Mengniu's new and old "helmsmen" hand over the baton, how does Gao Fei break the game?

Reporter Liu Wang reports from Beijing

On March 26, Mengniu Dairy announced that in accordance with the group's strategic arrangement, Lu Minfang was promoted to vice chairman, stepped down as the company's president and continued to serve as an executive director. Gao Fei, former senior vice president and head of the room temperature business department, took over as the company's president and served as an executive director. Mengniu's announcement stated that the management adjustment is an important decision of the board of directors of Mengniu Group based on medium and long-term strategic considerations.

The reporter of "China Business Daily" learned that Lu Minfang became the president of Mengniu Group in September 2016 and has been nearly 8 years, while the new president Gao Fei is 47 years old this year, who joined the company at the beginning of Mengniu's establishment in 1999 and is a veteran employee.

At Mengniu's 2023 annual results conference on March 27, both of the above appeared in new identities, and a photo of the two smiling and shaking hands was also interpreted by the outside world as a signal of the completion of the handover of Mengniu's new and old presidents.

In the opinion of industry experts, at a time when the growth of the dairy industry has entered a bottleneck period, Gao Fei has a rich resume and a clear understanding of Mengniu's various situations, and is the best candidate for Mengniu to break the situation. This also makes the outside world look forward to it.

The old and new "helmsmen" handed over the baton

In September 2016, Lu Minfang was appointed President of Mengniu Group. Prior to that, he had worked in foreign groups such as Yashili, Danone, and Johnson & Johnson.

Under the governance of Lu Minfang, Mengniu began to continuously improve its business segments, led the completion of strategic investments in large animal husbandry groups such as Modern Dairy and China Shengmu, and made certain achievements in the battle for milk sources in the dairy industry.

At the same time, it led the acquisition of the cheese leader "Miaokelando" and launched the "Daily Fresh Language" brand, realizing the layout of cheese and fresh milk business respectively.

In addition, it has strategically acquired Burra Foods, an Australian raw milk processor, Bellamy's, a well-known organic infant milk powder and food brand, and Aixue, Indonesia's largest ice cream brand, to promote Mengniu's business to many countries and regions.

In 2016, when Lu Minfang first became president, Mengniu's revenue was 53.78 billion yuan, and by 2023, Mengniu's revenue has exceeded 90 billion yuan, achieving an annual revenue of 98.62 billion yuan. Mengniu also mentioned that since 2016, Mengniu's performance has broken through multiple 10 billion yuan mark, doubled in scale in 8 years, and ranked among the top 10 in the world.

Zhan Junhao, founder of Fujian Great Aim Brand Positioning Consulting, believes that in the more than seven years that Lu Minfang has been at the helm of Mengniu, Mengniu's performance and development trajectory have shown obvious ups and downs.

On the one hand, under the leadership of Lu Minfang, Mengniu has indeed made certain achievements, such as steady growth in revenue, expansion of market share and improvement of brand awareness. These achievements are inseparable from Lu Minfang's investment and efforts in Mengniu's strategic layout, brand building and market expansion.

On the other hand, Mengniu also faced some challenges and problems during Lu Minfang's tenure. For example, while Mengniu's revenue has grown, it has not grown as fast compared to other giants in the industry, and its market share expansion has been limited. In addition, Mengniu also has some shortcomings in product research and development, quality control and cost control, which have affected Mengniu's competitiveness and profitability to a certain extent.

It is a little regrettable that the "double 100 billion" goal proposed by Lu Minfang in 2017, that is, to achieve sales and market value of more than 100 billion yuan by 2020, has not yet been achieved. Now, the heavy responsibility of achieving this goal has reached Gao Fei's shoulders.

Mengniu's announcement mentioned that the new president, Gao Fei, is 47 years old this year, graduated from Shandong University and Tsinghua University, and received a master's degree in business administration from Tsinghua University.

Gao Fei is a veteran of Mengniu, and after joining Mengniu in 1999, he has served as regional manager, center manager, sales general manager, and general marketing manager of the sales and marketing department. He has extensive practical experience in dairy sales, marketing and promotion, and operation management, and was appointed as the Group's Senior Vice President and Head of the Room Temperature Business Unit in 2016.

Gao Fei's achievements are that he has led the performance of the room temperature business department to rise year by year, liquid milk has achieved double-digit growth for five consecutive years, and the "Trensu" created by his team has opened up the high-end dairy product market, with annual sales exceeding 30 billion yuan. The above achievements have also led Mengniu to call the room temperature milk business a "ballast stone".

In addition, Gao Fei also commanded the Mengniu marketing campaign for the World Cup in Russia and the World Cup in Qatar, and led the construction of the Ningxia Digital Intelligence Gigafactory in the process of Mengniu's digital and intelligent transformation.

