Foreign milk powder siege domestic milk powder to regain confidence

For China's indigenous milk powder industry, "should not be too pessimistic. Now on the Chinese market, domestic milk powder and foreign milk powder are still far from the winner." Chen Dai, a domestic dairy product expert, told reporters.

The competition between foreign brands of milk powder and Chinese milk powder has gradually shown a state of “competitiveness”. However, judging from the current situation, foreign milk powder is eroding China’s milk powder market step by step, and domestic milk powder has stepped back, and has even returned. .

The relevant data in the first half of this year showed that China’s imported milk powder has risen in volume and price, and its share of the Chinese market has exceeded more than half. Some experts even believe that this year will continue to rise and it is likely to account for about 70%. . A survey conducted by a survey company on the retail situation of China's milk powder industry shows that currently there are five top-ranked milk powder brands in mainland China, five of which are foreign brands, and both are high-end products in first and second-tier cities.

The people's livelihood industry has become the main product of the milk powder industry as a foreign dairy product in the risk industry. It concerns the physical health of infants and young children. Therefore, in the eyes of the people, the status is extraordinary. However, due to a series of quality incidents and scandals involving domestic milk powder and dairy industry, the milk powder industry in China was almost devastated in 2008. Since then, it has been in trouble for two consecutive years. This has caused China's milk powder industry to suffer from a lack of confidence and consumer confidence. Market confidence has been difficult to improve.

“After the Sanlu milk powder incident, the milk powder industry in our country has changed from a purely livelihood industry to a risk industry.” Wang Huaibao, a senior advisor to the China Dairy Association and former CEO of Sanyuan Group, said in an interview. “Because there have been some incidents that have occurred and the accidents have occurred in the family's 'baby crickets', the relevant government departments and dairy companies are more afraid of this matter and are worried about recurrences. Therefore, they try to avoid this problem.”

In fact, before 2008, China's dairy market created a miracle, and production and market share gradually increased. “At that time, domestic dairy companies have begun to focus their efforts and compete with foreign brands for high-end market. They are looking to succeed, and they do not want the 'melamine' incident to make the Chinese dairy industry fall into a trough.” Talking about this matter, Chen I feel very sorry.

"Melamine", "hormone door", "leather milk", "quality door" and other incidents have caused domestic dairy products to fall into a crisis of trust, and "foreign milk powder" took the opportunity to seize a large market share. According to customs statistics, China imported 6,900 tons of dairy products from New Zealand in 2008 and it surged to 350,000 tons in 2010.

Domestic dairy expert Wang Dingmian said that before 2008, China’s milk powder brand accounted for more than 70% of the domestic market, and foreign milk powder brands accounted for only 30%. However, the “melamine” incident has become a watershed for the development of the milk powder industry in China. Since then, the market share of high-end domestically produced milk powder and imported milk powder has “reversed itself”. The proportion of foreign milk powder brands in China's infant milk powder market has increased to 60% to 65%, especially in first and second-tier cities. Foreign milk powder has occupied most of the market.

The data show that in 2008 China imported 140,000 tons of milk powder, which surged to 310,000 tons in 2009, an increase of 121% year-on-year; in 2010 it increased to 480,000 tons, an increase of 55%. This year will continue to maintain a strong growth trend. In the first half of this year, the import volume of milk powder has exceeded the total amount in 2009.

Wang Dingmian believes that "in the next three to five years, the domestic infant milk powder is not called the ability of foreign milk powder brand." Some industry sources believe that the situation of local milk powder "Foreign Brand" is difficult to change in a short time, and the loss of trust is easy. Rebuilding difficulties, consumer confidence in domestic milk powder recovery will take time, the domestic dairy products companies should start from regaining consumer confidence.

The foreign milk powder machine took the opportunity to attack the city in the domestic milk powder to get rid of the crisis of confidence, the foreign milk powder has also stepped up to the Chinese market a full range of cities. Prior to the “melamine” incident, China’s dairy industry maintained a high-speed development of more than 20% for 10 consecutive years. The huge market potential has caused many foreign dairy brands to covet.

Before the “melamine” incident, foreign brands mainly occupied the high-end market in China's first and second-tier cities. But in the past two years, foreign milk powder has accelerated the pace of entering China's second and third-tier cities. They even started to capture the market below the prefecture level. On these main battlefields where domestic milk powder was originally made, the sales of foreign brands such as Dumex and Nestle had explosive growth.

