△Add friend, please note community group purchase registration Cover image: Unsplash How did Shanghai's beloved Bright Dairy end up like this? Recently, Shanghai residents were flooded with an article titled "Save Bright Dairy." Over the past two years, news of Bright Dairy's consecutive profit declines and its market value being a fraction of Yili's has surfaced frequently. Those who claim to have been raised on Bright Dairy are spreading the word, eager to "save" it from dire straits. For nostalgic Shanghai residents, the "Bright" brand, born in 1950, is an indispensable part of their memories. Picking up the glass bottle of Bright milk every morning, pulling off the cotton thread, and licking the cream that condensed on the cap was a unique ritual of that era. When it went public successfully in 2002, Bright Dairy's revenue reached 5.02 billion yuan, while the "grassland duo" Yili and Mengniu had revenues of only 4.01 billion and 459 million yuan, respectively. However, over the following decade-plus, while competitors' revenues surged, Bright's growth was sluggish. As of November 5, 2018, Bright Dairy's market value was only 9.7 billion yuan, a gap as vast as the Mariana Trench compared to the grassland duo. DT君 understands the urgency of Shanghai residents to push Bright to the forefront, but before relying on love, let's trace how this former industry giant "fell" to this point.
▍Success and failure both stem from fresh milk
The story begins with the dispute between UHT milk and pasteurized fresh milk. DT君 remembers when I was in elementary school (showing my age), the milk market wasn't yet dominated by Yili and Mengniu. Every household had a fresh milk box at the door, and home delivery was all the rage. At that time, fresh milk was mostly pasteurized, heated at 72-75°C to kill bacteria while preserving nutrition and flavor. But because pasteurization isn't thorough, pasteurized milk has a shelf life of no more than 7 days and must be refrigerated. Under those conditions, long-distance transport was nearly impossible, so the national dairy industry was fragmented, with each region served by local fresh milk. When UHT milk, which can be stored at room temperature and has a longer shelf life, was introduced, a huge market opportunity emerged for dairy companies to expand beyond their local regions. However, perhaps due to resource constraints, some brands didn't pivot quickly—Bright was one of them. In 1999, the top three milk-producing provinces were Heilongjiang, Inner Mongolia, and Xinjiang. From 1999 to 2017, Inner Mongolia's milk production surged to first place, far ahead of other provinces. Yili and Mengniu, both from Inner Mongolia, had abundant milk sources. In contrast, Bright's milk sources were more limited. Before 2014, when it began integrating ranch resources, it mainly purchased raw milk from large-scale farms in Shanghai and East China, resulting in higher raw material costs and far lower production volumes than northern provinces. Against this backdrop, Yili and Mengniu decided to focus on UHT milk, while Bright stuck to low-temperature fresh milk. At this point, Tetra Pak, the Swedish food packaging company, played a pivotal role in the UHT vs. pasteurized milk battle. It expanded its business in China in 1993 and extended an olive branch to Yili and Mengniu. Known as the "arms dealer behind the dairy battlefield," its advanced aseptic packaging technology helped these two regional Inner Mongolian dairies quickly capture the UHT milk market. (Image caption: Tetra Brik and Tetra Fino provide safe, sterile, economical, and eco-friendly packaging for liquid foods.) With Tetra Pak's help, Yili and Mengniu were like tigers with wings, while the old-school Bright, sticking to pasteurized milk, couldn't sit still and formed an alliance with another packaging company—International Paper—to compete. However, the issuance of the "Fresh Ban" accelerated the outcome before the battle even began. In August 2004, the "National Standard Implementation Guide for Food Labeling" was issued, stipulating that any food that undergoes thermal processing cannot be labeled "fresh." This meant that city-based dairies like Bright could no longer label their products as "fresh milk," which was the most important selling point for pasteurized milk over UHT milk. Despite controversy and delays, the "Fresh Ban" was officially enforced in November 2006. After that, UHT milk surged, capturing up to 70% of the market by 2016. Looking at the entire history of the UHT vs. pasteurized milk battle, it seems to be a history of Bright's decline. Although many self-media only recently began calling to "save Bright," its fate of falling from the top tier of the dairy industry may have been sealed long ago.
