Text丨Xu Shizheng
出品丨牛刀财经(niudaocaijing)
An announcement in Mengniu late at night set off an earthquake in the dairy industry.
On the evening of March 26, Mengniu announced that Lu Minfang, the president who had been in office for two consecutive terms and had been in office for eight years, stepped down, and Gao Fei, the former senior vice president and head of the room temperature business department, took over as the company's president and served as executive director, becoming the new helmsman of Mengniu.
The sudden change of leadership caused turmoil in the secondary market, and Mengniu Dairy's stock price fell 9.92% at the opening of the next day, and the current total market value fell to less than 70 billion Hong Kong dollars.
Once, Mengniu Dairy was the largest milk company in the country, "no cattle, no factory", but it only took 4 years to list the company, and 8 years to become the first in the industry.
Behind this is inseparable from the founder Niu Gensheng's strategy, he signed a recycling agreement with the people who raised cattle, asked the factory to process, and owned the people, money and resources of the society for himself, built an industrial platform, united more forces to make money together, and quickly made the enterprise bigger and stronger.
His legendary myth has been circulating in the rivers and lakes for a long time, when he was forced to leave Yili, but he returned as a king and created a stronger Mengniu.
After Niu Gensheng's resignation, the fourth successor, Lu Minfang, still regarded him as a role model, and publicly shouted at the 2017 performance meeting: "Reach 200 billion in three years, and create a Mengniu in five years".
The goal of reaching double 100 billion yuan in the first three years refers to allowing Mengniu to achieve revenue and market value of 100 billion yuan in 2020, but unfortunately, this goal has not been achieved until Lu Min resigns in 2024.
Mengniu's double 100 billion goal has been mentioned repeatedly, and it has also labeled Mengniu's poor performance in the past two years.
Time passed, Lu Min let go, and Gao Fei took over. It's just that, judging from the current performance of Mengniu, Gao Fei may have to pick up a big bargain, and Lu Minfang's goal to achieve for 7 years may become a pedal for Gao Fei to take off in Mengniu's career, and Mengniu's revenue in 2023 will be 98.6 billion yuan, only one step away from 100 billion.
1. From two heroes standing side by side to being a dominant family, Mengniu has missed hundreds of billions one after another
Mengniu and Yili, two dairy giants, have always been the twin leaders of China's dairy industry. Their-for-tat confrontation in the market can be traced back to the generation of Niu Gensheng, the founder of Mengniu.
Before the establishment of Mengniu, Niu Gensheng worked in Yili for nearly 15 years from the age of 25 to 40, dedicating the best years of his life to Yili.
Erie did not treat him badly. His position in the company is vice president, in charge of production and operation, with an annual salary of more than one million and good benefits.
However, Niu Gensheng always felt that he was excluded by other senior managers of Yili, and a resignation letter from Niu Gensheng on the Internet mentioned the reasons for his resignation, listing personal conflicts with Yili's senior management, including hospitalization and not visiting, and being in the limelight.
Which of the two sides is right and which is wrong? What is the truth? Outsiders do not know.
But what we can see is the fact that Niu Gensheng resigned from Yili in 1998, sold Yili's shares the following year, and scraped together 1 million registered capital to establish Mengniu.
The real business war has never been like the ridicule on the Internet, where he can't get used to seeing anyone, so he uses boiling water to water his fortune tree, but a war without gunpowder.
Niu Gensheng's departure is a backstab to Yili, not to mention that Mengniu also set up its headquarters in Hohhot, Inner Mongolia, which is located in the same city as Yili.
As a result, the two sides grabbed the milk source with their left hand and the market with their right hand, and they fought fiercely.
At first, Yili's position in Hohhot was stable, Mengniu had just been founded, in order to survive, Niu Gensheng avoided Yili, did not face Yili, and rubbed Yili's popularity, playing "learn from Yili...... Create the second brand of Inner Mongolia dairy industry".
In just a few years, the domestic dairy industry has developed rapidly, and Mengniu's products have been put on the shelves of almost every supermarket, and the product line is in direct competition with Yili.