Marketing expert Li Guangdou said in an interview with reporters: “At present, foreign milk powder has achieved absolute right to speak in China’s market. Several quality events have reduced the credibility of China’s milk powder to the lowest point.” In Li Guangdou’s view, almost All foreign brands of milk powder are a unified marketing model. “Using high-end products to occupy the high-end market in the first- and second-tier cities first, then the brand sinks and gradually captures the markets in the second and third-tier cities, further squeezing the domestic brands' living space.”

For example, Mead Johnson, the representative of foreign brands, has more than 800 distributors in the country. The manufacturer used to have only two distributors in Liaoning Province, and now each prefecture-level city has its sales network sinking at an alarming rate.

An industry source stated that foreign capital has already realized the importance of the county and township markets. Although the preemption of the rural market is only the beginning, foreign investment is undoubtedly greater if it targets middle and low-end products in the county and township markets. In areas around Hebei, Henan, and Jiangsu and Zhejiang, the acceptance of foreign milk powder in rural areas even exceeds domestically produced milk powder.

Li Guangdou believes that compared with first-tier cities, consumers in the second and third tier cities and even smaller cities are more loyal to these foreign brands.

In fact, after the “melamine” incident, foreign milk powder increased its investment in all aspects of China’s production capacity, market networks, distribution, warehousing and advertising. With the continuous growth of China's dairy market, the status of China's milk powder market will gradually increase, and it has become an important target for the future development of major brands. Mead Johnson spent 140 million yuan to establish the first scientific research center in China focusing on the nutrition of infants and young children in Guangzhou. Abbott invested 230 million US dollars in Zhejiang Jiaxing to establish a modern nutrition manufacturing plant. Even Fonterra who once withdrew from China due to the Sanlu incident returned to the Chinese market at the end of last year.

The importance of the Chinese milk powder market and the reputational crisis of domestically produced milk powder have further promoted the establishment of foreign milk powder companies in the infant milk powder market in China.

Far from reaching the point of victory, when faced with the overwhelming trend of foreign milk powder, China’s milk powder companies apparently did not go to bed, and some companies survived the crisis. After more than two years of recovery, good results have been achieved. In particular, some large companies have gradually emerged from the crisis.

At the end of October this year, Yili Company announced its third-quarter results, achieving a net profit of 602 million yuan, an increase of 192.32% year-on-year; in the first three quarters, the company achieved a net profit of 1.418 billion yuan, an increase of 157.5%; and an annual revenue of 29.021 billion yuan, a year-on-year increase. Growth of 24.1%, earnings per share of 0.89 yuan.

In an interview with the media, Zhang Jianqiu, chief executive officer of Yili, said that the reasons for the significant growth in the first three quarters were mainly due to the continued construction of dairy farms, the further release of production capacity in new factories and the steady growth of high-end products. Among them, the rapid growth of infant milk powder represented by Golden Collar has led to significant improvement in performance. Although foreign milk powder brands have increased their efforts in the Chinese market, Yili milk powder still achieved a revenue of nearly RMB 4.4 billion, and in particular, the growth rate of Jinling Crown infant formula milk powder reached 94%.

Li Jihua, the public relations department of Yili Company, said in an interview with reporters that Golden Delicious is a high-end milk powder specially designed for Chinese babies by Yili. After researching, it shows that “the physique suitable for Chinese babies is the closest to Asian mothers' breast milk ingredients. It won't get angry."

Li Jihua told reporters that many of the current quality standards of Yili are far more stringent than national standards.

Since the “melamine” incident in 2008, Yili Company has paid more attention to the establishment of a milk source base. This year the Yilin Ningxia Wuzhong Plant and the Zhejiang Jinhua Plant have been put into operation one after another, and Yili’s production capacity has further expanded. The production capacity of the Wuzhong plant in Ningxia is 800 tons of liquid milk products per day, and the annual output is expected to be 240,000 tons. The first phase of the Zhejiang Jinhua cold drink factory has been put into production, producing 250 tons of cold drink products per day, and producing an annual output of 5 series of dozens of varieties. Ice cream and ice cream. "Compared with foreign brands, we still have a great advantage in milk sources, so we are very confident about domestic milk powder." Li Jihua said.

