China Food

The “last milk war” of new hope

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low temperature milk Jianghu scuffle.
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In the face of the strong fortress built by Yili and mengniu dairy giants, do the regional dairy enterprises that survive in the cracks still have the opportunity to break through?
In the past two years, the performance of Yili and Mengniu has continued to grow on the basis of high base, and the “Matthew effect” of the industry has become prominent. On the other hand, regional dairy industries such as Junyao health, Yiming food, Liziyuan and Sunshine Dairy have also been listed for further development.
The domestic dairy market is still evolving gradually. The rapid growth of low-temperature fresh milk and low-temperature yogurt, and the rise of convenience stores, community group buying and other channels constitute a hotbed for the growth of regional dairy enterprises.
The new dairy industry controlled by Liu Yonghao’s family is one of the most promising potential stocks in the domestic regional dairy enterprises by the capital market. In August 2020, its market value once exceeded 20 billion yuan, surpassing Guangming dairy and becoming the third largest market value of China’s dairy industry.
On the one hand, the overall scale of the new dairy industry ranks in the forefront among regional dairy enterprises; On the other hand, relying on such a big backer as new hope group also determines that it will not settle in one corner. Over the past years, it has been accelerating its growth through mergers and acquisitions, so the capital market has more expectations for it.
However, it is not so simple to become the third national dairy enterprise other than Yili and Mengniu. Although we have chosen a subdivision track with good prospects and supported by strong parent company capital, under the condition of relatively limited industry increment, how to seize food in the mouth of giants and how to deal with the integration and management after M & A are the problems that the new dairy industry has to face and solve.

Investment and dividend

Low temperature milk is generally regarded as the new growth engine of the industry.

According to Euromonitor data, by the end of 2020, Yili’s normal temperature milk market accounted for 38.6% and Mengniu’s market accounted for 28%, accounting for nearly 67% of the normal temperature milk market. The market of normal temperature milk has developed for many years and is dominant in the field of dairy products.
The domestic low-temperature milk, pasteurized milk, is much smaller, which is contrary to the situation in the overseas consumer market – so low-temperature milk is generally regarded as a new growth engine in the industry.
Low temperature milk is a kind of “low temperature sterilized milk”. From leaving the production line to transportation, sales, storage and other links, it is required to be refrigerated in an environment of about 4 ℃. Its shelf life is generally only one week, so it can better retain the taste and nutritional value of milk.
With the improvement of China’s national consumption level, the pursuit of fresher, healthier and better taste of food and beverages, and the continuous improvement of cold chain transportation conditions, short-term low-temperature milk is more and more popular with consumers. Euromonitor’s data show that from 2015 to 2019, the compound annual growth rate of the scale of low-temperature milk market reached 9%, and the consumption trend has basically taken shape.
Due to the short shelf life of low-temperature milk, it can only be built according to the milk source, and the coverage radius often does not exceed 300 kilometers around. Therefore, in this subdivision track, it is difficult for giants to expand rapidly in a large area like normal temperature milk, and regional dairy industry can form regional barriers and occupy advantages.
According to Euromonitor data, in 2020, the market share of the top three bright dairy, Sanyuan shares and new dairy in the domestic low-temperature fresh milk industry was 16.0%, 13.9% and 9.7%, reaching a total of 39.6%, and the head pattern loomed.
Compared with the two male situation in the field of normal temperature milk, low-temperature milk is a subdivision track that is not monopolized by giants and has high growth. Therefore, the competition between dairy enterprises for low-temperature milk is also compared to “the last milk war”.
New dairy is one of the most powerful competitors in this “war”. As a regional dairy enterprise, its main market is located in the southwest and has layout in East China, North China and other regions. The data show that its low-temperature products account for about 60% and its normal temperature products are less than 40%.
But waiting for the outbreak of the low-temperature fresh milk track, the new dairy industry has been invested for too long.
It is reported that in 2010, the new dairy industry has put forward the “fresh strategy” to promote the low-temperature business. Since then, it has accelerated the expansion of SKU in the category of low-temperature fresh milk and yogurt. But at that time, low-temperature milk had not yet entered the fast lane, and the growth of the new dairy industry was not tepid. Its revenue increased from 1.49 billion yuan in 2009 to 6.749 billion yuan in 2020, with a compound annual growth rate of only 14.72%.
However, at the valuation level, the new dairy industry has enjoyed a lot of dividends. Compared with normal temperature milk, low temperature milk itself has advantages in growth, and there are more possibilities for the uncertain market pattern. Therefore, the capital market will also give higher expectations.

Mergers and acquisitions raise the banner

“Eating too fast” can easily lead to “indigestion”, which has always been an iron rule in the business world.

