Zhou Xiangyue

In the past year or two, water buffalo milk has broken the spell of "not spreading beyond Guangdong and Guangxi" and become popular in Shanghai, Hangzhou, Beijing, and other cities. A large number of种草 posts have appeared online, and sales on e-commerce platforms have surged. Why did water buffalo milk suddenly become popular?

Breaking Out of the Niche

In early November, Zhao Yuan, a post-85s consumer who usually doesn't like to join in the Double 11 shopping frenzy, unusually stocked up on 7 boxes of Lechun Wanlitiaoyi water buffalo milk at a price of 52.4 yuan per box on JD.com in two separate orders. This was her first time trying water buffalo milk. She originally just wanted to give her daughter a different flavor, but unexpectedly found that this milk had a rich milky taste and no fishy smell.

Consumers like Zhao Yuan are not in the minority. Tang Qiao, a post-00s consumer, remembers that she first bought water buffalo milk in the second half of 2021. Initially, she just bought a box of Baifeilao water buffalo milk on a whim, but unexpectedly she was hooked. "I didn't like drinking milk before. I first bought water buffalo milk because I heard it was richer than pure milk, and it tastes great when heated, and also good when mixed with coffee," Tang Qiao said. She added that using water buffalo milk to mix with coffee is no less delicious than Luckin Coffee, and she has bought at least 8 boxes so far. (Source: Visual China)

Sun Qi, a post-90s office worker, fell into the water buffalo milk trap for the same reason. She is a typical coffee lover and buys milk mainly to pair with coffee. Since being introduced to water buffalo milk by a friend three years ago, she almost every once in a while stocks up on two boxes. In her opinion, water buffalo milk is "a bit greasy" when drunk alone, but it tastes especially good with coffee, especially for making Dirty coffee. Different brands of water buffalo milk can also have different effects when paired with coffee. So far, she has used coffee to pair with water buffalo milk products from brands such as Baifeilao, Huangshi, and Lechun.

In contrast, Ji Nan, a senior milk lover living in Beijing, came into contact with and learned about water buffalo milk even earlier. As early as 2018, when Baifeilao first started to enter Beijing, Shanghai, and Guangzhou, she tasted it and felt it had a strong creamy texture and a sweet taste.

Water buffalo milk is not "watered-down milk" but milk produced by water buffalo. Because water buffalo grow up eating elephant grass, sugarcane stalks, pineapple peels, etc., the milk they produce has a lighter fishy and gamey smell, and a higher fat content, giving it a mellow taste. Data shows that the fat content of water buffalo milk is between 4% and 6%, with the highest reaching 7.59%, far higher than the 3.0% to 4.0% fat content of ordinary milk. In terms of protein content, water buffalo milk generally ranges from 3.7g/100g to 4g/100g, also higher than ordinary milk's 2.5g/100g to 3.6g/100g. Zhao Yuan said that she saw the high protein content of water buffalo milk and therefore planned to add it to her daily shopping list.

In fact, water buffalo milk is not a new thing. As early as the late 1970s and late 1990s, Guangxi and Guangdong successively started the development of the water buffalo milk industry. However, for a long time, water buffalo milk was very niche, with low awareness and consumption limited to Guangdong and Guangxi. So when did water buffalo milk start to break out?

"In my impression, water buffalo milk seemed to gradually become popular in the second half of 2021, possibly because people pay more attention to health and nutrition, especially fitness enthusiasts who like high-protein products," Ji Nan recalled. (Source: Ji Nan's Xiaohongshu screenshot)

This is inseparable from the assistance of social platforms. After 2021, water buffalo milk began to set off waves of promotion and spontaneous recommendation on social platforms such as Xiaohongshu and Zhihu. On Xiaohongshu, searching for "water buffalo milk" reveals that there are currently more than 40,000 related posts. The search results also specifically list sub-tags for major water buffalo milk brands such as "Baifeilao," "Yixiaoping," and "Huangshi Dairy."

