China Food

Fight for “Ba”, dairy industry changes?

The new and old camp of
pasteurized milk holds bottom cards in products, channels and brands, which makes the confrontation more attractive. It can be predicted that in the near future, the bloody battle of pasteurized milk market is inevitable. At the same time, super bus products may become the focus of the whole industry.

Pasteurized milk has been “frozen” in China’s dairy market for more than 20 years, from “dominating the lake” to nearly “disappearing” later. Over the past 20 years, pasteurized milk enterprises scattered all over the country have been in a corner and each side has its own side.


Since 2017, the large-scale “invasion” of Yili and Mengniu has suddenly caused waves in the calm BA’s milk lake, and local “Princes” began to fight. As a result, the new and old camps tried their best in the aspects of milk source, technology and channel. Pasteurized milk was full of gunpowder, and bloody war was inevitable.


Before the war, Yili and Mengniu, who had “grain and grass first”, launched a battle for milk source, which made them have more chips with brand advantages. The former legend of normal temperature milk may be staged again in the field of pasteurized milk.


The “super bus” products pushed by the market force are also being watched by many giants, or become the “protagonist” in this war. However, at the beginning of the birth of the super bus products, which are still in the “gray zone”, there were constant disputes, which also injected more attention into the war.


Suddenly heated “old pasteurized milk”


The original price of 19.9 yuan of fresh milk is only 5.5 yuan, which can even be sold to 5 yuan in box horse. This is the recent “big move” of bright dairy farm.


In fact, the “blood” of low-temperature milk has lasted for several months. Supermarkets and online platforms in Beijing, Shanghai and other regions are full of gunpowder. In addition to the newly launched fresh pastures, the contestants also include Sanyuan’s 72 ℃ fresh milk, Guangming “youbei”, Mengniu daily fresh words and JUNLEBAO’s yuexianhuo milk.


If the epidemic situation is the fuse leading to this “bloody war”, the long cherished wish of several giants to compete for market share of pasteurized milk is the underlying logic of the war. China’s pasteurized milk has long been in turmoil, sales promotion only pushed the war to a climax.


Back in 2017, Yili and Mengniu, two big milk giants with normal temperature, extended their tentacles to the field of pasteurized milk, and quickly stirred up the spring water of pasteurized milk market. The “noble and decent” of traditional pasteurized milk quickly “rose to the ground” and rose to revolt.


Under the promotion of capital, China’s pasteurized milk market ushered in growth. According to the data of China industry information network, in 2019, the domestic pasteurized milk market scale was 34.3 billion yuan, with a year-on-year growth of 7.2%, and the compound growth rate of 2015-2019 was 8.8%.


China Dairy Association and China Dairy Industry Association have publicly “supported” pasteurized milk for many times, pointing out that the development of pasteurized milk is the general trend of improving the supply side of dairy industry and constantly meeting the growing demand of people.


As a result, the pasteurized milk market ushered in a sudden “prosperity”, from the first attempt to push new products to the nationwide promotion, and then to today’s price war, the confrontation between the old and new pasteurized milk giants is constantly upgrading.


This sudden craze even makes many people think that pasteurized milk is a new species with high sense. In fact, both in the international market and in the Chinese market, pasteurized milk has become an “old gang dish”, and now it is just “old trees blossom new flowers”.


As early as 1864, 150 years ago, pasteurized milk had taken root. At that time, French scientist Louis Pasteur invented pasteurization technology, breaking the limit that fresh milk can only be kept for four hours.


After that, pasteurization process has been improved many times and is still in use. At present, the international pasteurization process is mostly 72 ℃ – 75 ℃. In China, 85 ℃ is usually used for sterilization and heating for 10-15 seconds, and the corresponding ultra-high temperature sterilization process (producing normal temperature milk) is usually heated at 135 ℃ – 139 ℃ for 2-4 seconds.


In the Chinese market, pasteurized milk has been “the leader”, and even once occupied 90% of China’s liquid milk market share. Until the 1990s, the two giants of yiyimeng cattle were established one after another, and began to run horses and enclosure all over the country, and normal temperature milk quickly occupied the homes of ordinary people.


