China Food

In the post 100 billion era, how can Yili go?

the rise of the industry behind a glass of milk.

Yili has left a new footnote in the development history of China’s dairy industry.

On April 27, Yili released its annual report for 2021. Data show that the company’s revenue exceeded 100 billion yuan for the first time, reaching 110.6 billion yuan, making Yili the first Asian dairy enterprise with a revenue of more than 100 billion yuan.

Due to the limited resources of forage, dairy cows and breeding technology, China’s dairy industry started late and its foundation is relatively weak. It can be said that China’s dairy industry has been seeking survival in the “cracks” of foreign enterprises since its birth.

With the continuous efforts of domestic dairy enterprises, China’s dairy industry has become more and more powerful in the world in recent years. Among them, Yili is the fastest and most powerful.

Pan Gang, chairman and President of Yili, said at the celebration meeting: “the breakthrough of 100 billion is not only the achievement of Yili, but also the achievement of China’s dairy industry, which represents that China’s dairy industry has reached an unprecedented new height.”

In Pan Gang’s view: “100 billion is just the starting point. Yili still has higher goals to achieve and create greater value for the society.”

New height of China’s dairy industry

With the release of Yili’s performance in 2021, the situation of “one super and many strong” in China’s dairy industry has officially emerged.
In 2021, Yili Group’s revenue reached 110.6 billion yuan, 22.4 billion yuan more than the second in the industry; The net profit of the company reached 8.7 billion yuan, 1.73 times that of the second place.
Generally speaking, the larger the enterprise, the more difficult it is to achieve high growth. But in recent years, Yili has maintained rapid growth.
From 2017 to 2021, Yili Group’s revenue increased from 68.058 billion yuan to 110.595 billion yuan, with an average annual compound growth rate of 13%; The net profit attributable to the parent company increased from 6 billion yuan to 8.7 billion yuan, with an average annual compound growth rate of 9.7%.
The revenue growth of dairy enterprises above designated size can reflect the average level of the whole industry. In the past five years, except 2019, Yili’s revenue growth rate is higher than the industry average.
In 2021, Yili will continue to maintain rapid growth. Among them, the revenue increased by 14.2% year-on-year; The net profit increased by 23% year-on-year, the highest in the past five years. In the first quarter of 2022, Yili Group’s revenue and net profit attributable to its parent increased by 13.4% and 24.3% respectively year-on-year.
The high growth of Yili benefits from the formation of scale effect to a certain extent.
Manufacturing and production enterprises like Yili have obvious scale effect. With the increase of enterprise scale, the unit production cost and expense will be reduced.
In 2021, Yili Group’s overall gross profit margin increased by 0.4 percentage points, and its sales net profit margin increased by 0.58 percentage points to 7.93%. Such net interest rate is not only the highest level of the company in recent three years, but also 2.3 percentage points higher than the second place in the industry.
Yili Group can form the profitability of leading industries, thanks to the company’s cost control to a certain extent. From 2017 to 2021, the sales expense ratio of Yili shares decreased by 5.3 percentage points and the management expense ratio decreased by 0.8 percentage points.
Years of rapid growth has made Yili more and more important in the global dairy industry.
In the eight years from 2012 to 2020, Yili rose from 15th to 5th in the top 20 global dairy industry, and gradually became a member of the global dairy industry.
As the largest dairy enterprise in China, Yili’s development speed represents the development speed of China’s dairy industry to a great extent.
As Pan Gang said at the 100 billion celebration conference: “breaking through 100 billion is not only our own achievement, but also the achievement of China’s dairy industry, which represents that China’s dairy industry has reached an unprecedented new height and opened a new stage of development, which is the common glory of China’s dairy industry.”
Due to the lack of high-quality forage, the relatively small number of dairy cows and the obvious regional distribution, milk is not the mainstream in China’s traditional diet. China’s real development of modern dairy industry is still after the reform and opening up.
Under the guidance of the national dairy Revitalization Strategy, Yili and a large number of domestic dairy enterprises have made the overall scale and production technology of China’s dairy products reach the world advanced level through years of efforts.
China has a large population base, but the per capita annual consumption of dairy products is less than 25kg, far lower than the world average of 113kg, only one tenth of the annual per capita consumption in Europe and America.
Compared with the annual per capita consumption of more than 100kg in Japan and India, China’s dairy industry still has a lot of room for development. This is not only the mission of domestic dairy enterprises represented by Yili, but also their opportunity.
Therefore, for Yili, after the revenue scale exceeds 100 billion, the journey is far from over.
Pan Gang has always adhered to the strategy of “high goal leading”, and his core team has played a decisive role in the rapid growth of Yili.
At present, Yili Group ranks fifth in the global dairy industry. In the future, the medium and long-term goal of Yili’s development is to advance into the “top three global dairy industries” in 2025 and “No. 1 global dairy industry” in 2030. In addition, Yili’s net interest rate will also reach the world’s leading level in 2026.
At the celebration meeting, Pan Gang also said: “In the post 100 billion era, Yili will go all out towards the goal of comprehensive value leadership, continue to create valuable products and services for consumers, lead and drive the partners of the whole industry chain to create value for the society, achieve mutual achievements with employees, continuously improve the return of employee value, build a comprehensive leader in enterprise value, become a social enterprise trusted by consumers, respected by society and loved by employees all over the world, and let the world share health Kang. “
In recent years, high quality has become a key word, and ESG (environmental, social and corporate governance) performance is becoming more and more important to enterprises. Pan Gang’s speech also proved that Yili has already transitioned from simple development to high-quality development, and the construction of ESG is becoming more and more mature.
On April 24, the spring 2022 summit of ESG China Forum released the “ESG index of Dagong responsibility cloud listed companies”. With excellent performance in ecological environmental protection and social responsibility, Yili ranked first in the industry with 86.9 points.

