China's dairy industry is in trouble

Introduction: the competition makes the operating cost of the whole industry keep rising China's dairy industry is in a dilemma Following Mengniu's announcement that the management and investors have sold 316 million shares, the industry questions that the dairy industry will fall into an unprecedented dilemma Although Mengniu said publicly the day before yesterday that cash out is to improve the life of the management, the insiders believe that behind a large number of cash out is not as simple as Mengniu said, the whole dairy industry is quietly changing, not only the price war caused by fierce competition, but also the competition makes the operating cost of the whole industry rising, and small enterprises are facing being eliminated The danger of the Bureau, and large enterprises also bear the survival pressure brought by the cruel competition The decline of gross profit tests the strength of enterprises In fact, Mengniu's management has cashed in a large amount, which makes the outside world agree that its management is not optimistic about the development prospect of the enterprise In addition, Guangming's sales share in the whole country has declined sharply due to the "back to stove milk" event Although Sanyuan announced the price increase at the beginning of the year, it did not maintain the rise of the stock price, and the market share has declined nearly 30% Yili's transformation has just passed, The market is recovering The change of dairy giant makes the whole industry full of worries It is understood that although the net profit of Mengniu in 2004 was 319 million yuan, the operating cost increased significantly It is unexpected that the management of Mengniu began to sell a large number of shares in the first anniversary of its listing In addition, the three major financial institutional investors sold 316 million shares of the company, accounting for 23.06% of the total equity However, for the reason of a large number of selling, Mengniu's explanation is that its management team started from scratch, only received wages for many years, and cash out is to improve life However, analysts believe that Mengniu's explanation is far fetched, even if it is to improve life, it will not sell so much at once, which is obviously not optimistic about the development prospect of dairy industry It's worth noting that Mengniu showed more hesitation in the bidding site of CCTV last year Sun Xianhong, vice president of Mengniu, said in an interview that the fierce market competition led to the increase of marketing costs This year, Mengniu's actual amount of investment is about 170 million yuan, and the proportion of advertising investment is correspondingly reduced He said that many dairy companies will use part of the advertising costs directly to the terminal link, and the market competition will be more fierce Since the first half of last year, it has become an indisputable fact that the gross profit rate of dairy industry has declined According to the annual report of the first half of 2004, the turnover of Mengniu's three major products (including liquid milk, ice cream and dairy products) increased by 97%, 84% and 5.66 times respectively, but the overall price fell by 1.6%, resulting in a 1.3 percentage point drop in gross profit margin; while in the semi annual report published by Yili, the gross profit margin of liquid milk decreased by 3.34 percentage points compared with the previous report Since its official listing in September of the previous year, Sanyuan has been continuously issuing performance warning advisory announcements At the same time, some investment failures of Sanyuan in recent years, such as the forced transfer of the plant built in Australia, happened to happen this year From the annual report of Sanyuan, it can be seen that Sanyuan has been in a loss state since its listing At present, it is also reported that Sanyuan will sell the dairy factory in Beijing and is looking for a buyer The incident of "milk returned to the furnace" of Guangming also shows a problem from the side, which is to reduce production costs and cope with fierce competition In the three years of the price war, the new hope of rapidly rising to the forefront of the dairy industry, and in 2003, the information of its integrated dairy enterprises was becoming less and less, which seemed to have entered the stage of internal integration and expansion of the market It is said that the new hope that the following 11 dairy companies will complete production and sales of no more than 2.5 billion yuan that year, far from Liu Yonghao's expectation In 2004, new hope is more low-key in both industry integration and market promotion Through checking the public information, new hope no longer publicizes the plan to promote the dairy industry to build "No.1" What's unexpected about the withdrawal of foreign capital from China's market is that while several domestic dairy giants are fighting hard, some foreign dairy enterprises, such as feisland in the Netherlands, pamarat, kraft in the United States, Unilever in the United Kingdom and so on, have withdrawn from China's market In an interview with reporters, the northern marketing director of fishlankbeck company said that the main reason for the divestment is the fierce competition in China's dairy market at present Only in Tianjin market, there are dozens of dairy brands engaged in a fierce battle in the field of liquid milk with low price For foreign-funded enterprises, the post-war profit decline in price is very obvious and there is no need for further operation 。 Some experts believe that there are many reasons for the retreat of the international dairy giants in China Besides the price war, there are also many reasons for the international dairy multinational companies' products to follow the high price line, which is far from the actual income level of the Chinese people, as well as the lack of the company's advantages in domestic milk sources and control over milk sources Some foreign capital have to withdraw after a single fight However, there are also some foreign direct cooperation with domestic giants, such as Danone, France, which has several times increased its holdings of bright shares and vigorously entered the Chinese dairy market Although the foreign department behind Mengniu has not really participated in the operation, it still sees the prospect of the growth of the dairy industry behind the investment, but it is not clear whether the gradual withdrawal of foreign capital gives a clear hint to the development of China's dairy industry The pattern of dairy products will change It is understood that, in addition to some foreign investment leaving the Chinese market, the survival of some small and medium-sized enterprises is also difficult Some time ago, the price of fresh milk in Guangzhou increased in succession Wang dingmian, vice president of Guangzhou Dairy Association, said that the rise of raw materials made enterprises face survival crisis, and the only way out for enterprises was to increase the price A person in charge of Yantang, Guangzhou, said that it is not only the rise of raw materials, but also the competition of enterprises that makes the terminal price fall If not, enterprises will face a survival crisis In addition to the survival pressure of some small and medium-sized enterprises in Guangdong, the production scale of Shenyang Huishan and some local enterprises in the east of Guangdong is also shrinking due to competition Some insiders believe that competition will force some small and medium-sized enterprises out For the changes in the dairy industry, the insiders believe that the problems brought by the rapid growth of the dairy industry are bound to be exposed Although the sales volume of the whole industry is growing, the total value is not growing, the gross profit rate is falling, the cost is rising, and the price war is fierce Some small and medium-sized enterprises are struggling to survive, and the strength of the enterprise will directly determine the cruelty of the enterprise The development of China's dairy industry will face a new crossroads.