Research on Current Situation and Development Trend of Dairy Industry in China (III)
Fourth, the problem facing the dairy industry should be to pick faults in China's dairy industry. Maybe anyone can say two things. Because in the past few years, there have been too many incidents in the Chinese dairy industry, giving people a deep impression. However, here I only talk about four prominent issues:
1. Confidence in Consumers The 2008 melamine incident was undoubtedly a huge blow to Chinese consumers' information. Moreover, the facts show that until now, this effect has not been completely eliminated.
Even worse, afterwards, melamine milk powder was reappeared in many places, coupled with the “precocious puberty†controversy, which once again severely affected consumer confidence in domestic dairy products. Even if the official expressly stated that the “precocious puberty†incident had nothing to do with Sanyuan’s milk powder, consumer confidence did not recover quickly. This has adversely affected the development prospects of whole domestic milk powder and even the entire dairy industry, giving foreign milk powder even to Imports of raw materials once again provide opportunities to seize the market and expand its share.
The results of the 2010 liquid milk consumer satisfaction survey published by the China Quality Association and the National Users Committee show that the liquid milk industry’s consumer satisfaction is only 72.5 points, which is lower than last year’s 76.2 points, which fully proves the confidence of multiple events in consumer confidence. The blow.
Therefore, the biggest problem China's dairy industry is currently facing is how to restore consumer confidence. This depends not only on the enterprise itself, but also on the strength of state supervision. It even depends on the passage of a long period of time and the constant emergence of new highlights.
2. The price of raw materials The second biggest problem in the dairy industry is the price of raw materials. Moreover, the extent of this problem's impact on the entire industry seems to be no less than a crisis. Because the rise of raw materials not only affects corporate profits, but also affects consumer interests.
According to the weekly raw material price monitoring data of the Ministry of Agriculture, the price of raw milk rose sharply from 2.65 yuan/KG on January 6, 2010 to 2.95 yuan/KG on August 25. Moreover, from the trend point of view, it seems that we cannot see Any sign of decline (Figure 3).
In my opinion, this is a big problem. Because, at the same time, we also know that the price of international milk powder continues to be adjusted. This contrasts sharply with the continued rise in the price of domestic raw milk, and the price difference between the two is narrowing. This will bring at least two consequences: First, the cost of production companies using domestic milk sources will rise in a straight line, directly affecting the profitability of enterprises; Second, more dairy processing companies will choose more international milk sources, local milk sources. The competitiveness is weakened.
As a result, it is the Chinese dairy companies, Chinese consumers, and even the Chinese government that suffer losses. Because domestic milk prices are too high, dairy giants such as Yili and Mengniu are unlikely to use foreign milk sources. Therefore, they have to sacrifice profits to digest this part of the cost. This is called the company's disadvantage; however, this is only From the initial means to the later period, when they are difficult to digest, they will inevitably raise the retail price in a unified way and pass the pressure on to the consumers. This is called the consumer's disadvantage; then, what is the government's loss? This is the second consequence mentioned above. When everyone turns to foreign milk sources for consideration of interests, domestic milk sources will oversupply, and dairy farmers will begin to kill cattle or even become unemployed. The employment of so many people is inevitable. It will fall on the shoulders of the government; in addition, the profits of domestic enterprises will decline, and the income tax that is handed in will inevitably fall. The government will do well and will certainly suffer losses both inside and outside the country.
Therefore, this is not just a matter of rising raw materials, but an imbalance in the industrial chain, and it is related to the healthy development of an industry.
3. The rising profitability of raw materials and the vicious competition among enterprises, from the top (retail price) to the bottom (cost price), has left many companies with little profit. This has forced companies to think more about their own profit models.