▍In the UHT milk battlefield, latecomer Bright failed to catch up
After the "fresh" and "preservation" disputes, UHT milk developed rapidly. The north-to-south milk transport made Yili and Mengniu the top national dairy companies, with Yili even entering Rabobank's "Global Dairy Top 20." Bright, however, seemed stuck in East China, unable to break out. Belatedly, Bright began developing UHT milk, but catching up to competitors who were already far ahead proved too difficult. DT君 compiled the UHT milk products of Yili and Mengniu, which have long dominated the top tier, and couldn't help but sigh for Bright: maybe it's not that Bright is weak, but that its competitors are too strong. When we think of Yili and Mengniu, a variety of sub-brands come to mind. In the premium segment, Mengniu's Telunsu was first to gain deep consumer recognition, and Yili quickly followed with Jindian. Compared to the clear positioning and massive marketing campaigns of the grassland duo, Bright's You+ milk only emphasized eco-farm milk sources, making its positioning and marketing seem too ordinary. (Image caption: Compared to Mengniu's premium Telunsu and Yili's Jindian, Bright's You+ pure milk lacks clear positioning.) Besides lacking presence in the premium segment, Bright also lagged in developing niche UHT milk categories. For lactose-intolerant consumers, Yili launched Shuhua milk, which was well-received, and Mengniu had Xin Yangdao. For children, Yili introduced QQ Star, and Mengniu had Future Star. In contrast, Bright's lactose-free You Shu milk and DUDU milk for children failed to make a name for themselves. As for flavored UHT milk and lactic acid bacteria drinks, Yili has multiple sub-brands like Guliduo and Yousuanru, while Mengniu has Zhen Guoli, Suansuanru, and Youyi C. Bright has zero sub-brands in this area, offering only a few flavored milk varieties. Its plain style and conservative promotion meant they made no splash in the market. In the UHT milk segment, Bright's most memorable product is the ambient yogurt Mosilian. Mosilian performed well when launched in 2008, with sales reaching 10.7 billion yuan from 2012 to 2014. However, Yili and Mengniu, quick to respond and willing to spend, launched their own ambient yogurts, Anmuxi and Chunzhen, and with aggressive marketing, they overtook Mosilian. From early 2017 to May 2017, national sales share showed Yili's Anmuxi at 42.5%, Mengniu's Chunzhen at 25.8%, and Bright's Mosilian at only 21.8%, dropping from first to third.
▍Bright, reluctant to spend, is also absent from the advertising battlefield
Bright failed to catch up in UHT milk, and its pioneering ambient yogurt couldn't maintain its lead. Beyond product development, Bright is also at a disadvantage in promotion. Today, Yili and Mengniu are like the McDonald's and KFC of the dairy world. Their advertising spending is so high that Bright can't compete. In recent years, Yili has grown the fastest, rising to the top of the dairy industry. Behind its leadership is staggering advertising expenditure: 8.21 billion yuan in 2017, over 12% of total revenue. That same year, Mengniu's advertising spending was 8% of revenue. In comparison, Coca-Cola, which we think of as a big advertiser, spent less than 10% of revenue on ads in 2015. In stark contrast, Bright's advertising spending in 2017 was only 1/11 of Yili's, accounting for just 3.59% of its revenue. That said, apart from sponsoring the Chinese women's volleyball team in 2016, DT君 can hardly recall any Bright advertisements. Yili and Mengniu, on the other hand, have celebrity endorsements for almost every sub-brand, featuring popular stars. Whether it's "Not all milk is called Telunsu" or "Sour and sweet, that's me," these catchy slogans are backed by real money. Therefore, some media have commented that we're not drinking milk; we're drinking advertising.
▍Bright wants to strive upward, but relying on love isn't reliable
Bright Dairy's declining performance in the first three quarters of 2018 sparked a wave of loyal netizens shouting "Go Bright!" and "Buy up Bright!" Amidst the nostalgic "woe-is-me" sentiment, people in Shanghai and even East China often express intentions to buy up its products. True fans even go out to buy and post photos online. But can love alone save declining performance? Bright Dairy's financial reports in recent years show that revenue growth in Shanghai has been declining year by year, from a high of 23% in 2012 to just 1.15% in 2017, with even negative growth in 2015... This makes DT君 wonder: where is your love for Bright being sent? As Bright's home base, Shanghai is a typical city of consumption upgrade, which also exposes Bright to threats from imported milk brands. According to the China Dairy Association, imports of liquid milk increased significantly from 2011 to 2017. Shanghai and East China have always been major consumers of imported milk. Unable to break free from the limitations of a regional dairy and facing threats from all sides, in the fiercely competitive dairy market, nostalgia brings temporary attention but cannot solve Bright's long-term problems. If Bright wants to strive upward and return to glory, it clearly needs to focus on innovative product development and more conscious marketing strategies. After all this, DT君, who was also raised on Bright, still hopes this old domestic brand from childhood memories will fight! hard! Star: New Distribution You won't miss any news! -END-