Reflection on the loss of more than one third of China's dairy industry

Introduction: at 7:30 on August 29, Niu Gensheng, chairman and President of Mengniu Group, appeared beside a bus of Yili Group When lifting his legs to get on the bus, Niu turned to sun Xianhong, the vice president beside him, and whispered, "sit apart and don't pile up in a bus." It's hard to imagine that this is the first time Niu Gensheng has been allowed to enter Yili's new industrial park At 2:00 p.m on the same day, Pan Gang, chairman and President of Yili Group, appeared in Mengniu's "global model factory" and "AoYa international Ranch" for observation, accompanied by Pan Gang's executive director and assistant president The serious internal friction of dairy industry is almost an open secret of the industry The long-term confrontation between "base dairy industry" and "urban dairy industry", the two "base dairy industry", Yili and Mengniu, have a deep and complex dispute, which has become a source of continuous dairy affairs However, the first symbolic visit of Yili and Mengniu's senior executives can not predict how much they can promote the "harmonious development" expected by the dairy industry At the same time, for most small and medium-sized dairy enterprises, loss or even bankruptcy is like a lingering haze On July 28, the 11th Annual Meeting of China dairy capital naming and China dairy industry association was held in Hohhot China Dairy Industry Association issued a bulletin In 2004, 197 out of 636 dairy enterprises in China lost money, with a loss area of 31% Wang huaibao, vice president of China Dairy Association, told our reporter: "with the pressure of fierce price war this year, the economic benefits of dairy industry have not kept pace with the growth of production, the profitability of the whole industry continues to deteriorate, and the expansion of the loss area is an indisputable fact." After the rapid development of unconventional, the development of China's dairy industry is slow At the same time, the crisis of food safety and integrity caused by Fuyang milk powder incident, Guangming recycling milk crisis, Nestle iodine exceeding incident also enveloped China's dairy industry At the meeting, many people in the dairy industry had a rational reflection on the current situation In every link of the industrial chain, there are only a few old managers of small and medium-sized dairy enterprises who dare to admit losses openly Cheng Shuqian, chairman of Guiyang Sanlian Dairy Co., Ltd., is a brave one In 2004, Sanlian dairy lost 10 million yuan Cheng Shuqian confessed that many of the leaders of dairy companies who attended the annual meeting were confused and worried about the uncertain future In fact, it's not easy for the dairy enterprises which are bigger than the triple milk industry Song Kungang, President of China Dairy Industry Association, told reporters: "in recent years, many enterprises attach importance to development speed, ignore economic benefits, attach importance to market share, ignore profit rate, resulting in increased production, increased sales revenue, but the profit level is declining." The data of the National Bureau of statistics confirmed song Kungang's statement that the profit margin of dairy industry was 6.1% in 2003 and 5.4% in 2004 Among them, large and medium-sized dairy enterprises are 5.47%, small enterprises are 5.28%, and the top 10 enterprises in sales revenue have a profit margin of only 4.9%, which is lower than the industry average "No entrepreneur would like to see his industry slip into the edge of low profits, but the development of any industry seems to be hard to escape fate That's what dairy is all about " Lei Yongjun, chief consultant of Beijing Tongsheng integrated marketing agency, told reporters Dairy industry has entered the stage of "market to market, factory to factory, ranch to Ranch" comprehensive competition In this comprehensive upgrading process, only consumers are happy, and every link in the industrial chain seems to be suffering Niu Gensheng's point of view is that "the pains of dairy farmers are that the pastures need to eliminate low-yield cattle, and need to develop from scattered cultivation and low-yield to large-scale and improved breed; the pains of dairy enterprises are that the market has stepped into an over competitive state, the brand concentration is getting higher and higher, the raw materials are rising, the products are falling, and the market pressure is getting higher and higher." The homogenization of competition and high marketing cost lead to the decrease of profit margin and profit level, which will inevitably affect the development of dairy enterprises and drag down the whole industry The decrease of profit level also shows the contradiction between production and market, between production and sales [NextPage] adjustment in pain the dairy companies in pain need to adjust their own business ideas Xi Zhongwei, deputy general manager of Shanghai Mingtai Mingguan Dairy Marketing Consulting Co., Ltd., summed up all the contradictions in China's dairy industry as three points: the contradiction between product homogeneity and fierce price competition, the contradiction between the slowdown of market growth and the goal of high-speed growth of enterprises, and the contradiction between the high homogeneity of dairy enterprises in positioning, products, marketing and target markets So far, as the main consumption place of dairy products in large and medium-sized cities, the market capacity of liquid milk tends to be saturated and the consumption growth is slow, so the change of dairy structure from single to diversified and differentiated will be irreversible To increase product differentiation and other means of dislocation competition is gradually becoming a new choice for many dairy enterprises On the one hand, the market share and resources of China's dairy industry competition bureau are further concentrated on leading enterprises The top three companies, Yili, Mengniu and Guangming, have increased their discourse power by penetrating into milk powder and other fields On the other hand, the number of regional advantage brands has a trend of concentration, from "seeking big" to "seeking odd" and "seeking refinement" to seek differentiated survival However, it should also be noted that the competition environment around the dairy industry is still severe, non-commercial attack and low-level price war can be said to be the source of all evils that hinder the healthy development of the whole dairy industry As we all know, due to the different burden of new and old enterprises, the different preferential policies enjoyed by different regions, and the different prices of raw materials in different regions, the cost of products varies greatly, which is also a major reason why price wars are often prohibited Song Kungang advocated that "the pricing of dairy products must fully consider the industry's bearing capacity and the overall interests of the industry."