sales manager of Hunan Nanshan Marketing Company. Having witnessed the growth, expansion, and decline of Nanshan milk powder, he was deeply tired of the cow milk war. It was at this time that he met Meng Baiyue from Shaanxi. The two saw the product attribute of goat milk being more suitable for allergic constitutions and the gap in the goat milk powder market, so they hit it off and established Yubao, with Yang Lixin responsible for marketing and Meng Baiyue for products. His experience at Nanshan made Yang Lixin familiar with marketing. He quickly discovered that maternal and baby stores were increasingly replacing traditional supermarkets and hypermarkets as the main sales channel for infant milk powder. At exhibitions, many distributors even paid directly without looking at prices. So Yubao specifically formulated a pricing strategy for maternal and baby stores, with gross profit margins for stores reaching 30-40%. In 2010, Yang Lixin pioneered e-commerce business in the industry and made Yubao the number one online seller for many consecutive years. In 2016, Yubao's annual sales across all brands approached 1 billion yuan. But the good times did not last long. Yang Lixin and Meng Baiyue parted ways due to business disagreements. After multiple mediations, Meng Baiyue paid 120 million yuan to buy the Yubao brand, and Yang Lixin's marketing team completely withdrew from the Yubao system. The split between the two severely weakened Yubao, and it was replaced by Ausnutria Dairy from Hunan. In the goat milk powder market, the "Hunan Army" is an unavoidable presence. Chen Yuanrong, founder of Ausnutria Dairy, also came from Hunan. Coincidentally, both he and Yang Lixin came from Nanshan Dairy, and Yang Lixin was once Chen Yuanrong's subordinate. In 2003, Chen Yuanrong, together with Wu Yueshi, president of Xin Daxin Group, Yan Weibin, executive president of Longping High-Tech, and a group of old colleagues from the "Nanshan system," founded the Ausnutria brand, specializing in the imported milk powder industry. In 2011, Ausnutria Dairy, already listed in Hong Kong, spent 16 million euros to acquire 51% of the shares of the Dutch century-old dairy company Hyproca Group to establish a stable upstream supply base. With the support of Hyproca's pastures, milk sources, R&D, processes, and technology, Ausnutria Dairy established a differentiated competitive strategy of "using goat milk powder as a breakthrough" and launched its first goat milk powder product, Kabrita, which is currently the goat milk brand with the highest market share in China. In 2014, Chen Yuanrong resigned due to financial issues and founded Blue River Nutrition Co., Ltd. the same year. Due to his preference for imported milk powder, in 2015 Chen Yuanrong completed the full acquisition of New Zealand's Blue River Dairy and launched the world's first infant formula sheep milk powder. Keith Neylon, founder of New Zealand's Blue River Dairy, was a former pilot for Air New Zealand. He successfully bred improved East Friesian dairy sheep, and the Blue River brand was born. In 2016, Chen Yuanrong made another move, signing a merger and acquisition agreement with Italian dairy company Alimenta, becoming its largest shareholder, and announced at the press conference an investment of 50 million euros to build a new infant formula factory and a D90 demineralized whey powder factory in Italy. This model of "imported from abroad, operated domestically" is not uncommon. The "Action Plan for Improving Domestic Infant Formula Milk Powder" issued in May 2019 proposed policy directions such as "supporting domestic enterprises to acquire and build milk source bases overseas." In addition to Kabrita and Blue River, Yipin Dairy's Beikangxi has established milk source bases in Spain and built production factories in South Korea; Biostime's Kebes goat milk is imported from Australia in original packaging. Dairy analyst Song Liang pointed out that currently 65%-70% of domestic goat milk powder is imported. From the market structure, the goat milk powder market currently shows a trend of "one superpower, multiple strong players." Nielsen IQ data shows that from 2018 to 2022, Kabrita accounted for over 60% of the sales share in China's imported infant goat milk powder market for five consecutive years, followed by Beikangxi, Kebes, Blue River, and Yili. In 2019, the CR5 market share of goat milk powder reached 49.5%.Racing in Lower-Tier Markets For a long time, domestic and foreign brands in the milk powder field have adhered to the principle of "dividing the market by regions." The "2018 China Shopper Report" released by Kantar