There are fewer people behind the dairy crisis

On January 13, a large site in the Lotus supermarket in Chaoyang District, Beijing was occupied by milk. Common pure milk and organic pure milk were piled up neatly there. Some gifts were also hung on the side of the pile. "Screaming," but few customers are interested.

The reporter turned to WeChat's circle of friends and found that the news of milk farmers “pour milk” was still spreading. Regarding the reasons and solutions behind this incident, dairy industry experts also mobilized: For example, the threshold for imported dairy products was increased, and the government promoted the collection and storage of milk powder. Institutions, etc.

In fact, for the cyclical, globalized dairy industry chain, there are problems with upstream supply, which is often due to the drop in downstream consumer demand.

According to our reporter’s review of the latest financial reports of Mengniu Dairy, Yili Shares and Guangming Dairy, the three companies’ inventories in 2014 all climbed to varying degrees. Erie's stock as of September 30, 2014 was 4.367 billion yuan, an increase of 18.57% compared to the beginning of the year; Guangming Dairy's inventory as of September 30, 2014 was 2.521 billion yuan, an increase of 68% from the previous year's 1.5 billion yuan; The unaudited inventory of Mengniu Dairy as of June 30, 2014 was RMB 4.46 billion, an increase of 73.07% compared to the beginning of the year.

For reasons of high inventory, Guangming Dairy explained in its financial report that “mainly the purchase of milk powder and the increase in finished products in this period.” If carefully scrutinized, the two reasons for the increase in inventories mentioned above are the “relative surplus” of raw milk supply. "The culprit."

According to the reporter’s understanding, during the “milk shortage” in the second half of 2013, some milk companies have determined that raw milk prices will rise in 2014, so they began to frantically purchase domestically and abroad. However, what business owners did not expect was that in February 2014, it became the inflection point for raw milk prices, and then the price of imported milk powder began to fall.

Like the "buying up" in the operation of the stock market, some companies are still importing at the same time as the price of imported milk powder falls, because they do not know where the "bottom" is. A person in charge of a domestic listed dairy company admitted to this reporter that "the surplus of milk sources has led to an increase in the output of industrial powder (the raw material powder processed into raw milk), which has a large amount of funds and a large loss."

Song Liang, a dairy expert, analyzed with the reporter that the dairy company needed to use some time to digest the inventory, and as raw milk prices fell, raw material powders that were originally purchased and produced appeared to be too costly. Therefore, it is possible to reduce the price of products at the market terminal. Very small.

The responsible person of the above-mentioned dairy company also stated that in addition to raw material costs and financial costs, costs such as labor, water, electricity and environmental protection continue to increase. "At the same time as meeting the production and sales of low-end products, the company is also actively developing some functional and high-value-added products."

For listed companies, how to ensure product quality and safety while improving performance is the company's most concern. However, some dairy companies have begun to think whether the road of relying solely on brand premiums and relying on high-end milk is sustainable. Leading dairy companies such as Mengniu and Yili have also held several meetings to discuss this issue.

However, Lei Yongjun, chairman of Beijing Putian Shengdao Corporate Planning Co., Ltd., said that in 2013, when the “milk shortage” led to higher production costs, most dairy companies have already cut off the low-end product lines, and have to profit from the mid-to-high end. It doesn't seem realistic to go back and pick it up again.

To profit, or to the market? This is a problem that currently plagues domestic dairy processing companies. Lei Yongjun analyzed that sales of dairy enterprises have increased during the past two years, but sales have not kept pace with, and even declined. “A total of 700-800 million low-income people in rural and urban areas are very sensitive to prices. Their budget for milk consumption may be a pack of 1.5 yuan. If they rise to 2.5 yuan, the increase will reach 60%. This is for them. It's hard to accept."

It is worth noting that before 2009, the growth rate of domestic dairy product output was generally between 15% and 20%, the average growth rate fell from 2009 to 2011 to 12.7%, and the growth rates in 2012 and 2013 were 8.1% and 5.2 respectively. %. However, in the first half of 2014, the output of dairy products turned sharply downward, which was a 1.8% year-on-year decline, and the first decline occurred.

A dairy person introduced to this reporter that he did not pay much attention to the price level. Dairy product safety is the most important issue. How to ensure the safety of milk sources and ensure that the products have nutritional value to the human body is what a dairy company should do.

According to this person, after the consolidation of the dairy industry in the past few years, the domestic dairy product indicators and quality have been significantly improved, but consumer awareness of consumption has not been improved. “If dairy companies don’t step up publicity and guidance, companies do not increase interaction with consumers. People who don’t drink milk don’t drink milk, and people who drink milk may also lose part of their lives.”

It is worth mentioning that some dairy companies have already awakened and taken this step. At the end of 2014, Mengniu held its annual meeting in Chengdu. One of the important issues was the launch of the Milk Life Experience Pavilion. On the day of the event, some 90-year-olds gathered at the Convention and Exhibition Center early in the morning for a glimpse of the young combination TF-BOYS. Mengniu set up booths for its 36 branded products to interact with young consumers through tasting and games.

The dairy industry analysts mentioned that the market needs to be cultivated. In particular, how to keep up with the needs of the young consumer groups requires the dairy companies to work hard. “Investments don't necessarily have output, but if they don't, they certainly have no output.”

According to statistics, the national average per capita milk consumption was 26.96 kilograms in 2013. “This time, there is a surplus, and it is really difficult to understand. The United States and Germany had also seen 'climb tops' before. The background is not the same, they appear when the per capita possession is 260-300 kilograms.” Zhang Zhimin, chairman of the Shandong Dairy Association, introduced it.