Thinking about dairy industry in 2004: it's time to wake up from the scuffle

Introduction: in 2004, China's dairy industry was a troubled time In April, the case of Fuyang inferior milk powder was exposed, which caused great shock in the whole society As a result, food safety has also attracted unprecedented attention from the Party Central Committee, the State Council and local governments In November, with the announcement of the results of random inspection of dairy product quality by Beijing Municipal Bureau of quality and technical supervision, Yili was exposed for marking the production date in advance, and the dairy industry once again became the focus of the media and the community What are the problems facing the dairy industry in its development? What challenges will be faced in the future market competition? At the end of 2004, we should do some review and thinking After five years of rapid growth, China's dairy industry is experiencing growing troubles Like other industries, dairy industry is deeply troubled by price war On the one hand, the price of raw materials keeps rising, and the cost of increasing advertising investment keeps rising; on the other hand, product promotion and retail price decrease Under the double attack of rising cost and falling price, the gross profit rate and net profit rate of dairy enterprises are sliding to varying degrees It is understood that since this year, the dairy raw material market has been booming So far, the raw material for milk production -- white sugar has increased from 2600 yuan / ton last year to 3300 yuan / ton, with an increase of more than 30%; the price of packaging sheet materials has also been affected by the increase of crude oil price, from 11000 yuan / ton last year to 17200 yuan / ton, with an increase of 55%; the price of feed raw material corn has increased from 1200 yuan / ton last year to 1600 yuan / ton; the price of wheat bran has increased from 1000 yuan / ton to 1400 yuan / ton At the same time, milk prices have fallen by nearly 40% The promotion price of 1l UHT milk decreased by about 40% The price of 250ml milk decreased by 30% - 40% According to companies, prices are now almost below the bottom line The reporter learned in the interview that the milk enterprises have reached the point of sticking to their teeth, but no enterprise dare to raise the price lightly People in the industry can't help worrying that if the price of milk goes down like this, how many enterprises can survive? Since the cost of raw materials is rising all the way, why does the price of milk not rise but fall? The insiders said: "no enterprise has raised its price because of the rising price of raw materials, and has given up its market share to its rivals." Because milk is a homogenous product, the consumption of milk in China has not reached the era of brand consumption, and the price of milk is still the main factor for consumers to buy For enterprises, when the price is low, there will be sales Now the price war of China's dairy industry has shown an irrational vicious competitive situation Therefore, we should call on the dairy industry competition to return to rationality " The data shows that the overall profit of dairy enterprises in China is low Under normal circumstances, the net profit of dairy enterprises should not be less than 8%, and now the average profit of the industry is less than 5% According to the information disclosed by the securities times, in 2003, Mengniu had a sales volume of nearly 5 billion yuan, a profit of only 130 million yuan, a profit margin of 2.6%, and only 3% of Yili shares with high profit margin Many small and medium-sized enterprises suffered losses Without profits, enterprises cannot invest in scientific research and development, and the industrial chain will break due to lack of funds In the long run, the dairy industry will face greater hidden dangers Since 1998, China's dairy industry has developed rapidly, with the highest growth rate of 20% - 30% Many enterprises believe that the market space of dairy industry is very large, and they have invested in this field At present, there are more than 1600 dairy processing enterprises in China, including 360 with annual sales of more than 5 million yuan, and only 12 with annual sales of more than 100 million yuan There are about 8 million cows in China, with an annual output of 16.25 million tons But these are the front-end supply chain parts of the dairy industry, and as the most important part of the whole industrial chain - sales, but not really pull up In Guangzhou, Shanghai, Beijing and other big cities, the growth rate of milk consumption has reached 20% - 30% in recent years, and the market capacity tends to be saturated However, the consumption of milk in the second and third tier cities has not really been promoted, which leads to the "saturation" of the dairy consumption market This saturation does not mean that there is too much milk, but that many consumers have not formed the habit of drinking milk Therefore, although the growth space of China's dairy industry is still large in theory, at this stage, the growth rate of demand slows down By analyzing the increase of market share of dairy enterprises this year, we can see that the consumer population has not expanded, that is to say, the overall cake of dairy industry is still the original scale, but the large enterprises cut more cakes, and the market share of many second-line and third-line brands has decreased Therefore, the data of market increase of large enterprises does not mean that the whole dairy market has expanded "In order to gain market share, most of China's dairy industry is too prosperous, and the negative profit also needs to fight for price, which eventually makes China's dairy industry fall into the mire of irrational price and lose its direction." Some people in the industry said anxiously According to the WTO agreement, by 2005, the import tariff of six kinds of dairy products, such as yogurt, dairy products, ice cream, milk powder and other dairy products, will be greatly reduced In the past, the practice of restricting the import of dairy products by relying on higher tariffs will be changed, and the imported dairy products will become more competitive, and the impact on the domestic market will increasingly appear Experts believe that China's dairy enterprises should have a clear understanding of this While the Chinese dairy enterprises are competing fiercely for market share, the news comes that the multinational dairy industry has left the Chinese market one after another On November 25, the Dutch company fiss closed its business in China and withdrew from the Chinese market they had been optimistic about This is another foreign dairy giant who has left the Chinese market sadly after Danone in France, pamarat in Italy, kraft in the United States and Unilever in the United Kingdom Why do powerful international dairy brands encounter Waterloo in China? Are they not familiar with China's market rules, or do they not understand the Chinese food culture? Or is there something wrong with our management? Rao Baosi, northern marketing director of fislanke Baker company, told reporters that the main reason for the divestment is that the price competition in China's dairy market is very fierce at present Only in Tianjin market, there are dozens of brands engaged in a fierce battle in the field of liquid milk with low price For foreign investors, there is no need to operate without profit Wang dingmian, vice president of Guangdong Dairy Association, believes that there are many factors that cause the retreat of international dairy giants in China He believes that the most perplexing factor for foreign enterprises is the long-term price war In fact, the world's largest potential market for dairy consumption, who are salivating So, are international dairy companies willing to withdraw completely? According to Wang dingmian, this is just a strategic retreat Because, for the foreign-funded enterprises that pursue profit, they will not do the business at a loss They believe that during the period of China's market price competition and resource integration, Chinese enterprises should not be accompanied by the discount or loss to cultivate the market slowly They are actually taking a retreat as a step forward and waiting for the right time When China's dairy industry is almost integrated or the market is more mature, they will definitely make a comeback Wang dingmian said that domestic enterprises should keep sober China's dairy industry is indeed at a time when we should sum up experience, understand the situation and grasp the direction of development The focus of the competition is a big issue related to the healthy development of China's dairy industry.