Looking at the financial statements of listed companies in the dairy industry, in fact, we can also see some of the doorways. In the first half of 2010, Yili and Mengniu were undoubtedly profitable: Yili had a profit of 355 million yuan and a profit margin of 2.4%; Mengniu had a profit of 619 million yuan and a profit margin of 4.3%. Bright is also profitable, although only 65.42 million yuan, but compared with the same period last year, much better, the profit rate reached 1.5%. However, unfortunately, Feihe, Sanyuan, and Xinganling all suffered losses. Feihe suffered a loss of 103 million yuan, a loss of 3 yuan was 51.6 million yuan, and Xinganling suffered a loss of 6,691,700 yuan (Source: National Dairy Industry Technology System Dairy Industry Economic Research Office). So why do people all work in the same industry, but there is such a big difference between profit and loss?
We first analyze Erie. Why is Erie profitable? The author believes that the profits of Yili benefit from the profitability of milk powder. Yili milk powder has become the largest brand in China's milk powder industry. The profit it brings to Yili Group is no less than its liquid milk, or even more. Therefore, as a large-scale enterprise group, Yili's business group is complementary, and even if it is lost in other businesses, the general ledger can still be profitable.
So why are Mengniu profitable? Mengniu milk powder does not make money like Yili milk powder. Why is it profitable? That is the success of the development and promotion of high-end products. In fact, the profitability of Mengniu in previous years was not very good. Especially in the late period of the melamine incident, Mengniu's capital chain almost broke down, and thus the famous "Wanyan Book" was born. However, in the first half of this year, its profit rate was as high as 4.3%, which was far higher than the average level of the industry and became the most profitable company. This had to thank the various business groups for their product structure adjustment efforts. High-margin products such as Teluxsu, breakfast milk, Xinyangdao, Guanyi milk, real fruit, and milk specials were ranked first or second in their respective market segments, and considerable sales saved Mengniu from the edge of losses. come back.
In contrast, the bright, flying cranes and the three yuan are much less, the bright ones are barely profitable, and flying cranes and three yuans are completely lossy. So why are they losing money? This should cause our thinking.
If there is no wrong guess, the bright profits should come from yogurt, because in the yogurt category, they have achieved the first or second in many market segments, forming a certain degree of competitiveness. In addition, “Yuebei†can also give them some money back, but also because “Yuebei†has become the first brand of “low-temperature high-end milkâ€. The rest of the categories may have little chance of making money with the light, and it is very likely that even the profits made by these products will be swallowed up.
Therefore, the author believes that in the face of a brutal competitive environment, how to find their own profit model is the key, in the end take the road of specialization, or take the road of diversification? In the end, along the "imitation" route, or give up "imitation" to find a way out? Most Chinese dairy companies should come to seriously answer this question.
4, industry supervision issues industry supervision issues, let me do this marketing person mentioned, it seems a little amateur. However, I feel I must mention it. Because some things can only be solved by companies.
After the melamine incident, the promotion of the scale of dairy cows in various localities has played a positive role in improving the quality and efficiency of China's dairy industry. However, in most areas, dairy cows are mainly households entering and entering the district, and the proportion of large-scale farming on the surface has increased. It is scattered farming, problems and development difficulties have also gradually emerged, and many individual households withdraw from dairy farming in some areas, and the occupancy rate of the community is also low. This is a big hidden danger. If this issue is not solved fundamentally, there will always be a greater crisis in the Chinese dairy industry.
In addition, the testing standards for products are also a thorny issue. For example, as far as milk quality testing is concerned, there is no precedent for testing standards and testing items for “estrogen†prior to the “precocious puberty†event, which again exposes the lag in testing standards and methods. Therefore, the supervision of China's dairy industry has given many people the feeling that something has gone wrong and that they have taken a step forward. No accidents have occurred, and they are always on the spot. The word “supervision†has not been implemented at all.
Every crisis event will expose the scars of the consumer's mind and expose the industry's loopholes. If this is not enough for our industry regulators to pay attention, similar incidents will be like a wave of floods that will frequently impact the dam's weak links, ultimately leading to a complete collapse of industry reputation and consumer confidence. This will lead not only to a single incident. The collapse of the two companies, but the decline of an industry, and even one of the economic decline. Therefore, the strengthening of industry supervision and the improvement of the regulatory level are also major issues that are urgently needed.
