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low temperature milk has gradually entered people’s hearts. Who can lead Yili, Mengniu and Guangming?
If you are a milk consumer, normal temperature milk and low temperature milk, how would you choose?
The former may be your long-term choice, but the data prove that the latter is being favored by more and more consumers. The data shows that in 2019, the market scale of low-temperature pasteurized milk will reach 34.3 billion, with a year-on-year growth rate of more than 11%, and the growth rate of normal temperature white milk in the same period will be less than 2%.
Low temperature milk ushered in a sudden “prosperity”, which suddenly came to the hot, let some people think it is a new species full of advanced sense. In fact, low-temperature milk in the domestic dairy market has been “Snow” for decades. During this period, the scattered low-temperature milk enterprises are on one side.
The competition pattern of low-temperature milk is scattered, and its large-scale development is facing multi-dimensional restrictions. Because of this, the market’s “wealth code” may be hidden in the “shackles” to break away.
In recent years, Yili and Mengniu, the national normal temperature dairy giants, have focused on exploring the low-temperature dairy track, and several regional dairy enterprises have also pressed the expansion accelerator button, eager to further open up the situation. The “immortal fight” in the low-temperature milk market is escalating in multi-dimensional confrontation.
Low temperature milk “old tree opens new flower”, after that, what direction will players lead the industry to evolve?
Quality, efficiency, distance A631
Three shackles of “low temperature” to be removed
If we want to talk about low-temperature milk, we have to mention another part of dairy products – normal temperature milk. Mantis finance has found that the low-temperature milk track has gained more attention. There is a “dark line” buried here.
In the past, after the introduction of UHT sterilization technology, room temperature milk rose on a large scale. At the same time, Yili, Mengniu and other leading enterprises have laid channels on a large scale and continuously put into marketing, realizing the rapid expansion of normal temperature milk channels and categories.
Subsequently, the normal temperature milk turned to upgrade the product structure and increase the price, and the sales volume declined for three consecutive years after 2016, with the growth rates of – 2.06%, – 1.07% and – 0.98% respectively from 2017 to 2019.
This actually reflects that the era of “volume increase” in normal temperature milk industry has passed, and the milk market needs new “increment”. In this context, low-temperature milk leaps over normal temperature milk and becomes a hot spot that may be detonated under the development of the industry.
Euromonitor data shows that in 2018, the representatives of low-temperature pasteurized milk are bright, Sanyuan and new hope dairy, with corresponding market share of 11.5%, 9.2% and 5.9% respectively. The market share they occupy is not high, and the industry is not obviously centralized. Therefore, individual leaders may emerge in the future.
But the reality is that there are still some problems in the low-temperature milk industry. With the continuous improvement of the technology level of the enterprises in the product chain, they are gradually “melting”, and the industry also ushers in large-scale development. Another “dark line” is here.
Mantis finance believes that the problems of the low-temperature milk industry are mainly reflected in many aspects, including “quality”, “efficiency” and “distance”.
From the perspective of “quality”, the production process of low temperature pasteurized milk is different from that of normal temperature milk, which requires high quality of raw materials;
In the subsequent transportation, pasteurized milk must be kept in a proper state of refrigeration and preservation. At this time, the quality of pasteurized milk puts forward high requirements for cold chain storage. The latter is the obstacle for many dairy enterprises to operate low-temperature pasteurized milk.
It is worth noting that if the transportation links are optimized, the problem of “distance” dimension can also be solved in one direction. The separation of domestic consumption place and gold milk source place from north to South and optimization of transportation link will help to realize long-distance and cross regional transportation and distribution. Another solution is to set up a new pasture adjacent to the consumption area.
For the “efficiency” dimension, the key is in the distribution of low-temperature pasteurized milk. On the premise that the whole cold chain transportation is normal, the shelf life of low-temperature pasteurized milk is about 5 days, and the promotion discount usually starts from the fourth day. In other words, the first three days are important sales time, and how the industry efficiently allows consumers to buy goods will determine whether it can expand profits.
Therefore, the “dark line” under the three dimensions intersects with the first “dark line”, waiting to be ignited. In the past two years, the enterprise layout of low-temperature milk track has brought the progress of the objective environment of the industry and successfully “detonated” the track.
The radius is spear and the center is shield
Mengniu and new hope fight for a new blue ocean
“The breakthrough development of the industry is reflected in the application. There are two alternative paths and one key word to be possessed,” the industry told Mantis finance. “The former is to lengthen the radius and increase the center, while the latter is to meet the consumption frequency.”