By 2001, Mengniu's sales exceeded 2.7 billion. No matter what Yili's mood is, Mengniu has completely gained a firm foothold in the dairy industry.
In 2021, Yili and Mengniu will have market shares of 23% and 20% respectively, accounting for half of China's dairy industry.
(Niu Gensheng)
So Niu Gensheng said that to be the second brand of the dairy industry, is he really willing to be the second?
Apparently not. Over the years, Mengniu has been secretly trying to catch up with Yili, the "leader", but this road to catch up can be described as ill-fated.
The gap between Mengniu and Yili has become wider and wider in recent years, and Mengniu is a little powerless in key indicators such as revenue and net profit.
In 2016, when Lu Min parachuted into Mengniu to become the president of Mengniu, it was in the bottleneck period of Mengniu and suffered a loss for the first time in history, but at this time, Yili achieved a profit of 5.669 billion yuan.
Lu Min was ordered to be in danger, and his ambition was undiminished, vowing to catch up with his old rival Yili, so that he would shout the slogan of "two hundred billion yuan in three years" in 2017.
(Lu Minfang)
At that time, the gap between the two was mainly in milk powder, ice cream and other businesses, so Lu Minfang had tried to "overtake in corners" many times in the past 8 years.
From 2017 to the first half of 2023, in the liquid milk business, where there is not much gap between the two sides, Yili's revenue accounted for 64.09% and Mengniu's revenue accounted for 88.1% decreased from 88.1% to 81.5%.
However, in terms of the milk powder business, which was already very different between the two sides, Yili's revenue increased from 9.44% to 20.43%, while Mengniu fell from 6.7% to 3.9%, which was far behind Yili.
In the first half of 2023, Mengniu's net profit fell by 16%, and in the first three quarters of 2023, Yili's revenue of 97.4 billion yuan was only almost equal to Mengniu's annual performance.
So, Mengniu has repeatedly experienced problems such as sluggish revenue growth and declining gross profit margin, what is the reason for missing 100 billion?
2. High-premium mergers and acquisitions have hidden risks
Mengniu's defeat seems to have been traced for a long time.
In the past, Mengniu's main business has been liquid milk, which is their revenue responsibility, accounting for more than 80% of long-term revenue.
At present, the liquid milk market is gradually saturated, consumer tastes have changed, and the liquid milk industry seems to have come to an end.
Lu Minfang may also be aware of this, so after taking office, he carried out a drastic "Lu reform" both internally and externally.
Internally, he started from the model and team, grasped the core of people-oriented, and achieved appropriate decentralization, clear division of labor, and responsibility to people.
According to Lu Minfang's explanation, it is "up if you can do it, and if you can't go down", the outside world's view of this is that Lu Minfang has brought the wolf culture back to Mengniu again and revitalized the morale of employees.
In the face of the external market, Lu Minfang started a crazy merger and acquisition model, and engaged in a product matrix layout of "four categories, many small categories". Liquid milk, milk powder, ice cream, cheese, the four troikas go hand in hand, and it seems that the scenery is infinite.
But mergers and acquisitions are like a blind box, if you want to surprise, you will be frightened when you open it.
In 2019, Mengniu acquired Bellamy's, an Australian organic infant formula manufacturer, at a premium rate of 50% and a price of 7.1 billion.
To this end, Mengniu did not hesitate to sell Junlebao, which had a mature business, in the same year.
Today, Junlebao is one of the top three milk powder brands in China, with revenue of 20.1 billion yuan in 2021, equivalent to about one-fifth of Mengniu.
On the other hand, Bellamy's, which Mengniu spent a lot of money to acquire, has been losing steadily, and even brought a goodwill impairment of 742 million yuan to Mengniu in 2022.
In addition to Bellamy's, Mengniu also acquired a 51% stake in Yashili for HK$10 billion in 2013. I thought it could be a win-win situation, but as a result, Yashili's gross profit margin continued to decline, and it was left far behind by its peers.
After Lu Min took the position, he also attached great importance to Yashili, hoped to give Yashili a hand, and hoped to incorporate it into Mengniu's business territory.