After water buffalo milk broke out, there were also significant changes in sales. Data shows that in 2021, sales of water buffalo milk products on Tmall Supermarket increased by more than 30% year-on-year. During this year's 618 shopping festival, the top ten representative Guangxi water buffalo milk brands, including Nanguo Dairy and Huangshi Dairy, saw sales on Tmall Supermarket increase by more than 200% year-on-year. Data from JD.com also shows that during this year's 618, sales of water buffalo milk on the JD platform increased by 74.5% year-on-year. Although it accounts for a relatively small proportion of the milk and dairy products category, the overall growth rate is higher than the overall category, and it is predicted that there is still large room for growth in the next two to three years.

Behind this is the expansion of the consumer base for water buffalo milk, breaking the spell of "not spreading beyond Guangdong and Guangxi." Tmall Supermarket's 618 data shows that Shanghai, Hangzhou, Beijing, Wuhan, and Ningbo have become the top five cities for water buffalo milk purchases. The post-95s generation, with the fastest growth rate, has become the main consumer force for water buffalo milk.

Stuck in Guangdong and Guangxi

The development history of water buffalo milk is actually very long. In the last century, China carried out two large-scale water buffalo introduction plans. One was in 1957, introducing 55 Murrah buffalo from India, and the other was in 1974, introducing 50 Nili-Ravi buffalo from Pakistan. Unlike the common black-and-white dairy cows (Holstein cows) in people's minds, these imported dairy buffalo generally have a pair of large horns on their heads, with coat colors mostly brown, tan, and dark brown. They are more adapted to the southern climate in terms of living habits, so they were assigned to Guangxi, Guangdong, Hubei, and other places upon introduction, and began the important task of "crossbreeding to improve Chinese buffalo."

After decades of development, the water buffalo milk industry has successfully taken root in the southern region, showing distinct regional characteristics. Especially in the Guangdong and Guangxi regions, many fresh ways of eating water buffalo milk have been explored, the most representative being making ginger milk curd and double-skin milk, such as the well-known Shunde double-skin milk.

Although water buffalo milk is loved by consumers in Guangdong and Guangxi for its excellent quality and rich taste, it also has to face a fact: for a long time, this niche milk category has not spread beyond Guangdong and Guangxi.

Behind this is the background factor of the overall development process of the dairy industry. In those years, Yili and Mengniu were the undisputed winners in the industry. Relying only on the trick of room-temperature milk, they quickly completed nationwide market education and dominated the dairy market. Even many niche local dairy brands had to avoid their edge, let alone water buffalo milk companies with much smaller scale.

Moreover, while lacking competitiveness, water buffalo milk also has natural obstacles to breaking out, such as scarce milk sources, high cross-province transportation costs, and limited consumer awareness of water buffalo milk. Therefore, in the past many years, although some water buffalo milk companies tried to break out, most failed.

The most typical example is the old water buffalo milk company Huangshi Dairy (later renamed Huangshi Group). In May 2001, Huangshi Dairy was founded in Nanning, Guangxi. Since 2003, it has continuously ranked first in sales of water buffalo milk series products nationwide for many years. In January 2010, it went public, becoming the fourth listed dairy company on the A-share market and the first listed water buffalo milk company. In the same year, Huangshi Dairy recruited talents everywhere and began nationwide expansion. It not only set up wholly-owned subsidiaries or offices in Shenzhen, Yunnan, Guizhou, and other places to carry out marketing work, but also specifically developed high-end water buffalo milk varieties such as Mola Feier for first-tier cities like Beijing, Shanghai, and Shenzhen, officially launching them to the market in early 2011.

But this ambitious breakout "failed at the start." Shortly after Mola Feier entered first-tier cities like Beijing and Shanghai, it was quickly embroiled in a "false advertising" controversy, suffering heavy losses. More importantly, given people's awareness and acceptance of water buffalo milk at that time, the price of Mola Feier water buffalo milk, which was often around 100 yuan per box, was hardly acceptable to many. In the end, Huangshi Dairy had to admit in its annual report that its performance was significantly dragged down by high marketing expenses in first-tier cities like Beijing, leading to lower-than-expected revenue growth.

In 2014, Huangshi Dairy was renamed Huangshi Group, shrinking its forces in the dairy sector back to the southwest region, and at the same time began a multi-year cross-industry journey, once expanding its main business to film and television entertainment, children, internet channels, information services, and other industries.