Worldpanel showed that foreign milk powder accounted for over 80% in first- and second-tier cities, while domestic milk powder held 60% of the market share in third-tier and below cities. The market layout of goat milk powder also follows this rule. According to data from 436 valid samples in the "Current Status of Goat Milk Powder Category Operations in Maternal and Baby Stores," over 80% of maternal and baby stores operating goat milk powder are located in third-tier and below cities. Song Liang believes that consumers in first- and second-tier cities have relatively low awareness of goat milk powder, and such consumers tend to trust foreign brands more. The Maternal and Baby Research Institute also pointed out that consumers in lower-tier cities have lower brand loyalty to milk powder, and there is greater substitutability between milk powder brands. In addition, in terms of fertility rates, which are crucial to the milk powder industry, lower-tier markets and high-tier cities have begun to diverge. A survey by Mead Johnson showed that among China's 0-3 year old infants, there are 4.5 million in first-tier cities, 5.4 million in second-tier cities, and 38 million outside first- and second-tier cities. The preference of first- and second-tier consumers for big brands, coupled with limited birth rates, has led many small goat milk brands to prefer going down to third-tier and below cities to seek opportunities. Unlike the cow milk powder field where domestic and foreign brands compete on equal footing, the leading goat milk powder companies have rarely seen foreign brands. Whether it was Meike Gaote in the early days, Yubao later, or today's Kabrita and Blue River, they are essentially Chinese private enterprises. The root cause of this situation lies in the different operational approaches of foreign and local companies. "Foreign brands rely on brand, domestic brands rely on promotion." Song Liang summarized. In the cow milk powder field, foreign brands have been in China for a long time, especially after 2008 when they were at their peak. They could dominate consumer purchasing decisions solely through their brand awareness. But goat milk powder is different. Due to a lack of market education, the primary issue consumers face is what goat milk powder is and what its value is, rather than which brand to choose. The lack of category awareness makes it difficult to drive sales through brand awareness alone. Foreign brands, which are accustomed to directly leveraging brands to reach C-end consumers while neglecting ground promotion system construction, thus lost their advantage. In contrast, domestic goat milk powder companies are better at using "human wave tactics," mobilizing distributors and retailers to conduct extensive market education for the C-end. Wang Xin, who has been an agent in the goat milk industry for 8 years, told Guanchao New Consumption (ID: Tidesight) that leading goat milk companies, led by Kabrita, have used various channels to educate consumers about goat milk over the years. For example, they create brand momentum through large-scale events. Kabrita created the first immersive parent-child sports themed activity in China in 2021, covering more than 200 cities within three months of its launch. Another example is through channels such as pregnancy classes at tertiary hospitals, early education centers, or postpartum care centers, where goat milk is embedded in classes to popularize its characteristics such as small molecules and low allergenicity. In addition, traditional celebrity endorsements, elevator media placements, ground promotion, and the currently popular Xiaohongshu seeding are also routine methods. Wang Xin mentioned that when these leading goat milk companies distribute products downstream, they often equip trainers to explain the value of goat milk to distributors and retailers, who then transmit it to end consumers, thereby completing market education. But not everyone is willing to invest heavily in market education. Wang Xin said that some small brands adopt a "naked price" model, providing products to distributors at the lowest prices, with distributors responsible for operations and distribution. "Distributors and retailers lack manpower. If the brand only supplies goods and leaves market education to the downstream, it is difficult for the brand to break through." Wang Xin frankly stated that even if the unit price of big brands is twice that of small brands, he would rather cooperate with them and grow together. In fact, it is precisely because of representing big brands that Wang Xin's company doubled its performance