Image source @ Visual China
Text | Blindly researched, the author | Wild fog, typography | Yi Xin, Executive Producer | Small
2022 marks the 20th anniversary of Bright Dairy's listing.
For the past 20 years, Bright Dairy has relied on low-temperature fresh milk to fight the world, but the times and the market have long changed.
Yili and Mengniu have made a name for themselves in the market segment through a number of sub-brands, with a larger number of milk sources and stronger marketing advantages. Anti-tourism Ming Dairy, which was once the "big brother" of the dairy industry, not only lost both lines at home and abroad, the performance declined significantly, and the first-mover advantage in the field of low-temperature milk was also difficult to maintain, and it was constantly seized market share by Yili and Mengniu.
The reason is that the accumulation of internal problems over the years, the pressure of the supply chain, coupled with weak product design and marketing publicity, are all important factors restricting the development of Bright Dairy.
From the first in the industry to the overall backwardness
Bright Dairy grows on low-temperature milk.
Low-temperature milk generally refers to pasteurized milk, that is, milk processed by pasteurization and processed with low temperature treatment technology of 72 °C-85 °C. Before 2002, pasteurized milk once occupied 90% of the mainland liquid milk market, with a milk delivery box, Bright Dairy has become a well-deserved "big brother" in the market.
The year 2002 was Bright Dairy's brightest moment. This year, bright dairy revenue exceeded 5 billion yuan, more than the second place Yili 25%, while Mengniu's main income was only 1.668 billion yuan, less than half of bright dairy. It was also this year that Bright Dairy successfully landed on the Shanghai Stock Exchange, with the halo of "the first share of China's dairy industry" overhead, and the scenery was unlimited for a while.
However, in just one year, the former "big brother" was overtaken by the "little brother".
In 2003, Yili and Mengniu launched a strong force in the ambient milk market and quickly achieved great success in the national market. According to the financial report data, in 2003, Yili's revenue was 6.299 billion yuan, exceeding the income of Bright Dairy by 5.981 billion yuan; in 2004, Mengniu used 7.214 billion yuan of revenue to beat bright dairy's revenue scale of 6.786 billion yuan in the same year.
Since then, in the national market, Bright Dairy has continued to widen the gap with Yili and Mengniu. According to Euromonitor data, in the dairy market in 2020, the market share of Yili and Mengniu's two giants was 26.4% and 21.6%, respectively. In contrast, the total proportion of the four dairy enterprises of Guangming, Junlebao, New Dairy and Sanyuan is only 10.6%.
On March 28 this year, Bright Dairy announced its 2021 annual results, and the financial report showed that the annual revenue of Bright Dairy in 2021 was 29.206 billion yuan. In contrast, in 2021, Yili achieved a total operating income of 110.595 billion yuan, which is 3.8 times that of Bright Dairy; Mengniu achieved a total operating income of 88.1415 billion yuan, which is 3 times that of Bright Dairy.
From the first in the industry to the overall backwardness, Bright Dairy should worry not only about revenue, but also about profits.
According to the financial report, from 2019 to 2021, although the revenue of Bright Dairy has continued to grow, the revenue growth ratio in the past three years has been 7.52%, 11.98% and 15.59%, but the growth rate of attributable net profit is 45.84%, 21.95% and -2.55%, showing a clear downward curve.
In this regard, Bright Dairy said that it was because the cost became higher, and analyzed in the announcement that the main reason for the increase in costs was that the prices of raw materials and feed continued to rise.
From the financial report, bright dairy since 2019, the operating cost of 1.6 billion yuan to 4.2 billion yuan per year has risen at a high speed. In 2021, the operating cost of Bright Dairy reached 23.846 billion yuan, an increase of nearly 21.08% compared with 2020.
Not only that, but Bright Dairy's overseas business is also difficult to say optimistic. New Zealand New Lite, a subsidiary of Bright Dairy, lost 0.4 billion yuan in 2021 due to the increase in raw milk prices in New Zealand, the increase in international shipping costs, and the decline in sales of key customers affected by the epidemic.
Why did the once brilliant Bright Dairy fall to this point?
5 coach changes in 14 years
Behind the stall in performance is the frequent turmoil of the senior management team.
When it comes to Bright Dairy, we have to mention one person: Wang Jiafen. In 1992, Wang Jiafen became the general manager of Shanghai Milk Company, the predecessor of Bright Dairy, and she single-handedly promoted the joint venture between Milk Company and Hong Kong SIIC Holding Company to form "Shanghai Bright Dairy Co., Ltd.", which was transformed into a joint-stock company in 2000 and successfully listed in 2002. It can be said that Wang Jiafen's transformation of Bright Dairy is indispensable, and it is she who seized the opportunity of the development of the dairy industry at that time and led Bright Dairy to stand on the peak of the industry, so she was also known as the "Queen of Dairy".
In 2008, Wang Jiafen, who had been in charge of Bright Dairy for 15 years, left her post. Subsequently, the management of Bright Dairy began to "turmoil".
