for the dairy industry, Xinjiang market can be described as a “Besieged City”, and enterprises in Xinjiang want to go out, which is very hard; Enterprises outside Xinjiang lack motivation to enter.
In recent years, Xinjiang milk brand, once a niche brand, has gradually come into the sight of more consumers.
Evaluation blogger Mu Mu told the market that in the little red book, evaluating niche milk has become a trend. Among them, Xinjiang milk tastes really good, “drinking Xinjiang milk, you can taste the first, middle, and base note”.
The great enthusiasm of consumers also promotes the sales volume of dairy enterprises. In 2021, the sales volume of Tianrun dairy, the largest listed dairy company in Xinjiang, increased by 22.7% year-on-year, while Yili, the industry leader, increased by only 6.8%.
However, the sales volume itself has a huge gap. In 2021, Tianrun sold more than 240000 tons of dairy products, while Yili sold 9.87 million tons.
Xinjiang milk is “hot” to the whole country, but it is not easy to really want to go out of Xinjiang and to the whole country.
Xinjiang milk enterprises and golden milk source belt
Whoever gets the milk source gets the world.
In the temperate grassland between the South and North latitudes of about 40 ° ~50 °, due to the warm climate, these two regions grow succulent grass, which is generally considered to be a high-quality cow breeding belt.
The best pastures and dairy producing areas in the world are mostly concentrated in these two latitudes of the southern and Northern Hemisphere. This is what people often call the “golden milk source belt”.
The golden milk source belt in the northern hemisphere includes Ireland, the Netherlands, Normandy, northern Germany, Mongolia, Hokkaido, Japan and other regions, as well as Inner Mongolia, Xinjiang and Northeast China.
From 1987 to 2000, private dairy farming was first allowed and supported; Thirdly, the dairy industry has carried out market-oriented reform, liberalizing the purchase and sale prices of milk; In addition, the reform of residents’ diet, “often eating milk” has entered the dietary guidelines for Chinese residents… Which has promoted the development of the dairy industry.
At the same time, ultra-high temperature sterilization processing technology and sterile Tetra Pak packaging have entered China, expanding the sales radius of dairy enterprises.
Xinjiang dairy enterprises Tianrun dairy, western animal husbandry, maixier, Yili and Mengniu in Inner Mongolia were probably established during this period.
After that, around the normal temperature milk (also known as ultra-high temperature sterilized milk, UHT milk), all kinds of milk enterprises fought hard in the hinterland market, after 10 years of industry integration and fierce competition.
At a time when Yili, Mengniu and other enterprises were booming in the country, Xinjiang dairy enterprises did not make much noise.
In 2013, Tianrun dairy was successfully backdoor listed. At this time, it had three brands: Tianrun, Gary and Jiali. Its products include normal temperature milk, low temperature fresh milk (pasteurized fresh milk), yogurt, milk drinks (milk beer, etc.), which are mainly sold in the territory.
In the same year, the revenue of Tianrun’s liquid milk (including sterilized milk and prepared milk) and dairy products was 69.6166 million yuan; Yili’s total revenue of liquid milk and dairy products reached 46.871 billion yuan; Mengniu liquid milk and dairy products revenue totaled 40.334 billion yuan.
According to the statistics of the National Bureau of statistics, in 2013, the main business income of Enterprises above the national dairy industry scale (annual revenue of 20million yuan and above) was 283.2 billion yuan. According to this calculation, Mengniu and Yili together account for 30.79%; Tianrun is only 0.02%.
The absence of Xinjiang dairy enterprises in the national market can be called “Chengye geographical conditions, difficult geographical conditions”.
With Tianshan Mountains as the boundary, Xinjiang is divided into northern Xinjiang and southern Xinjiang.
The warm and humid air flow from the Atlantic and Mediterranean is blocked in the north of Tianshan Mountains, as if adding a “buff” to northern Xinjiang, which is more conducive to forage planting than other milk areas at the same latitude.
There are four listed dairy enterprises in Xinjiang. Tianrun dairy, western animal husbandry and maixier are all headquartered in Northern Xinjiang, and only the headquarters of Xinnong development is located in southern Xinjiang – Xinnong development was initially mainly engaged in agricultural fields such as cotton production, and did not get involved in the milk industry.