within three years. From 2017 to 2019, China's goat milk powder market experienced rapid growth. Ausnutria Dairy's annual report shows that in 2017 and 2018, goat milk powder revenue growth rates were 60.1% and 58.9%, respectively. According to research data from SPDB International, China's goat milk powder market size exceeded 10 billion yuan in 2019. The rapid expansion of goat milk attracted traditional dairy giants. Feihe acquired 70% of Guanshan Dairy in 2014, which was once a leader among Shaanxi goat milk powder companies, but was sold by Feihe in 2016 due to product quality issues. In 2021, Feihe again acquired Shaanxi Xiaoyang Miaoke and successively launched goat milk powder brands such as Xiaoyang Miaoke and Jiaai. Xiaoyang Miaoke's predecessor was the former Guanshan Dairy. At the end of 2019, Yili's Youzi Xiaoyang was officially launched; in October 2021, Yili acquired 34.33% of Ausnutria's equity for HK$6.245 billion through its wholly-owned subsidiary Hong Kong Jingang Trading Co., Ltd., becoming Ausnutria's single largest shareholder. At the end of 2021, Junlebao obtained the formula registration approval for goat milk powder and launched its first pure goat milk powder "Zhenweiai" in 2022, with the slogan "If we do it, we must be the leader." Since then, the three domestic milk powder giants—Feihe, Yili, and Junlebao—have all gathered in the goat milk powder track. Foreign brands have also bet on goat milk through acquisitions. In 2022, Mead Johnson China acquired Meike Gaote; Danone invested 280 million yuan in March of the same year to acquire 95% of Hunan Oubijia, which owns the "Yangzizi" brand goat milk powder. **"Big water" brings "big fish," even bigger than the "big water" itself.******From Noble to Being Sold Off After 2019, the goat milk track became increasingly crowded, and competition became white-hot. The most prominent manifestation was the "price-cutting wave" caused by overcapacity. Starting in August 2022, the first batch of registered infant formula certificates began to expire one after another. The second registration raised the entry threshold. Goat milk that did not meet the standards could not circulate in the market after the implementation of the new national standard on February 22, 2023, and price-cutting sales were imminent. Specifically this year, the price-cutting wave started around March. Li Jian mentioned that November to February of the following year is generally the dry milk period, and February to March is the period when lambs are concentratedly born, during which goat milk is also listed in large quantities. But goat milk had already been in overcapacity for several years, making it difficult for the upstream fresh milk produced this year to be digested by the downstream. According to Li Jian, the upstream purchase price has already inverted. "Last year, the cost price of fresh milk was 6.3-6.8 yuan, but currently the purchase price at milk stations is only 5.1-5.3 yuan." In order not to let the milk powder rot in their own hands and to quickly recover funds to ensure cash flow turnover, the upstream can only continuously push goods downstream, causing serious cross-regional selling in the industry. "If you live in a three-bedroom apartment, having three tables at home is not too many, but now you live in a one-bedroom apartment, and three tables are obviously crowded, so you have to sell the extra tables through various channels," Li Jian described. "Even if it means breaking the price, you have to ship quickly." Fresh milk is continuously sent to the market, and the longer it takes, the faster and larger the price cuts. "Today's purchase price is 6.9 yuan, tomorrow it might be 6.8 yuan, and the day after tomorrow 6.7 yuan." Li Jian said. The bitter fruit of supply-demand imbalance quickly spread from the upstream to the entire industry. One of Li Jian's clients stocked up from a certain domestic leading dairy company before the Chinese New Year and lost more than 1 million yuan due to price cuts right after the holiday. "Compared with March, the entire industry has basically cut prices by 20%." Guanchao New Consumption counted the terminal prices of some leading dairy goat milk powders, among which the discounted prices of Kabrita and Blue River sheep milk powder on Tmall flagship stores were below 300 yuan, while some Xiaohongshu users said that the price of Kabrita Yuebai Stage 3 800g had reached 468 yuan. Excessive upstream shipments made it difficult for a single channel to bear the pressure, and cross-regional selling was rampant in the industry. Many users purchased milk powder not from maternal and baby