After Wang Jiafen resigned, Guo Benheng, who was favored by her, took over the position of chairman. In 2009, under the leadership of Guo Benheng, Bright Dairy launched the ambient yogurt brand "Moslian", which contributed rich revenue to Bright Dairy for a long time after that; in 2010, Bright Dairy acquired New Zealand's New Lite Dairy Company, adding another revenue force to Bright Dairy. According to the financial report data, from 2007 to 2015, the operating income of Bright Dairy increased by 136.08%, and the revenue scale increased from 8.206 billion yuan to 19.373 billion yuan.
However, the good times did not last long, and in 2015, Guo Benheng fell due to corruption, and also implicated a large number of internal employees. Since then, it has been difficult for Bright Dairy to glimpse the rapid growth of performance. From 2015 to 2020, the cumulative growth of Bright Dairy's operating income was only about 30%.
After that, Zhang Chongjian and Zhu Hangming became the chairman and general manager respectively, but within a few years, from August to October 2018, they resigned with directors, deputy general managers and financial directors; in September of the same year, Pu Shaohua took over the position of chairman of Bright Dairy; at the end of 2021, chairman Pu Shaohua and general manager Luo Hai resigned successively, and veteran Huang Liming succeeded him as chairman of the company.
In the 14 years since 2008, Bright Dairy has changed coaches five times. Frequent changes in coaching make the direction of corporate strategy waver, and the business strategy is frequently changed, which is undoubtedly fatal.
A significant fact is that as a domestic veteran dairy company that was once on par with Yili and Mengniu, Bright Dairy has not yet created a popular product with high recognition, and the success of Moslian in the early years has not continued, but has gradually degenerated into a marginal product. According to the Northeast Securities report, Moslian's retail sales fell from about 8 billion yuan at its peak to 5.06 billion yuan in 2019, and the market share fell from 11.7% in 2014 to 3.4% in 2019. Today, Bright Dairy no longer announces Moslian sales.
In contrast, Mengniu's Terunsu, Chunzhen, Yili's Jindian, Anmuxi and other brands are developing in full swing. According to the financial report, in 2021, Mengniu's star products such as Terunsu, Youyi C, and Daily Xianyu continued to create the best sales records, especially the super large single product of Terunsu, with annual sales of more than 30 billion yuan, becoming the king of the global dairy industry.
At a time when Bright Dairy was dragged down by frequent executive changes, competitors did not stop moving forward.
Low temperature milk tap is difficult
From the perspective of market share, Bright Dairy is still a "low-temperature milk leader", but what is worrying is that its advantages in preemptive layout have not been fully exerted, and the gap between the market share and Yili and Mengniu is getting smaller and smaller.
According to statistics, as of 2020, Bright Dairy has a market share of 15% in the low-temperature milk market, temporarily ranking first; while the Market Share of Yili's Low-Temperature Milk Business is 14.8% and the Mengniu Market is 11.2%.
On the one hand, the one who gets the milk source wins the world. Low-temperature milk has high quality requirements, requires high-quality distributed milk sources and cold chain logistics distribution storage and transportation systems, and the shelf life is generally not more than 7 days, but bright dairy has no advantage in milk sources than Yili and Mengniu. It is understood that Mengniu and Yili have now joined forces to divide about 40% of the country's milk sources. At present, the major shareholder behind the first-ranked Youran Ranch in the mainland is Yili Group, while the second-ranked Modern Animal Husbandry is a wholly-owned subsidiary of Mengniu.
In this regard, Bright Dairy proposed in the strategic plan for 2021-2025 released at the end of March 2021 that "it will accelerate the construction of regional industrial clusters such as the Yangtze River Delta and develop new high-quality milk source bases and advantageous regional markets", but under the attack of Mengniu and Yili, it is not easy to compete for new milk sources.
On the other hand, in terms of marketing, Bright Dairy cannot compete with Mengniu and Yili. According to the 2021 financial report, Yili's advertising and marketing expenditure reached 12.61 billion yuan, an increase of 14.6% year-on-year, surpassing well-known enterprises such as SAIC, China Unicom, and Guizhou Moutai; Mengniu's publicity and marketing expenses were 7.208 billion yuan, accounting for about 8.2% of the group's revenue. Anti-Tourism Ming Dairy, in 2021, the sales cost is 3.6495 billion yuan, of which the advertising and publicity fee is only 940 million yuan, less than the fraction of Mengniu and Yili, accounting for only about 3.21% of its total revenue.
Long-term low profits make it difficult for Bright Dairy to invest in large-scale advertising, but if it cannot improve the disadvantages of marketing in time, it is difficult for Bright Dairy to maintain the top spot in the low-temperature milk market.
After 20 years of ups and downs, Bright Dairy is far behind its competitors, and half a foot is about to reach out of the cliff. How to make up for shortcomings and stabilize the military's morale will become the key to its future development.
Resources:
- "Bright Dairy, is it difficult to see "light"? Silver Arrow
- "High costs, under pressure on profits, can Bright Dairy keep the top spot in the low-temperature milk market", Beijing Business Daily
- "Four degrees of coaching, once the dairy giant Bright Dairy, why did it fall to this point?" Flower Finance
- "Ten years to change four coaches, what is it that stumbles on Bright Dairy?" , Chief Entrepreneurial Officer