Farewell to 2018, welcome 2019, everything is renewed, and people inevitably reflect on the past and look to the future. For most industries, 2018 was a year full of challenges and uncertainty, but for China's two leading dairy companies, Yili and Mengniu, it was a time of rapid progress, as both dairy brands showed impressive performance and made frequent moves. In common, both have proposed a "100-billion plan," but they are taking different routes. Moreover, the differences between them are becoming increasingly obvious, not in performance, but in industrial structure, overall corporate strategic layout, and other aspects. Look at Yili According to the "Global Dairy Top 20" ranking published by Rabobank, Yili Group continued to rank first in Asia with revenue exceeding $9.9 billion in 2017, firmly in the global dairy first tier. Rabobank, which released the ranking, is one of the world's largest institutions focused on agriculture and food-related industries. The report shows that in 2017, the top 20 global dairy companies saw an average annual revenue growth rate of 7.2%. Yili's financial report shows that in 2017, Yili achieved revenue of 68.058 billion yuan, a year-on-year increase of 12.29%. Excluding exchange rate fluctuations, Yili's growth rate is much higher than the global average. On December 6, 2018, Yili Group launched its "Yili Global Partners Conference" in Sanya, Hainan, where it released dozens of new products, including upgrades of its star products—Ambrosial high-end drinking series with fruit pulp, as well as an upgraded version of Zhi Xuan drinking-style rich soy milk. It also launched Qiaolezi mysterious elegant purple new products, the small V tube series, and high-end organic milk powder Jilinguan Senamu. At the same time, Changqing PET, Meiyitian passion fruit, and cheese yogurt products also continued to gain momentum. For this dairy leader, whose total operating revenue for the first three quarters of 2018 was 61.327 billion yuan, a year-on-year increase of 16.88%, and whose performance continues to lead the industry, these new products will become the fresh force for Yili to hit the global "Top Five and 100 Billion" goal. To achieve the "Top Five and 100 Billion" goal, relying solely on its dairy layout is still difficult. Therefore, in addition to dairy, Yili has also begun to lay out the beverage market. On December 16, 2017, Yili announced its entry into the plant protein beverage field, launching Zhi Xuan soy milk, positioned as "a high-quality soy milk rich in plant protein and fragrant," and invited Ni Ni as brand spokesperson. In April 2018, Yili revealed that it would enter the energy drink market. It is reported that Yili's new energy drink, Huanxingyuan, has features such as relieving fatigue, replenishing energy, and a refreshing taste. On December 14 last year, Yili issued an announcement stating that it planned to build a new Changbai Mountain natural mineral water beverage project in the Changbai Mountain natural mineral water industrial park in Antu County, Jilin Province, with an investment amount of 743,882,629 yuan. Regarding the reason for investing in this project, Yili stated in the announcement that to realize the corporate vision of "becoming the world's most trusted healthy food provider" and enhance corporate competitiveness, the company chose to enter the mineral water industry. With the launch of plant protein beverages represented by Zhi Xuan soy milk, healthy drinks represented by Huanxingyuan, and the investment in the mineral water beverage project, Yili is no longer a pure dairy company but has begun to lay out the broader health food field and will continue to invest. In addition, in 2018, Yili made frequent moves in Southeast Asia, launching cold drinks in Indonesia in October and acquiring Thailand's largest ice cream company in November. On December 28, 2018, Yili Chairman Pan Gang stated at Yili Group's 2018 annual meeting "Shouwang Chuxin Wen Dianfeng·Running To The Top" that the future Yili will be a multi-category player in the broader health field and the most trusted healthy food provider for consumers; the future Yili will become a global platform integrating high-quality global resources and gathering global elite strength, becoming a globally influential enterprise; the future Yili will be more lean and efficient in supply chain operations. As early as 2014, Yili proposed the strategic goal of entering the global dairy top five and becoming a 100-billion-level healthy food group. Relying solely on dairy business, it is difficult to achieve in the short term. Now, Yili has started a full-category layout in the broader health field, moving step by step toward the "100 billion and top five" goal. Look at Mengniu The other leader, Mengniu, is not far behind. In 2017, Mengniu proposed the "double 100 billion" goal, that is, sales reaching 100 billion and market value reaching 100 billion. After Lu Minfang took office, he successively acquired multiple businesses. In early 2017, Mengniu announced that it planned to acquire a 16.7% stake in Modern Farming for HK$1.873 billion. After a series of transactions to increase its stake in Modern Farming, Mengniu's shareholding increased to about 60.77%. In 2017, Mengniu established a fresh milk business division. In 2018, Mengniu's fresh milk division launched three sub-brands: "Mengniu Fresh Selection," "Daily Fresh Words," and "Fresh Factory." At the 2017 performance briefing, Lu Minfang revealed, "Acquisitions and mergers are an important part of the company's 2020 strategy. Currently, the company has ample cash flow. Whether domestic or international, as long as there are good opportunities that align with Mengniu's strategy and core business, we will act if we see them." Mengniu has been practicing "strike when the iron is hot." On December 24, 2018, China Shengmu announced that it planned to sell a 51% stake in its wholly-owned subsidiary Inner Mongolia Shengmu Gaoke Dairy Co., Ltd. to Inner Mongolia Mengniu for a total price of 304 million yuan, establishing a new joint venture. As a precondition for the transaction, China Shengmu must transfer all its downstream dairy business chains and related assets to the target company. In fact, from the continuous strengthening of ties with upstream pasture companies, it is not difficult to see that Mengniu is continuously increasing its layout in low-temperature dairy and high-end organic products. In 2018, Mengniu also made a series of moves in hardware investment. On November 29, 2018, Mengniu announced the official opening of the Mengniu YoyiC factory located in Cikarang, West Java, Indonesia. This is the first factory built by a Chinese dairy company in Southeast Asia. Subsequently, on December 11, the project of Mengniu Group and Qujing Municipal Government to jointly build a full industry chain project for highland specialty dairy in Southwest China was officially signed in Kunming. The project is located in Luliang County, Qujing City, and will be divided into a factory area and a pasture area. The factory will design 10 normal-temperature production lines and 5 low-temperature production lines, with a daily production capacity of 1,200 tons, and will be equipped with two modern intensive pastures. The first phase is expected to invest 1 billion yuan, driving the overall industry chain investment to exceed 1.5 billion yuan. Mengniu's large-scale acquisitions, factory investments, and hardware construction in the industry, especially after proposing the double 100 billion goal, acquiring Modern Farming and China Shengmu, investing in factories in Indonesia and Qujing, Yunnan, are all aimed at consolidating upstream milk sources, production, and processing strength, and laying out the Southwest market and Southeast Asian market. All these are preparations for the "double 100 billion" goal in 2020. The two dairy giants are chasing each other, evenly matched. Yili's full-category layout, Mengniu's buy-buy-buy plus hardware construction, they will have to continue competing this year, and by 2020, after achieving the "100 billion" goal, there will certainly be the next goal waiting for them to strive for. Source: EBH Maternal and Infant Times (ID: EBHtime) -END-