On the other hand, Northern Xinjiang is far away from the market outside Xinjiang, and the road is blocked by Tianshan Mountain.
Zhipeiyuan, the chief agricultural economic expert of Tianjin Bohai commodity exchange, told the city boundary: “83.6% of the dairy products in Xinjiang are produced in Northern Xinjiang, while Xinjiang covers an area of more than 1.66 million square kilometers, and its vast territory leads to the dispersion of milk sources. In the early days, the road access rate in Xinjiang was low, and the collection of raw milk was a great difficulty, even the transportation within Xinjiang was a difficulty.”
Low temperature yogurt out of Xinjiang
Xinjiang dairy enterprises are trapped in Xinjiang, missed the golden period of national development, and the gap with “peers” is also growing.
In 2014, the second year of listing, Tianrun dairy finally began to seek change, and wrote “focusing on expanding markets outside Xinjiang” into the annual report – Tianrun is also the first dairy enterprise in Xinjiang to break through with liquid milk and dairy products.
In the process of breaking through, Tianrun dairy chose to take the road of differentiation in terms of products, marketing and channel construction to avoid a positive competition with the double giants Yili and Mengniu.
On the product side, the two giants are particularly strong in the normal temperature milk market. According to the Research Report of Guosen Securities, the total market share reached about 54% in 2014 and is still growing. Relatively speaking, the proportion of consumers of low-temperature yogurt at that time was lower than that of normal temperature milk and low-temperature white milk, and the market was relatively scattered.
Tianrun dairy chose low-temperature yogurt as the main product to break through, and went out of Xinjiang through diversified and differentiated marketing.
In 2015, Tianrun launched new low-temperature yogurt products such as “rose red”, “chocolate broken”, “ice cream melted” and made innovations in taste. Up to now, Tianrun is still updating the yogurt taste every year.
At this stage, due to the continuous promotion and completion of the goal of “village access” in Xinjiang, the transportation in Xinjiang has been greatly improved, and the rapid development of the cold chain transportation logistics industry has objectively helped Xinjiang dairy enterprises to go out of Xinjiang.
According to Shanghai Securities News, Tianrun dairy yogurt products will be available to consumers in Beijing, Shanghai and Guangzhou within twoorthree days after they are offline.
In addition, in order to form a more distinctive differentiated image with competitors, Tianrun took the lead in adopting the “eklin” packaging which is more portable, lightweight and easy to handle.
In terms of marketing, Tianrun initially did not choose traditional TV advertising, event sponsorship and other methods, but mainly used local promotion, code scanning and free drinks, Internet new media and other means of publicity. After establishing consumers’ first impression of the product and completing the construction of the membership system, we will carry out marketing and stimulate repurchase through wechat groups.
On the channel side, Tianrun has taken the upward approach from the sinking channel: in the early stage, it avoided the mainstream channels such as large and medium-sized supermarkets dominated by Yili and Mengniu, and took the lead in entering the peripheral channels such as community husband and wife convenience stores, fruit stores, snack stores, etc; After gaining a firm foothold, we will march into mainstream channels such as supermarkets and specialty stores.
This set of “low-temperature yogurt + low-cost marketing + sinking channel” way out of Xinjiang soon achieved results.
In 2016, the revenue of Tianrun dairy outside Xinjiang market was 168million yuan, accounting for 19.27% of the total revenue; In 2017, the revenue of markets outside Xinjiang increased to 445million yuan, accounting for 36.13%.
Xinjiang is also growing rapidly. According to the Research Report of Guojin securities, the revenue of Tianrun dairy in 2016 was 705million yuan, surpassing xiyuchun, and has become the leader of dairy in the territory since then.
Since 2015, the sales growth rate of Tianrun dairy has been higher than that of Yili. In 2018, the sales volume of Tianrun Aklin low-temperature yogurt exceeded 1billion packages, ranking first in the country’s low-temperature yogurt.
In 2021, Tianrun dairy sold 243300 tons of liquid milk and dairy products in total, with a year-on-year increase of 22.7% – although it can not be compared with the 9.8657 million tons of Yili, the national dairy leader, the growth rate is much brighter than Yili’s 6.83%.