stores or online channels, but through unconventional channels such as friends or communities. Yingying, a mother in Qingdao, told Guanchao New Consumption (ID: Tidesight) that she has multiple maternal and baby groups and usually looks for cheap good products in various groups. When interviewed, she casually checked the current price of goat milk powder: "It's really cheap, more than 100 yuan cheaper than the Friso milk powder I bought." Agents have also become more cautious. Wang Xin bluntly said that now is not the time to blindly accept products. Agents who have transitioned to the goat milk field in the past five years will find it difficult to survive. "Ten years ago, when we went to ordering meetings, the brand would directly pull a car to the exhibition hall as a reward, but now no matter how attractive the policies are, it is difficult to move the channel." In addition, product homogeneity has also fueled the "price war." Song Liang mentioned that now there is almost no difference in formulas among various goat milk powders. "Previously, 'pure goat' could be used as a differentiator, but after the second formula registration, 'semi-goat' is no longer allowed, and now the entire industry is 'pure goat'." In fact, the price-cutting wave is not unique to 2022. As early as 2020, the goat milk industry, just hit by the epidemic, saw price cuts. Wang Weimin, secretary-general of the Shaanxi Dairy Product Safety Production Association, revealed in an interview that the purchase price of goat milk for many dairy companies had fallen below 5 yuan, and some milk stations even dropped to 3.8 yuan, while the purchase price the previous year was 6 yuan. Wang Weimin mentioned that due to the impact of the epidemic, dairy companies were in a dilemma. If they collect milk and process it, they may face inventory backlog; if they do not collect milk, after the epidemic and market recovery, what would they do without milk powder? The hesitation about the market ultimately led to the price-cutting wave. The more profound impact of the three-year epidemic was the decline in consumption power. In Li Jian's view, if there had been no epidemic, companies could have expanded according to the market rules they had explored in the past, and downstream consumption power could have absorbed it, but the epidemic disrupted everything. "When the epidemic came, many consumers who had just tried goat milk, due to insufficient cash flow, fell back to cow milk." The harm of involution can also be seen from financial reports. From 2017 to 2019, Ausnutria's goat milk powder revenue growth rates were 60.19%, 58.90%, and 40.50%, respectively. From 2020 to 2022, Ausnutria's goat milk powder revenue growth slowed to 8.8%, 7.8%, and 6.6%. Hongxing Meiling, which once aimed to become the "first goat milk stock," showed in its prospectus that from 2019 to 2021, its revenue was 342 million yuan, 363 million yuan, and 378 million yuan, respectively, and net profit was 45 million yuan, 55 million yuan, and 53 million yuan, almost stagnant. In Li Jian's view, the momentum of price cuts will be difficult to curb this year. "Real changes are expected to come in the spring of 2025." Finding the Next Growth Point Now, infant goat milk powder is no longer expected to bring growth, and "20 billion" has become the market size ceiling mentioned by some practitioners. The key to breaking through the ceiling lies in adult milk. Taking middle-aged and elderly goat milk powder as an example, Kabrita launched its adult goat milk powder product "Yingjia" during the CIIE in November 2019. In July 2022, Kabrita launched the "Yingjia Baohu" series of milk powder. Giants are also laying out plans. In May 2020, Yili announced the launch of its first adult goat milk powder "Beichang"; two months later, Mengniu's adult goat milk powder brand "Jiabeiluo" appeared. Goat milk itself carries the identity of "noble among milk," making it easier to tell a high-price story than ordinary cow milk powder. Ausnutria Dairy previously mentioned that the core consumer group targeted by Kabrita's "Yingjia" is precisely "new wealthy families." Beiensi, a goat milk brand backed by New Zealand's Xinyimei Group, teamed up with a team led by Professor Cao Binyun from Northwest A&F University in March this year to launch three middle-aged and elderly series products. Beiensi CEO Chen Hong told Guanchao New Consumption (ID: Tidesight) that the first product is for sleep aid; the second is a dual-protein product (immunoglobulin and milk protein) for immunity enhancement; the third focuses on intestinal digestion, with the three products emphasizing