In the following 20 years, the normal temperature milk “rolled” pasteurized milk for more than 20 years. According to the latest data, the proportion of pasteurized milk in liquid milk in China will be about 20% in 2019, compared with 99.9% in Canada, 99.7% in the United States, 99.5% in the United Kingdom and 98% in Japan.

The fight for “Ba” is imminent


The addition of the new favorite in pasteurized milk market makes the “old pasteurizers” who were in a rather peaceful corner seem to smell something. They have changed their usual state of fighting against each other, and share a common hatred against the enemy and unite with the outside world.


The story began in 2017, Mengniu established the fresh milk business department and officially entered the pasteurized milk market. Then, it launched 17 new pasteurized milk and Chaoba new products in one breath, and cooperated with Ali to launch the “Tianxianpei” platform at the channel end. Yili was not willing to be outdone, and even pushed three pasteurized milk products, and the channel end also launched the “Yili home” performance mode.


Following the layout of the two giants, JUNLEBAO, a rising star, launched “yuexianhuo” super Ba products (with a shelf life of 15 days, longer than pasteurized milk) at the end of 2019, and quickly occupied the first and second tier markets.


The actions of yiyimeng cattle and other giants touched the foundation of “old pasteurized milk” to settle down. In the absence of normal temperature milk, milk powder and other plates, they rose up one after another to expand their “moat” in the field of pasteurized milk by various means.

In 2007, the new dairy industry, which had called for “China’s first brand of fresh milk”, added a new “golden 24-hour fresh milk” after the “24-hour pasteurized milk”, which lowered the sterilization temperature from 82 ℃ to 72 ℃, continuously raising the technical threshold.


Bright Dairy, the leader of pasteurized milk market, upgraded the pasteurization process from 85 ℃ to 75 ℃ in 2017, and held a press conference on bright fresh products in April 2019. In November of the same year, Guangming Dairy Co., Ltd. held the D20 summit of China dairy industry, and jointly released the group standard of pasteurized milk with traditional pasteurized dairy enterprises.


It is worth noting that there has been no national standard for pasteurized milk market in China. Guangming Dairy Co., Ltd. and several major pasteurized milk enterprises advocate taking the three active substances as the “first standard” of pasteurized milk, and took the lead in labeling the active substances on pasteurized milk products, declaring to the outside world that it is the “noble and decent” of pasteurized milk market.


As for the confrontation between the two camps, Wang dingmian, a dairy expert, told Yidian finance and economics that the “old pasteurers” have loyal consumer groups, are closer to the consumer market, and have long-term cooperative pastures; while Yili and Mengniu have advantages in capital, channel and brand, and are distributed at the same time across the country, with strong product strength.


“Normal temperature milk” miracle reappearance?


Yili and Mengniu have built a solid milk empire in a few years. This miracle may be replicated in pasteurized milk market.


As a matter of fact, the plot of price war in pasteurized milk market seems familiar, which is very similar to the history of yimengniu’s prosperity. It is reported that as early as 2000, Niu Gensheng, who founded Mengniu, went south to Shenzhen to occupy the market by means of “free delivery of the top 10 boxes in each community”.


As a result, relying on strong marketing and nationwide cooperative pasture, Yimeng cattle all the way. By 2019, the revenue of Yili and Mengniu will be 90.2 billion yuan and 79.2 billion yuan respectively.


Today’s two giants are playing a similar “trick”, not only on the new pasteurized milk products, but also staged a big play to grab milk source. Not long ago, Mengniu increased its stake in China Shengmu and Yili took a stake in Zhongdi dairy industry, which is the enhancement of upstream control.


According to the Research Report of BOC securities, up to now, Yili’s pasture team includes Youran animal husbandry, saikexing and Zhongdi dairy industry, with a total of 350000 cows on hand; while Mengniu has a reserve army of modern animal husbandry, Fuyuan animal husbandry and China Shengmu, with a total of about 400000 cows on hand.


“Just like Yili and Mengniu seized the market nationwide in those years, regional pasteurized milk enterprises were hard to resist the attack of Yili Mengniu, and the future pasteurized milk market is likely to perform a similar plot with the previous normal temperature milk,” Wang dingmian lamented.