“The continuous improvement of domestic cold chain logistics infrastructure has just laid the foundation for enterprises to” lengthen the radius, “industry insiders said.
According to the data of cold chain Committee of China IOT, the scale of China’s cold chain logistics market will continue to expand from 2017 to 2019, with an average annual compound growth rate of 15.3%. In 2019, the market scale of cold chain logistics industry will reach 339.1 billion yuan, with a year-on-year growth of 17.5%.
Some investors point out that due to the success of Mengniu and Yili in the low-temperature yogurt category, their relatively leading cold chain quantity and quality contribute to the development of low-temperature pasteurized milk.
After 2018, Mengniu and Yili successively set foot in the field of low-temperature pasteurized milk. Mengniu established an independent fresh milk business department in 2018; according to its annual report in 2019, Mengniu’s fresh products have covered 24 provinces and 50 key cities; in October last year, it joined hands with Coca Cola to set up “keniule” to enter into high-end low-temperature milk.
Photo source: Mengniu daily fresh language
Mantis finance learned that in order to expand the low-temperature pasteurized milk to the whole country, Mengniu has enriched its strategy of “lengthening the radius”. Specifically, on the basis of mature cold chain transportation, using ESL and other technologies to produce pasteurized milk with longer shelf life. This can extend the transportation period, so as to extend the business tentacles to further consumer places.
On the other hand, it also means that the distance between production and consumption has become more controllable. Mengniu’s production plant does not need to be set in the outskirts of the core consumer city, but can choose to be further close to the city, and ultimately achieve “lengthening radius”.
Mengniu’s old rival Yili launched three new low-temperature fresh milk products at the end of 2019. The layout signal is released. However, Yili is conservative in this field.
Last year, Liu Chunxi, vice president of Yili Group, said that “in the future, China’s dairy products will still be mainly liquid milk at room temperature. Yili will actively lay out its low-temperature business, but also adhere to the development of normal temperature business.”. Although said there will still be action, but this seems to be the first time Yili publicly said that the low-temperature milk track cautious.
In addition to “lengthening the radius,” increasing the center of the circle “is another path. The typical representative of dairy enterprises is the new dairy industry. At present, it is difficult to develop new pastures around developed cities, and the transportation radius of low-temperature pasteurized milk is limited. Therefore, the new dairy industry has taken the way of acquiring local brands to go deep into the “hinterland” of its competitors.
Since 2002, the new dairy industry has set off two rounds of acquisitions. In the first round, it acquired dairy enterprises in West China, Shuangfeng, Tianxiang and other regions to attack the East China and North China markets; in the second round, it acquired Nanshan of Hunan Province to enter the central China market, and then acquired Shuangxi, Sanmu and other regions to continue to increase its weight.
Through the merger and acquisition of local low-temperature milk brands, the new dairy industry can quickly obtain its local brand recognition, channel and overall planning ability. Expand the market and form the coverage and penetration of new market areas.
In 2019, new dairy landed in a shares, and then its expansion continued to accelerate. They acquired different proportion of shares in aoniu dairy, modern animal husbandry and Huanmei dairy. As a result, the nationalization of regional dairy enterprises and new dairy industry has been very clear.
If the above enterprises are the “descendants” of the low-temperature milk market, then Guangming can be said to be one of the “senior” enterprises. As an old regional dairy enterprise in Yangtze River Delta, it missed the development opportunity of normal temperature milk in the past and was surpassed by Mengniu and Yili. Bright then riveted enough strength, in the low-temperature milk market to accelerate the layout of “center”.
Photo source: bright times
Bright Dairy completed the acquisition of Jiangsu Huishan dairy. On this basis, it joined hands with Jiangsu Yinbao group to set up a production plant and ranch. Industry insiders told Mantis finance that “the purpose of this move may be to occupy a favorable position in advance and take it as a starting point to radiate the target market to the surrounding areas.”.
In addition, Guangming has already built its own distribution platform “Xinding”, which has covered at least 34 large and medium-sized cities in China. This reflects that Guangming is also committed to “lengthening the radius” and gradually improving the cold chain distribution system.
On the whole, all dairy enterprises focus on the strategy of “lengthening the radius” and “increasing the center of the circle”, in order to expand the national territory again. The giants are involved in amplifying the voice of low-temperature pasteurized milk, but the overlap of strategic territory naturally brings more fierce competition.