Meet consumer demand

In the whole consumer industry, providing products that meet the needs of consumers is not only the most basic responsibility of enterprises, but also the foundation of enterprises.
Pan Gang said at the celebration meeting that in the post 100 billion era, Yili will adhere to the consumer-centered principle, provide differentiated health food and life solutions, and continue to meet the diversified needs of consumers of all ages, circles and scenes with high-quality products and services.
(Pan Gang)
This is enough to show that Yili Group attaches importance to consumer demand from top to bottom, and also proves that Yili will be more comprehensive and reasonable in product layout.
At present, China’s consumer groups are constantly differentiating. While the overall consumption is upgrading, consumers’ multi-level, personalized and diversified needs are also emerging. The same is true of dairy consumption.
In terms of products, the liquid milk with the largest market scale in China shows two obvious characteristics: market sinking and acceleration of high-end.
The penetration rate of traditional liquid milk in the first and second tier cities has been very high. In recent years, the sinking market has become a new increment. According to the research data of Kaidu, in 2021, the consumption of liquid milk in Prefecture and county-level markets increased by 17.4% over the same period of last year, and the growth rate of dairy consumption in offline markets accelerated significantly.
While the market is sinking, professional and high-end liquid milk is also more favored by consumers. The data show that in 2021, the consumption of organic, A2 and other high-end liquid milk increased by 18.1% over the same period of last year, and the number of households covered increased by 10.1% over the same period of last year.
Milk powder is also a large market segment of the dairy industry. With the innovation and upgrading of domestic dairy industry, the market competitiveness of domestic infant formula milk powder is also increasing.
In addition to liquid milk and milk powder, domestic cheese and other dairy products have also ushered in a period of rapid development in recent years.
For Yili, in order to meet the needs of consumers, the group must closely follow the changes of consumer needs in product structure and layout.
At present, Yili Group has several major product series, such as liquid milk, milk powder and dairy products, frozen drinks, cheese, packaged drinking water and so on.
The liquid milk business has always been the “basic business” of Yili Group, with a revenue of 84.911 billion yuan in 2021, accounting for about 77% of the company’s total revenue.
In 2021, Yili liquid milk’s revenue increased by 11.5% year-on-year, ranking first in the industry. Such achievements benefit from the satisfaction of Yili Group to consumer demand.
As early as 2006, Yili launched the “national weaving” strategy, which is the first dairy enterprise in China to cover the national market. In 2007, the company began to layout the rural township sinking market earlier than its peers. By the end of 2020, Yili will serve nearly 1096000 Township and village outlets.
Such channel layout not only allows Yili to enjoy the dividend of the rising consumption in the sinking market, but also facilitates the layout of other products in Yili’s sinking market in the future.
In terms of products, Yili adheres to research and development, and new products are iterated continuously. At the same time, the annual sales scale of the company’s superstar single products Yili pure milk, Jindian pure milk and amuxi normal temperature yogurt series products has exceeded 20 billion yuan.
In addition to liquid milk, milk powder and dairy products are also the key areas of Yili. On the one hand, domestic milk powder is rising; On the other hand, the gross profit margin of Yili Group’s milk powder is nearly 11 percentage points higher than that of liquid milk.
Therefore, whether from the perspective of conforming to the development of the industry and meeting the needs of consumers, or from the perspective of pursuing higher profitability, the milk powder business is the focus of Yili Group.
In 2021, Yili’s milk powder and dairy products achieved a revenue of 16.209 billion yuan, a year-on-year increase of 25.8%, which is the fastest growing business segment of the group.
Among them, the annual sales revenue of jinlingguan brand of infant formula milk powder exceeded 10 billion. According to Nielsen zero research data, its market share increased by 1.4% year-on-year, and the growth rate ranked first in the market; The market share of retail sales of adult formula milk powder increased by 2.2% year-on-year. At the end of the reporting period, the market share ranked first in the market.
In order to maintain the first mover advantage, Yili completed the tender offer for Aoyou dairy in March 2022 and officially controlled Aoyou. Aoyou is the leading enterprise in the domestic milk powder Market and has the world’s first brand of sheep milk powder, jiabeiaite.
Cheese is the outlet of the dairy industry. In 2021, Yili cheese business increased by 150% and the market share increased by 6.3%. In order to adapt to the rapid growth momentum of the cheese industry, Yili newly established yijiahao cheese company to realize the centralized allocation of resources through corporate operation.
Behind the burst of vitality of new and old echelon products is the company’s expensive R & D investment. The company has become the dairy enterprise with the most “China patent awards” for 13 consecutive years. In 2021, the company’s R & D investment reached 601 million yuan, a year-on-year increase of 23.39%, much higher than the industry level. Among them, the number of patents under jinlingguan has reached more than 70.
Continuous research and development, keeping up with changes in the consumer market and updating products are not only respect and responsibility for consumers, but also the basic principle that Yili will continue to adhere to in the “post 100 billion era”.