“Siege” of dairy enterprises
In an interview in 2018, Liu rang, chairman of Tianrun dairy, said, “going out of Xinjiang is the inevitable choice for the company to develop to a certain stage, and the market outside Xinjiang is the main source of profit for the company in the future.”
However, the fact is that although Tianrun has occupied a place in the national market with low-temperature yogurt, it is still far from the goal of “markets outside Xinjiang are the main source of profits”.
Since 2017, Tianrun dairy’s revenue outside Xinjiang has accounted for more than 30%, which was 36.13% in that year. Since then, the proportion of Tianrun’s revenue outside Xinjiang has been hovering in the range of 30 ~ 40%, which was 38.74% in 2021.
In the same period, as the main product exported from Xinjiang, low-temperature yogurt was not the main source of revenue. In 2021, the revenue of Tianrun low-temperature dairy products was 937 million yuan, accounting for about 44.58%, of which some came from low-temperature fresh milk.
In the market outside Xinjiang, with the development of low-temperature yogurt category, Tianrun has to face the strong pressure of giants. Yili, Mengniu, new hope and other enterprises have even launched low-temperature yogurt products packaged by aclin to compete directly with Tianrun.
According to the Western securities research report, by 2019, Yili and Mengniu will be the top two low-temperature yogurt markets, with a total market share of 54%.
In terms of channel competition, Tianrun’s previously envisaged model of “marching from sinking channels to mainstream channels” also encountered resistance in the implementation process.
The municipal community visited several large and medium-sized supermarkets in Chaoyang District of Beijing, and the products of Tianrun dairy did not appear on the shelves.
Song Liang, a dairy analyst, analyzed the market: “the entry fees and circulation costs of traditional supermarkets are relatively high. At the same time, due to the characteristics of low-temperature dairy products, its dynamic marketing mechanism, inventory audit and recall mechanism have put forward higher requirements for the terminal management ability of dairy enterprises. Xinjiang dairy enterprises will face great challenges, not to mention Yili and Mengniu have a great say on the channel.”
In addition to the competition with national giants, Tianrun and dairy enterprises in Xinjiang should also continue to compete.
According to the analysis of Minsheng Securities Research Report, Xinjiang dairy products is a localized market. Tianrun dairy industry occupies a leading position in Xinjiang, and the rest, such as xiyuchun, western animal husbandry, Xinnong, maixier, Ruiyuan, Yiyuan and other brands, have formed a competitive pattern of separatist development.
From the beginning of the development of dairy industry in Xinjiang, many prefectures and counties in the autonomous region have formed their own dairy brands. In 2021, there were 60 dairy production enterprises registered and filed by the Xinjiang market supervision department, including 15 above the designated size (with an annual main business income of more than 20million yuan), and the brands are “small and many”.
This means that if the domestic market wants to grow further, it needs to compete with its brothers in the same province; If you want to further expand the market outside Xinjiang, all brands need to have more unique labels.
According to the data of the National Bureau of statistics, from the perspective of the overall dairy market, Yili and Mengniu together accounted for 43% of the market share in 2021, while Xinjiang dairy enterprises were among the “others”.
Minsheng securities research report mentioned that due to the vast territory, sparse population, insufficient market awareness and high transportation costs, dairy enterprises in Xinjiang have established long-term brand awareness, and dairy enterprises outside Xinjiang have insufficient motivation to enter Xinjiang.
For the dairy industry, the Xinjiang market can be described as a “Besieged City”, and enterprises in Xinjiang are struggling to nationalize; Enterprises outside Xinjiang lack motivation to enter.
The Xinjiang dairy revitalization action plan (2019-2025) issued in 2019 proposed to accelerate the cultivation of “Xinjiang brand” dairy products, take markets outside Xinjiang as the main growth point of consumption, and encourage enterprises to actively expand the market.
In 2021, the dairy production enterprises registered in Xinjiang achieved a sales revenue of 8.156 billion yuan, an increase of 13.58% year-on-year; The sales volume of dairy products outside Xinjiang was 224400 tons, with a year-on-year increase of 32%.
Xinjiang dairy enterprises are trying to make more people drink Xinjiang milk.
(except for the source marked separately, the above pictures are from visual China)
Author: Dong Wenshu; Source: city boundary (id:sparklive), reprint has been authorized. Reprint authorization and media business cooperation: Amy (wechat: 13701559246);
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