Since the leading company Huangshi failed, other water buffalo milk peers rarely tried to break out for various reasons. Therefore, water buffalo milk has remained in a state of "hidden in the deep boudoir, unknown to the world." Within Guangdong and Guangxi, everyone knows it, but outside, almost no one knows it. (Source: Visual China)

Who Made It Popular?

Stuck in Guangdong and Guangxi for many years, why did water buffalo milk suddenly become popular again? One reason is that after years of development and market cultivation, Chinese consumers' demand for milk is moving towards diversification and differentiation. Especially as young people gradually become the main consumer force, this trend is becoming more and more obvious, and water buffalo milk stands out with its obvious differentiation and good taste.

"In recent years, everyone has been paying more attention to improving immunity. From the perspective of nutritional indicators such as protein and fat, water buffalo milk has considerable advantages in this regard," said Wang Dingmian, a well-known dairy expert.

It can be said that consumers' diversified needs provide opportunities for water buffalo milk to break out of its niche. The rich taste and its own characteristics are the fundamental reasons for retaining consumers, while at the operational level, it is inseparable from the promotion of e-commerce and social platforms, as well as some efforts and changes made by water buffalo milk companies in response.

"In recent years, the development of internet commerce has been very fast, including live streaming with goods becoming popular," said dairy analyst Song Liang. He believes that water buffalo milk just caught this wave, coupled with the good taste of the product, which formed a "internet celebrity" reputation and thus became popular.

In terms of creating the "internet celebrity" attribute, social platforms have played a significant role. Since 2019, recommendations and discussions related to water buffalo milk have frequently appeared on platforms such as Xiaohongshu, Zhihu, Weibo, and Douyin. Nowadays, in addition to brand marketing, many netizens spontaneously share the water buffalo milk they have drunk on social platforms. For example, Zhao Yuan and Sun Qi have both done similar recommendations, and Ji Nan once made a "collection" review of more than 20 kinds of water buffalo milk she had drunk.

Of course, a more immediate effect comes from the intervention of e-commerce platforms. For example, JD.com first introduced water buffalo milk brands in 2018 and gradually laid out the water buffalo milk sub-category. During this period, this category was recognized and sought after by consumers for its taste, and the overall growth trend has been higher than the overall milk and dairy products category for a long time. According to JD.com, so far, the number of self-operated water buffalo milk brands on JD.com has gradually increased from only Huangshi Dairy at the beginning to 6 brands including Baifeilao and Lechun, and sales have grown from an initial monthly average of over 100,000 yuan to a monthly average of millions of yuan, with the potential for further improvement.

JD.com also emphasized that in the next 1-3 years, it will introduce more water buffalo milk merchants and brands based on the development of the category business to help drive sales growth. Specifically, it will take water buffalo milk out as a separate sub-category, provide key support and cultivation in daily resources and activity reporting, and also arrange dedicated personnel to be responsible for the water buffalo milk brand for refined operations.

Similarly, Tmall has also played a significant role in "making water buffalo milk popular." In April 2020, Tmall launched a large-scale traceability activity with Guangxi water buffalo milk as the first stop. During the activity, Tmall not only provided Huangshi Group and Baifei Dairy with Alibaba's full resources such as Juhuasuan and Tmall Food Venue, but also joined forces with more than 20 Taobao live streamers including Li Jiaqi to promote Guangxi water buffalo milk. This wave of marketing and promotion had a very obvious effect on the sales performance of water buffalo milk. In Li Jiaqi's live stream alone, Guangxi Baifei's Baifeilao and Huangshi Group's Mofei water buffalo pure milk achieved results of "emptying the merchant's warehouse in five minutes, selling more than 200,000 items" and "being snapped up for more than 210,000 items in three minutes."

It is worth mentioning that water buffalo milk companies have not been inactive in the process of "being made popular." In fact, the popularity of brands such as Baifeilao and Huangshi in the past two years is closely related to continuous brand marketing. For example, Baifeilao, in addition to appearing multiple times in live streams of带货 anchors like Li Jiaqi, also frequently collaborates with various internet influencers and food bloggers to carry out online marketing on Xiaohongshu, Weibo, and other platforms. Financial report data shows that in the first half of 2020, Guangxi Baifei's revenue and net profit were 267 million yuan and 91 million yuan respectively, a year-on-year increase of 132% and 193%, but sales expenses increased by 244% to 16.3 million yuan. (Source: Visual China)

Limited Milk Sources

After quietly breaking out, what is the future development prospect of water buffalo milk? In this regard, Zhu Danpeng, an analyst at China Food Industry, believes that although water buffalo milk is not cheap due to its high cost, "it still has differentiation ability. When China's dairy industry enters a stage of high homogeneity, water buffalo milk, as one of the sub-tracks, will gradually enter the brand mind of the new generation."