How many companies in Erie represent the status of some of China's dairy companies, and they are gathering strength to prepare for regaining “lost ground”.

In Chen Yun’s opinion, although domestic milk powder is still difficult to compete with foreign milk powder, the two parties are still far from the time of “determination of victory”. Chen Hao believes that while domestic brands of milk powder are expanding in China, domestic brands are also expanding. Both sides are expanding in China's market with unlimited potential. “Many companies have recovered to a better situation than before 2008. ".

In addition, the process of urbanization in China is accelerating, and more consumer groups will join in. Therefore, this market is infinite, and the shuffling of the city share has only just begun. “The competition between Chinese brands and them (foreign milk powder) It is still far from winning."

From the data point of view, some experts believe that even if the foreign milk powder is unstoppable, it is only a useful supplement to the Chinese market. In the first half of this year, China imported a total of 563,000 tons of dairy products, which was calculated on the basis of the amount of milk consumed by each person in the country. The total amount of milk in the first half of the year was only enough for 1.4 billion people to drink for 2 days. Moreover, the quality of foreign milk powder is not unassailable in China. Chen Hao believes that, first of all, foreign milk powder is also difficult to guarantee safety and quality problems, such as "mad cow disease" will affect the development of its dairy industry. Second, with the refinement of the division of labor of the foreign dairy industry, new pathogens have been detected in milk powder. For example, only between March and July last year, imported milk powder that had suffered a return from China exceeded 450 tons. In 2010, Ausnutria [1.59 0.63%] imported milk powder was returned by the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) because zinc exceeded the standard and phosphorus did not meet the requirements of the national standard. In the list of unqualified imported foods announced by the General Administration of Quality Supervision, Inspection and Quarantine in June 2010, nearly 150 tons of whole milk powder from Singapore was detected for Enterobacter sakazakii.

In comparison, domestically-produced milk powder companies have their own unique advantages. They are either explicitly or implicitly inclined to support the understanding of Chinese consumers and the smooth marketing channels. “Chinese dairy products have created a miracle in the past 20 years. The industry can also create another miracle." Chen Hao said.

“From the point of view of the national environment, at present, there are no industries in China where the inspection of infant formula milk powder is strict.” Chen Xi said that this is also an important external aspect of China’s milk industry and even the dairy industry’s maturation and benign development. condition.

Song Kungang, chairman of the China Dairy Industry Association, said in an interview with the media earlier: “Now is the best time for the quality of domestic dairy products. Some companies’ own product standards are higher than the minimum standards set by the country.” Secretary of China Dairy Products Industry Association Liu Meiju also pointed out that China's dairy processing standards are the most stringent in the world. Liu Meiju said that the current industry environment of the dairy industry has greatly improved compared to 2008. Especially at the beginning of this year, the Ministry of Industry and Information Technology and the General Administration of Quality Supervision, Inspection and Quarantine carried out a re-audit on the production license of the dairy products industry and eliminated nearly 50% of the enterprises.

However, Wang Dingmian believes that although the "melamine" incident has passed three years, from the data point of view, several large domestic companies have recovered well, but there are still a large number of small milk powder companies that have been ignored by the public are still in the recovery period. The successive series of crises caused many domestic consumers to deter domestic milk powder brands.

From an objective point of view, there are still many problems in China's dairy industry and milk powder industry. Gao Hongbin, deputy director of the Ministry of Agriculture and president of the China Dairy Association, pointed out at the National Dairy Conference in June this year that there are five major problems in China's current dairy industry that are closely related to the milk industry: First, in terms of dairy production, a large number of dairy cows are free-range. The production facilities are poor, and the health and epidemic prevention conditions are not perfect, which restricts the further improvement of the quality and safety level of raw milk. Second, in dairy products processing, some companies focus on the development of light milk source bases in the market, which affects the normal order of raw milk purchase. Third, in terms of supervision, the dairy industry has many production links and long chains, which are mostly distributed in rural areas and are difficult to monitor. Fourth, in the public opinion, after the issue is exposed, it is easy to cause industry panic; Fifth, in terms of psychological expectations, the majority of consumption There are strong expectations for improving the quality and safety of dairy products, but there is still a gap between the current dairy production status and these requirements and expectations.

“Consumers have not yet come out of this shadow and have doubts about the quality of domestically produced milk powder, but for some low-income people, they have to eat again. How to boost consumer confidence is critical,” said Li.