Although the share of new dairy in the low-temperature milk market is quite different from that of Guangming and Sanyuan, its market value once exceeded 20 billion yuan in August 2020, which is about the sum of Guangming and Sanyuan market values at that time.
On the one hand, as mentioned above, the subdivision track of new dairy industry is more growth; On the other hand, it is due to the M & a strategy adopted by new dairy, which is equivalent to putting wings on its growth and making investors have more reverie space for its growth.
Looking back on history, the development and growth process of the new dairy industry is different from those regional dairy enterprises in a corner from the beginning. By acquiring local dairy enterprises, it can enter the dairy industry. Public information shows that new hope acquired nearly 10 local dairy enterprises from 2001 to 2003; Since then, in 2015-2017 and 2019-2021, new dairy has successively acquired a number of regional dairy enterprises and pastures.
It will be a time-consuming and labor-consuming marathon for enterprises and capital to build new pastures, factories and brands everywhere. Therefore, M & A is a faster and effective strategy. Equally important, dairy enterprises located in the suburbs usually have a large land area. It is equivalent to the acquisition of a security asset.
M & A tests the ability to use capital. In terms of capital operation, the new hope group and Liu Yonghao behind the new dairy industry are undoubtedly old and familiar. At present, new hope group has five A-share listed companies, including new hope, new dairy, Xingyuan environment, Pegasus international and Huarong chemical, and also controls new hope services listed on the Hong Kong stock exchange.
Compared with the bright and ternary background of state-owned assets, the new dairy industry will be more flexible in capital operation; Compared with Tianrun dairy, Yantang dairy, maixier and other dairy enterprises, with the scale and volume of the new dairy, it can leverage a larger amount of capital.
Adding the development goal of “doubling in three years and striving to enter the leading ranks of the global dairy industry in five years” proposed by the new dairy industry is undoubtedly an imaginative story for the capital market. The capital market was once willing to pay for it, but as the M & a landing became a specific performance figure, the confidence of investors was gradually eroded.
According to the public financial report, although Huanmei dairy (Xiajin milk) was consolidated in July 2020 and Chongqing Hanhong was consolidated in March 21, the revenue and net profit of new dairy were flat in 2020 and 2021. After excluding the impact of consolidation, Shenwan Hongyuan pointed out that the stock business of new dairy achieved a revenue of about 7 billion yuan in 2021, with a year-on-year increase of only about 19%.
Perhaps affected by this, the market value of the new dairy industry has fallen from the peak of more than 20 billion yuan to less than 10 billion yuan at present, and the glory of the third largest market value of China’s dairy industry has given way to Guangming dairy again.
The reason is that “eating too fast” can easily lead to “indigestion”. It has always been an iron rule in the business world, and management coordination can not keep up with it, which is also prone to problems. According to the 2019 annual report of the new dairy industry, it now has a product matrix of 9 categories of products, 80 major brands and about 300 product specifications. This complexity is not only unmatched by Yili and Mengniu, but also far inferior to Guangming and Sanyuan, both leaders of low-temperature dairy industry.

Low temperature milk scuffle

This subdivision track, which is not monopolized by giants and has high growth, has been crowded with players from all walks of life.

China’s golden milk source belt is located in the north, mainly covering the northeast, Hebei, Inner Mongolia, Xinjiang and other provinces, concentrating nearly 70% of the country’s dairy cows and 60% of raw milk, while the milk consumption market is more biased towards the south.
Mengniu and Yili dairy giants both started in Inner Mongolia, and most of their pastures are nearby. Therefore, in the past, they have always taken normal temperature milk as the main product. Even if they make great efforts to develop low-temperature milk, it is difficult to achieve strong competitiveness covering the whole country in a short time.
But this does not mean that the competition of low-temperature milk track is not fierce. This subdivision track, which is not monopolized by giants and has high growth, has been crowded with players from all walks of life.
In September last year, keniu dairy products Co., Ltd., a joint venture between Mengniu Dairy and Coca Cola in China, launched the first batch of ultrafiltration milk product xianfeile and officially laid out the low-temperature milk market. In July, CASS and Jane Eyre, brands focusing on high-end low-temperature yogurt, announced their entry into the low-temperature fresh milk market and launched new products one after another.
With the addition of regional dairy enterprises such as Yantang dairy, Huang’s group and Yiming food, the low-temperature milk track has become more and more crowded. Even if the annual growth rate of its market scale exceeds 10%, players still need to do their best to achieve a growth rate higher than the industry average.
In addition, with the changes of residents’ consumption level and consumption habits, new changes are taking place in the low-temperature milk track, and the challenges faced by the new dairy industry are becoming more and more severe.
The high cold chain transportation cost of low-temperature milk was once one of the key barriers for regional dairy enterprises. Due to the short shelf life of low-temperature milk and high cargo damage (it is difficult to accurately predict the initial sales volume), the cold chain transportation cost is difficult to be fully amortized, resulting in high initial development cost of the channel.
However, with the vigorous development of cold chain logistics, the transportation radius of low-temperature milk is extended, the transportation cost is reduced, and the regional attribute of low-temperature milk is weakened accordingly. The gradual application of the new pasteurization technology (the shelf life can be extended to 15 days) makes it easier for new players to enter the regional market, and the competition may become more intense.
Generally speaking, the advantages of head enterprises lie in high popularity and strong brand appeal, and centralized procurement brings scale advantages; The advantage of regional brands lies in the emotional connection established with users for many years, which can better occupy the mind.
To some extent, the new dairy industry has the advantages of both giant enterprises and regional dairy enterprises. For example, its 14 main brands have a certain emotional connection with consumers in different regions, so it can ensure the stability of the revenue end without putting too much advertising; If we can make full use of capital to accelerate development, including mergers and acquisitions of small brands, investment in pastures, reducing costs and so on.
However, in general, whether focusing on high growth segments or M & a development model, new dairy is not unique – it is not difficult for competitors to imitate. To win the “last milk war”, the new dairy industry still lacks a real trump card.
Original title: the “last milk war” of new hope | tide
作者:荆玉;来源:巨潮WAVE(ID:WAVE-BIZ),转载已获得授权。
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