Song Liang, head of the expert group of the China Agricultural Reclamation Dairy Alliance, believes that in the past eight years of Mengniu, Lu Min has built a digital, green and sustainable supply chain system for Mengniu, and at the same time established a modern enterprise management system, which has steadily promoted the international development of Mengniu and maintained the stable growth of Mengniu's performance. Judging from Gao Fei's resume, his experience is very rich, and the intention of the shareholders behind Gao Fei to serve as president is to break the situation.

"On the one hand, we see that the macroeconomic consumption situation is severe, and on the other hand, the traditional dairy category has reached a bottleneck period, so Mengniu needs to break the situation at this time, so Gao Fei is the best candidate. Song Liang said.

Zhan Junhao also said: "The new appointee, Gao Fei, has rich practical experience in dairy sales and marketing promotion, and also has an in-depth understanding of Mengniu's business and market. Therefore, I look forward to Gao Fei continuing to leverage his professional strengths to further promote Mengniu's progress in product development, quality control and market expansion." At the same time, Gao Fei also needs to pay attention to Mengniu's cost control and operational efficiency issues, and improve Mengniu's profitability and market competitiveness by optimizing production and management processes. ”

How does the new president break the game?

Judging from the financial report data, Mengniu's annual revenue performance in 2023 will be stable, with a year-on-year increase of 6.5% in overall revenue, a year-on-year increase of 4.9% in liquid milk product revenue, and a year-on-year increase of 6.6% in ice cream revenue. Gross profit margin also increased by 1.9% year-on-year to 37.2% due to lower raw milk prices and improved product mix.

However, in the context of the slowdown in the growth of the entire industry, Mengniu has also been affected to a certain extent. Lu Min mentioned at the performance briefing that the industrial structure of the dairy industry is still single and needs to be upgraded urgently; the front-end has shown a new consumption trend, but the back-end supply chain still lacks corresponding changes; and the whole industry is just in a period of surplus of raw milk. "The dairy industry has entered the second half, but the industry has not yet reacted. ”

For Mengniu, the above-mentioned industry status quo has been reflected in the performance. In 2023, Mengniu's net profit will decline due to the impairment of large bags of flour and continuous dividends.

At the same time, the revenue of Mengniu's subsidiary, Modern Dairy, in 2023 will be 13.458 billion yuan, an increase of 9.5% year-on-year, and the profit for the year will be about 185 million yuan, a year-on-year decrease of 68.1%, and the operating income of Microcolando in the cheese sector in 2023 will be about 4.049 billion yuan, a year-on-year decrease of 16.16%, and the net profit attributable to shareholders of listed companies will be about 63.4395 million yuan, a year-on-year decrease of 53.9%.

As for the strategic plan for 2024, Lu Minfang said that Mengniu has put forward the "321" strategy, that is, three focuses, focusing on R&D and innovation, brand building and digital and intelligent transformation, two accelerations to accelerate channel optimization and new business development, and one center, all work should dedicate value to consumers and partners.

At the same time, Gao Fei also said: "No matter who sits in this position today, the first thing that may come to everyone's mind is whether Mengniu's strategy will change. This is a very firm way to tell everyone that the strategy that the management team will do together under the leadership of Mr. Lu will definitely not change. ”

Gao Fei said that at present, the industry is encountering some challenges, and Mengniu will actively respond to them. "We still have a lot of room to further promote the iteration of consumption, including digital transformation, continue to create more value for consumers and shareholders, and achieve high-quality development, while Mengniu's management will pay more attention to the improvement of content, cash flow and overall shareholder returns from an empirical perspective. ”

Zhan Junhao believes that in the current competitive environment, Mengniu is facing competitive pressure from many aspects. First of all, the domestic dairy market is fiercely competitive, not only with established giants such as Yili and Guangming, but also with many emerging brands, which are competing for market share through continuous innovation and marketing methods. Secondly, international dairy brands are also entering the Chinese market, bringing more diversified product choices and more fierce competition. In addition, consumers' demand for dairy products is also constantly changing and upgrading, and the requirements for quality, taste, nutrition and other aspects are getting higher and higher.

In response to these competitive pressures, Gao Fei needs to take a series of measures to break the situation. First of all, he needs to strengthen Mengniu's brand building and enhance brand awareness and reputation to attract more consumers' attention and recognition. Secondly, he needs to promote Mengniu's progress in product development and quality control, and continuously introduce high-quality products that meet consumer needs and enhance product competitiveness. At the same time, he also needs to focus on cost control and operational efficiency, and reduce product costs and improve profitability by optimizing production and management processes. Finally, he also needs to actively respond to market changes and changes in consumer demand, and flexibly adjust market strategies and product strategies to adapt to the changing market environment. Zhan Junhao said.

Song Liang believes that under the current situation, for Gao Fei, it is necessary to continue to consolidate its main business and ensure the stable development of white milk, secondly, to accelerate the expansion of new business areas, such as cheese and milk powder, to speed up the breakthrough, to accelerate and deepen international development, to accelerate the expansion of overseas markets, and finally to continue to promote the construction of Mengniu's digital and green industrial system.

(Editor: Yu Haixia Proofreader: Yan Jingning)