Responsibility of large enterprises

When an enterprise is large enough, its value will not only be reflected in meeting the needs of consumers, but also in stimulating and giving back to the industry, local and even society.
From Pan Gang’s speech, we can see that in addition to meeting the needs of consumers, the social value of Yili in the post 100 billion era also includes the implementation of green and sustainable development; Promote the common development of the industrial chain, so as to help partners achieve common prosperity; Be responsible for employees and improve their value return, happiness, etc.
Energy conservation and emission reduction are related to the longer-term “health” of mankind. Yili has adhered to this road for many years.
(Yili production line)
Since 2010, Yili has the capability of independent carbon inventory and has carried out carbon inventory for 12 consecutive years; In 2012, emission reduction targets were set and carbon peaked that year, and carbon dioxide emissions changed from increase to decrease; By 2021, Yili will initially form a business model of green and low-carbon circular development.
Through source control, process control and terminal tracking, the company has formed a green industrial chain development path of the whole life cycle.
Yili said that it would achieve carbon neutrality in the whole industry chain by 2050, and become the first enterprise in China’s food industry to release the “double carbon goal” and “zero carbon future plan roadmap”. In addition, Yili also has the first “zero carbon factory” in China’s food industry and the first “zero carbon milk” in China.
Yili’s development of self height and quality drives the coordinated development of the whole industrial chain, which is also reflected in the substantive support for partners.
For dairy enterprises, milk source is particularly important. Many enterprises choose to build their own milk source through equity participation, sole proprietorship and other forms, but they have not fundamentally solved the problem of effective supply of domestic raw milk.
One of the problems is that the interest connection mechanism between dairy farmers and dairy enterprises in China is not strong, there is no form of collaborative symbiosis, and there are still deficiencies in the upstream and downstream interest distribution, industrial organization form, dairy farmers’ interest protection and so on.
In view of the difficulties existing in the upstream industry of dairy industry, such as weak technology, difficult financing, slow transformation and high risk, Yili and herdsmen have carried out “interest connection” in seven aspects: technology, finance, industry, risk, high-quality and high-yield forage, cow quality upgrading and comprehensive close service.
(the staff feed cows and oat grass imported from Australia)
From 2014 to 2021, Yili served 8590 industrial chain partners and provided financing support of about 93 billion yuan.
Yili’s support for the upstream dairy industry has also driven the common prosperity of the industrial chain and the revitalization of the rural economy. According to incomplete statistics, Yili has driven 5 million farmers and herdsmen to become rich.
In addition to direct assistance, Yili has also set up “pasture special class” and “cattle second generation” training camp for training talents; In 2021, Yili also compiled the practical manual of pasture management, which records the innovative practice, management mode and technology of the pasture over the years. This manual is released to the whole society to promote the development of dairy industry chain.
For employees, Yili focuses on building a sustainable first-class career development platform, continuously improving the employee care system and achieving mutual success with employees.
Yili’s sense of responsibility and social responsibility is also reflected in that since the epidemic, Yili has always rushed to the front line for assistance at the first time, and has donated 380 million yuan since 2020.
Entering the 100 billion era also means that Yili has the ability to undertake greater social responsibility. As Pan Gang said, “100 billion is just the starting point. Yili still has higher goals to achieve and create greater value for the society”.
(unless the source is marked separately, the above pictures are from visual China)
作者:齐敏倩 华宇;来源:市界(ID:ishijie2018),转载已获得授权。



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