According to the latest research report on securities companies released by Yili, the company’s low-temperature fresh milk revenue increased by 70% in the first half of this year compared with the same period last year. It has been distributed in more than 20 central cities, and its products tend to be medium and high-end. It is expected that the low-temperature fresh milk will reach a scale of about 1 billion yuan this year.


Industry analysis, compared to the traditional “old pasteurized”, Yili, Mengniu do hold more chips, in this inevitable pasteurized milk competition is more likely to win. After all, through years of channel construction, they have formed a very strong channel sinking force, and Yili is the only dairy enterprise with distributed milk source in China, and the layout of milk source and cold chain has been basically completed.


Song Liang also believes that Yili and Mengniu have stronger brand building ability, market distribution ability and channel promotion ability, and their super Ba products are far stronger than pasteurized milk in terms of promotion speed, distribution breadth and dynamic sales strength. It is estimated that Yili and Mengniu will occupy 40% market share of pasteurized milk market in the next 3-5 years.

The dispute of superba process


The confrontation between the new and the old camp not only appeared in the traditional pasteurized milk market, but also in the new subdivision of pasteurized milk in the super Ba field. However, as the key point of pasteurized milk market and the winner or loser, the birth of Chaoba products itself is the topic and controversy flying together.


In March this year, the State Administration of Market Supervision issued a new food production license catalogue, which added a new category of milk: “high temperature sterilized milk” (i.e. super Ba products), and the pasteurized milk market ushered in a “new species”.


The sterilization temperature of this “new species” is lower than that of normal temperature milk, that is, there are more active substances than normal temperature milk, and the shelf life of 15-25 days is longer than that of pasteurized milk. As a result, its birth made the Chu River Han boundary of the two camps blurred and quickly became the focus of fierce fighting between the two sides.


However, although this “new species” is recognized in concept, there is no relevant standard in technology. It is reported that there are ESL process and ultra instantaneous sterilization process on the market at present, and there are different opinions on who is more advanced, more authentic and more advanced than pasteurization process.


Junle Bao, a new entrant, had told the media that pasteurization was the earliest process, with more than 100 years. However, the reason why JUNLEBAO chose super bus process is that its product shelf life is longer and it is easier to meet the needs of consumers. The company’s superba process is imported from Germany, with high cost, and has applied for a patent.


This view was disdained by Bright Dairy, which claimed to be “respectable and decent”. Its high-level has intentionally or unintentionally told the media that pasteurized milk has high requirements for cold chain transportation, which is not only the terminal freezer and the whole process cold chain, but also a necessary condition. It is not ruled out that some enterprises can not meet the requirements of the cold chain and launch super bus products. However, there are still many questions about the perfection of the process.


No matter what the “truth” is, Superbus products really can better meet the demands of consumers. As a senior executive of a dairy enterprise said after a survey in a supermarket in Beijing, “I explained in detail the difference between pasteurized milk and superba products, and described the fact that a number of nutritional indicators of pasteurized milk were more comprehensive, but he still chose the super bar products with lower prices.”.


Because of this, the bright dairy industry of pasteurized milk, which is “famous and decent”, has to bow its head to the market and launch the super Ba product “fresh pasture”. Pu Shaohua, chairman of Guangming dairy, said frankly that the company launched “fresh Ranch” in order to stop competing products and expand sales radius.


It can be seen that some of the new super bus products in bright dairy industry are about to be occupied. In addition to Yili, Mengniu, JUNLEBAO, etc., which have entered the bureau at present, the super bus products are attracting many giants to enter the Bureau, and the “card position” war of super bus products has already spread.


Yili and Mengniu, who once created the legend of normal temperature milk, are trying their best to enter the pasteurized milk market in a similar way, seizing the cheese of the traditional regional pasteurized milk enterprises. This makes the enterprises which take pasteurized milk as the basis of “settling down” have to fight hard.


The new and old camp of pasteurized milk holds bottom cards in products, channels and brands, which makes this confrontation more attractive. It can be predicted that in the near future, the bloody battle of pasteurized milk market is inevitable. At the same time, super bus products may become the focus of the whole industry.

Author: Zhou Yi; source: Yidian Caijing, reprinted with authorization.
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