1. Confidence in Consumers The 2008 melamine incident was undoubtedly a huge blow to Chinese consumers' information. Moreover, the facts show that until now, this effect has not been completely eliminated.
Even worse, afterwards, melamine milk powder was reappeared in many places, coupled with the “precocious puberty†controversy, which once again severely affected consumer confidence in domestic dairy products. Even if the official expressly stated that the “precocious puberty†incident had nothing to do with Sanyuan’s milk powder, consumer confidence did not recover quickly. This has adversely affected the development prospects of whole domestic milk powder and even the entire dairy industry, giving foreign milk powder even to Imports of raw materials once again provide opportunities to seize the market and expand its share.
The results of the 2010 liquid milk consumer satisfaction survey published by the China Quality Association and the National Users Committee show that the liquid milk industry’s consumer satisfaction is only 72.5 points, which is lower than last year’s 76.2 points, which fully proves the confidence of multiple events in consumer confidence. The blow.
Therefore, the biggest problem China's dairy industry is currently facing is how to restore consumer confidence. This depends not only on the enterprise itself, but also on the strength of state supervision. It even depends on the passage of a long period of time and the constant emergence of new highlights.
2. The price of raw materials The second biggest problem in the dairy industry is the price of raw materials. Moreover, the extent of this problem's impact on the entire industry seems to be no less than a crisis. Because the rise of raw materials not only affects corporate profits, but also affects consumer interests.
According to the weekly raw material price monitoring data of the Ministry of Agriculture, the price of raw milk rose sharply from 2.65 yuan/KG on January 6, 2010 to 2.95 yuan/KG on August 25. Moreover, from the trend point of view, it seems that we cannot see Any sign of decline (Figure 3).
In my opinion, this is a big problem. Because, at the same time, we also know that the price of international milk powder continues to be adjusted. This contrasts sharply with the continued rise in the price of domestic raw milk, and the price difference between the two is narrowing. This will bring at least two consequences: First, the cost of production companies using domestic milk sources will rise in a straight line, directly affecting the profitability of enterprises; Second, more dairy processing companies will choose more international milk sources, local milk sources. The competitiveness is weakened.
As a result, it is the Chinese dairy companies, Chinese consumers, and even the Chinese government that suffer losses. Because domestic milk prices are too high, dairy giants such as Yili and Mengniu are unlikely to use foreign milk sources. Therefore, they have to sacrifice profits to digest this part of the cost. This is called the company's disadvantage; however, this is only From the initial means to the later period, when they are difficult to digest, they will inevitably raise the retail price in a unified way and pass the pressure on to the consumers. This is called the consumer's disadvantage; then, what is the government's loss? This is the second consequence mentioned above. When everyone turns to foreign milk sources for consideration of interests, domestic milk sources will oversupply, and dairy farmers will begin to kill cattle or even become unemployed. The employment of so many people is inevitable. It will fall on the shoulders of the government; in addition, the profits of domestic enterprises will decline, and the income tax that is handed in will inevitably fall. The government will do well and will certainly suffer losses both inside and outside the country.
Therefore, this is not just a matter of rising raw materials, but an imbalance in the industrial chain, and it is related to the healthy development of an industry.
3. The rising profitability of raw materials and the vicious competition among enterprises, from the top (retail price) to the bottom (cost price), has left many companies with little profit. This has forced companies to think more about their own profit models.
Looking at the financial statements of listed companies in the dairy industry, in fact, we can also see some of the doorways. In the first half of 2010, Yili and Mengniu were undoubtedly profitable: Yili had a profit of 355 million yuan and a profit margin of 2.4%; Mengniu had a profit of 619 million yuan and a profit margin of 4.3%. Bright is also profitable, although only 65.42 million yuan, but compared with the same period last year, much better, the profit rate reached 1.5%. However, unfortunately, Feihe, Sanyuan, and Xinganling all suffered losses. Feihe suffered a loss of 103 million yuan, a loss of 3 yuan was 51.6 million yuan, and Xinganling suffered a loss of 6,691,700 yuan (Source: National Dairy Industry Technology System Dairy Industry Economic Research Office). So why do people all work in the same industry, but there is such a big difference between profit and loss?