functionality. "Goat milk itself is helpful for the gastrointestinal absorption and digestion of middle-aged and elderly people. On this basis, we have added nutritional elements to improve the intestinal microbial environment." In Chen Hong's view, simple calcium supplementation and fat removal can no longer meet the needs of adults for milk powder; they need more targeted product solutions. The growing "silver economy" also gives giants the confidence to enter the adult milk market. According to data from the National Development and Reform Commission, by the end of 2022, China's population aged 60 and above reached 280 million, accounting for 19.8% of the total population. At the same time, newborns born during the first baby boom from 1962 to 1975 will begin to turn 60 from 2022. Jinding Capital pointed out in its report "Investment Logic of the Elderly Care Industry" that compared with population size, China's silver economy market size is at least 7 times that of Japan, and Japan's silver economy market size has reached 2.8 trillion. Children's milk is another breakthrough. In 2019, Kabrita launched its first children's formula goat milk powder, Jingying Children's Nutrition Formula Goat Milk Powder; in 2022, Kabrita continued with the launch of Xiangyang Children's Growth Nutrition Formula Goat Milk Powder. Data shows that in 2021, the population of children aged 3-15 in China was 184.38 million, far exceeding the number of infants and young children. Nielsen data shows that the children's milk powder market grew at a rate of 40% in 2023, far exceeding the overall growth rate of the infant formula industry. Not only goat milk, but the entire milk powder industry is now transitioning from the traditional maternal and baby concept to "whole family nutrition," and adult milk-based nutritional products are becoming a new growth point. In this context, various sub-categories such as women's milk powder, student milk powder, and special population milk powder have also emerged. In an era of shifting from incremental to stock, focusing on segmented needs has become a new way out for dairy companies to compete. But from the current perspective, due to differences in dietary habits, middle-aged and elderly people in China generally do not have the habit of drinking milk, and their demand for milk powder is even weaker. The current market price of middle-aged and elderly milk powder is also lower than that of infant formula. On Tmall flagship stores, the discounted price of Kabrita's sugar-free goat milk powder for middle-aged and elderly people (800g) is only 81 yuan, far lower than the price of infant formula. The gap in products is also reflected in basic research. Chen Hong mentioned that there is almost no gap in production technology between domestic and foreign dairy industries, and domestic equipment is even ahead of foreign countries, but foreign countries are more complete in basic research. "Foreign research has a broader spectrum, covering feed research, research on improving milk source quality, and research on nutritional elements for infants and even adults." The channels are also not yet mature. The sales channels for infant formula are mainly maternal and baby stores, while the sales channels for middle-aged and elderly milk powder are still stuck in supermarkets. With maternal and baby stores transitioning to "whole family nutrition," the future "whole family nutrition stores" are expected to become the mainstream channel for adult milk, but before that, **there is still a long way to go to reverse consumers' perception from "maternal and baby" to "whole family nutrition."**Conclusion From the market structure, traditional dairy giants are increasing their investment in the goat milk market, but the old forces are still difficult to shake. "Big ships resist risks, small boats are easy to turn around." In Li Jian's view, the tactics, operations, and service depth of goat milk are vastly different from cow milk. Traditional dairy giants already have a profound influence in the cow milk market, and can drive sales with their brand alone, but goat milk powder still requires labor costs for promotion. On the other hand, the market size of goat milk itself is limited. Whether it is Yili, Junlebao, or Feihe, they are already dairy companies with tens of billions or even hundreds of billions in scale, and no one is willing to use a cannon to shoot a mosquito. Song Liang also mentioned that although giants have entered the market, the current market structure will not loosen in the short term. "Everyone can survive, it just depends on who can live better."