Song Liang said that as a niche product, water buffalo milk has certain development prospects, but at present, it is unrealistic to expect it to develop to a large scale in a short time. "On the one hand, because the price is relatively high, and not everyone can fully accept water buffalo milk now; on the other hand, because the yield per buffalo is relatively low, and the output is severely limited by the scale of breeding."

In fact, although new brands related to water buffalo milk have been increasing in recent years, most of them are OEM products. In May this year, Ji Nan found when sorting out the water buffalo milk she had drunk that although she had drunk more than 20 different brands of water buffalo milk, careful research showed that they all came from the same OEM factories, basically a few water buffalo milk processing enterprises such as Guangxi's Guiniu Dairy and Nanguo Dairy, and Guizhou's Shengheng Dairy. Even the "internet celebrity" brands Yixiaoping and Lechun Wanlitiaoyi water buffalo milk are actually OEM products. Among them, the OEM factory behind Yixiaoping is Guangxi's Zuojang Dairy, and the OEM factories for Lechun Wanlitiaoyi water buffalo milk are Guangxi's Nanguo Dairy and Guiniu Dairy.

This means that the vast majority of water buffalo milk products on the market mainly rely on the milk sources of a few water buffalo milk processing enterprises. According to Wang Dingmian, water buffalo milk is still a niche product with relatively scarce resources. Guangdong, Guangxi, and Yunnan are the main production areas, while Sichuan, Guizhou, Hebei, Fujian, and other places also produce small amounts, but the scale is relatively small.

In fact, even in Guangxi, which has long been the largest water buffalo milk producing province in the country, the number of dairy buffalo in stock was only 44,200 heads as of 2020, with a water buffalo milk output of 27,600 tons. In contrast, in 2020, the domestic dairy cow stock reached 6.15 million heads, with milk production as high as 34.4014 million tons, and it is expected that the number of dairy cows will further increase to 6.3 million in 2022.

Moreover, there is a significant gap in milk production between dairy buffalo and ordinary black-and-white cows. Generally, a dairy buffalo produces about 2025 kg of milk per year, while a low-yield black-and-white cow produces about 3540 kg per year, and a high-yield black-and-white cow can even exceed 6000 kg. Obviously, whether from the perspective of per-head yield or stock, the water buffalo milk industry still faces a serious shortage of milk source supply.

To solve the milk source problem, the Guangxi government has shown particularly obvious signals of supporting the development of the water buffalo milk industry in recent years. In February this year, it specifically issued the "Several Measures of Guangxi to Support the Development of the Water Buffalo Milk Industry," stating that it will subsidize farms (households) that introduce high-yield dairy buffalo from abroad or produce dairy buffalo through embryo transfer at a standard of 10,000 yuan per head, and will also give a series of reward measures to newly built and expanded dairy buffalo farms that meet the requirements. It also set a new KPI: the output value of Guangxi's water buffalo milk industry should exceed 15 billion yuan by 2035, becoming a ten-billion-yuan major industry, while in 2020 it was about 5 billion yuan.

In addition to policy drivers, many enterprises are also increasing efforts to solve the milk source problem. For example, Huangshi Group has launched a series of strategic goals this year, such as "ten-billion-yuan dairy enterprise" and "dairy buffalo breed source chip," and also stated that it will mainly invest around the dairy industry in the future.

In addition to the milk source problem, another pain point in the water buffalo milk industry is that there is no national standard for water buffalo milk in China, and only the reference indicators of ordinary milk are used as guidance, which leads to a situation of bad money driving out good money in the industry. Ji Nan said that among the milk she has drunk, she can feel that some are unstable in quality, "and now there are many products that use the banner of water buffalo milk but are not actually pure water buffalo milk."

Overall, water buffalo milk still has a long way to go to develop and grow.

(Consumers are pseudonyms, and the title image is from Visual China)