We first analyze Erie. Why is Erie profitable? The author believes that the profits of Yili benefit from the profitability of milk powder. Yili milk powder has become the largest brand in China's milk powder industry. The profit it brings to Yili Group is no less than its liquid milk, or even more. Therefore, as a large-scale enterprise group, Yili's business group is complementary, and even if it is lost in other businesses, the general ledger can still be profitable.
So why are Mengniu profitable? Mengniu milk powder does not make money like Yili milk powder. Why is it profitable? That is the success of the development and promotion of high-end products. In fact, the profitability of Mengniu in previous years was not very good. Especially in the late period of the melamine incident, Mengniu's capital chain almost broke down, and thus the famous "Wanyan Book" was born. However, in the first half of this year, its profit rate was as high as 4.3%, which was far higher than the average level of the industry and became the most profitable company. This had to thank the various business groups for their product structure adjustment efforts. High-margin products such as Teluxsu, breakfast milk, Xinyangdao, Guanyi milk, real fruit, and milk specials were ranked first or second in their respective market segments, and considerable sales saved Mengniu from the edge of losses. come back.
In contrast, the bright, flying cranes and the three yuan are much less, the bright ones are barely profitable, and flying cranes and three yuans are completely lossy. So why are they losing money? This should cause our thinking.
If there is no wrong guess, the bright profits should come from yogurt, because in the yogurt category, they have achieved the first or second in many market segments, forming a certain degree of competitiveness. In addition, “Yuebei†can also give them some money back, but also because “Yuebei†has become the first brand of “low-temperature high-end milkâ€. The rest of the categories may have little chance of making money with the light, and it is very likely that even the profits made by these products will be swallowed up.
Therefore, the author believes that in the face of a brutal competitive environment, how to find their own profit model is the key, in the end take the road of specialization, or take the road of diversification? In the end, along the "imitation" route, or give up "imitation" to find a way out? Most Chinese dairy companies should come to seriously answer this question.
4, industry supervision issues industry supervision issues, let me do this marketing person mentioned, it seems a little amateur. However, I feel I must mention it. Because some things can only be solved by companies.
After the melamine incident, the promotion of the scale of dairy cows in various localities has played a positive role in improving the quality and efficiency of China's dairy industry. However, in most areas, dairy cows are mainly households entering and entering the district, and the proportion of large-scale farming on the surface has increased. It is scattered farming, problems and development difficulties have also gradually emerged, and many individual households withdraw from dairy farming in some areas, and the occupancy rate of the community is also low. This is a big hidden danger. If this issue is not solved fundamentally, there will always be a greater crisis in the Chinese dairy industry.
In addition, the testing standards for products are also a thorny issue. For example, as far as milk quality testing is concerned, there is no precedent for testing standards and testing items for “estrogen†prior to the “precocious puberty†event, which again exposes the lag in testing standards and methods. Therefore, the supervision of China's dairy industry has given many people the feeling that something has gone wrong and that they have taken a step forward. No accidents have occurred, and they are always on the spot. The word “supervision†has not been implemented at all.
Every crisis event will expose the scars of the consumer's mind and expose the industry's loopholes. If this is not enough for our industry regulators to pay attention, similar incidents will be like a wave of floods that will frequently impact the dam's weak links, ultimately leading to a complete collapse of industry reputation and consumer confidence. This will lead not only to a single incident. The collapse of the two companies, but the decline of an industry, and even one of the economic decline. Therefore, the strengthening of industry supervision and the improvement of the regulatory level are also major issues that are urgently needed.
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