As the cold chain transportation system accelerates to improve, companies with scale advantages will continue to reduce supply chain costs in the competition. In this way, the regional leader will face the “squeeze” of the national leader. From the perspective of competition, in the face of possible pressure, dairy enterprises naturally need to race to seize market share.
“For low-temperature pasteurized milk, if dairy enterprises do not preempt the blank market, they may lose the opportunity because the market will not wait for you,” industry insiders told Mantis finance.
Keeping up with the mature market and “getting on the bus” new retail
Where is the “tuyere” of low temperature milk blowing?
Countries all over the world focus on the choice of normal temperature milk and low temperature pasteurized milk. Belgium, Spain and other European countries, room temperature milk market share of more than 90%; dairy developed countries, such as the United States, Japan, New Zealand and other countries, like pasteurized milk more.
If the mature market of the United States is taken as a reference, the mature animal husbandry and pasture are relatively uniform. The “radius” of production place and consumption place is short, and the perfect cold chain facilities are also the characteristics of American pasteurized milk industry.
In contrast, under the premise of continuous upgrading of cold chain and transportation in China, although it can not exceed the share of normal temperature milk, the consumption proportion of low temperature pasteurized milk is expected to continue to increase.
Such a signal to enterprises means that behind the transformation of dairy consumption structure is the structural opportunity of the industry.
At present, the domestic low-temperature product category is relatively single, compared with the mature market, the low-temperature product matrix has further development space. In the future, with the further expansion of the categories, the consumer groups will be expanded for the low-temperature milk market, and finally the market scale will be expanded.
It is worth noting that there is another keyword that has not been discussed before, which is “meet consumption frequency”. Low temperature milk is different from normal temperature milk because of its own characteristics, which is reflected in the consumer demand of “low quantity and high frequency”.
This can be seen from the channel of low temperature pasteurized milk. Data show that convenience stores and small and medium supermarkets account for 31%, milk delivery accounts for 27%, large Ka accounts for 20%, and e-commerce accounts for 16%.
Convenience stores and small and medium-sized supermarkets are closer to consumers, which is in line with the scene of frequent consumption. Moreover, they have sufficient low-temperature cold chain equipment, which can also help better achieve “meeting consumption frequency”.
In the past, consumers often need to go to supermarkets to “stock up” or online milking stations to “order for half a year”. And now, the distance between consumption place and family is getting closer, and dairy enterprises will further “lengthen the radius”.
It is worth noting that the fresh e-commerce has developed rapidly in recent two years, and the fresh channel has become the “east wind” for dairy enterprises. It provides a sales platform for low-temperature pasteurized milk. Consumers can buy fresh milk just like ordering takeout, and enjoy the service of ready to serve.
The low-temperature pasteurized milk basically matches the fresh customer group. The fresh e-commerce platform acts as the role of “terminal network + milkman”, directly connecting manufacturers and consumers, reducing intermediate links, which is equivalent to reducing losses and improving circulation efficiency.
Mengniu has “got on the bus” new retail, which is to establish technical cooperation with Ali to build “Tianxianpei” and provide periodic distribution business; Guangming has reached a cooperation with tmall periodic shopping, which can be delivered to customers according to the scheduled cycle after placing an order in the flagship store.
When the distribution and purchase of low-temperature pasteurized milk become efficient and convenient, dairy enterprises can naturally extend their business tentacles to further markets, which will still bring the effect of “lengthening the radius”.
In general, the “main” channel can help the industry bid farewell to the problems of low consumption frequency, high consumption and inaccurate users. In the future, how to better occupy the “main” channel has become a new topic for dairy enterprises to learn. Lay a solid foundation, low-temperature milk may have the conditions of quantity.
As the “last step” to reach consumers, dairy enterprises have realized its importance. Efficient new retail has become the “new favorite” of dairy enterprises, and the “gunpowder smell” will be more intense in the future.
Author: Leo Chen; source: tanglangfin, reprint authorized. Joining the community: Cherry (wechat: 15240428449); business cooperation: Amy (wechat: 13701559246). It is recommended to read the secret selection column of quality original plant protein beverage, NMN and Mengniu’s top 8 new take away packaging brands to maintain their vitality. One week’s hot news, innovation interview, lingting, new Xiu brand, trend insight, packaging outpost fbic 2021 , food people are “watching”
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