However, because of the melamine-tainted milk powder incident that year, Yashili's trust in it has been greatly reduced, and there are still voices questioning Yashili's safety on the Internet until now.
The decline in Yashili milk powder performance is only the tip of the iceberg of Mengniu's problems. The chain problems brought about by strong mergers and acquisitions have made Mengniu even more headaches.
Before Mengniu acquired Yashili, some people in the industry were worried that the corporate culture was too different, which could lead to high follow-up run-in costs.
In fact, mergers and acquisitions are not simply "1+1=2", but require careful integration and running-in in order to make the two enterprises truly integrate and exert greater synergies.
At present, Mengniu still relies on liquid milk to support the company, and ice cream, milk powder, cheese and other businesses account for only 14.4% of Mengniu's total revenue.
The proportion is small, the input is large, and the input-output ratio is extremely uncoordinated.
(Mengniu's acquisition of Yashili shares)
It turned out that before Lu Minfang took office, he had profound experience in the milk powder business and had pushed the Dumex brand to the peak of the domestic infant milk powder market share.
Lu Minfang has expressed his importance to the milk powder business in Mengniu on many public occasions, "If you don't do a good job of infant formula, you won't become a leader-level enterprise."
Unfortunately, it backfired.
When talking about Mengniu's nearly eight-year career as president, Lu Minfang said that he had gains and losses, and lamented that Mengniu's expansion under his governance was not resolute enough.
"It could be more resolute in doing some new brand development and investment," he said. For example, the daily fresh language, the ambition of expansion is not enough. As a result, when it comes to the allocation of resources across the group, there is actually a bit of conservatism, and more resources should be allocated. ”
Now that Lu Minfang has stepped down, I don't know how his successor, Gao Fei, will view the issue of expansion? Will Mengniu continue to maintain rapid expansion?
3. "Young Zhuang faction" high-flying relay
In 2024, Mengniu will suddenly change its coach at this juncture, and the situation is familiar.
As a veteran of the company, Gao Fei joined Mengniu as early as 1999 and has always been a leader in the liquid milk business.
As we mentioned earlier, although Mengniu has been losing ground in other businesses, its revenue in liquid milk is on par with Yili, and Mengniu's head in liquid milk is Gao Fei.
Everyone has heard the popular advertising slogan: not all milk is called Trensu.
As a large single product with annual sales of more than 30 billion yuan under Mengniu, Telunsu is one of Gao Fei's most proud works during his tenure as the head of the room temperature business department.
In addition, Gao Fei is also an all-rounder, in addition to Trensu, he has also planned the World Cup marketing campaign, and is proficient in business management, brand building, and talent training.
Perhaps Mengniu also hopes that Gao Fei can replicate his successful experience in building the Telunsu brand to the entire business line of Mengniu, helping Mengniu further achieve its high-end goal and catch up with Yili.
Can Goofy do it?
Shopping malls are like battlefields, and they pay attention to the right time, place and people.
Despite Gao Fei's outstanding personal ability and experience, it is not easy to lead Mengniu to the next level.
After all, for Mengniu, the current dairy market is a besieged city. Liquid milk growth is hopeless, milk powder strategy is wrong, and the cheese business has hit a ceiling...... Demand has contracted repeatedly, and Mengniu has not been able to find a second growth curve.
However, Gao Fei is brave and strategic, and he said at the performance meeting that he must stick to the strategy and actively respond to challenges. He also put forward a series of strategies such as strengthening the high-end strategy, focusing on the trend of functional milk, expanding market segments, and online and offline collaborative operations.
These strategies may really bring new development opportunities to Mengniu, but when it comes to implementation, it is still difficult for Mengniu to achieve high-end.
For the sake of performance, all brands are using the word "volume" to open the way, and the mid-to-high-end dairy market is full of gunpowder. Like Yili Jindian and Mengniu Trensu, they have been desperately fighting a price war.
Walking into a supermarket at random, you can see that Telunsu has made a special offer with a separate price of 55 yuan for one box and nine for two boxes;
However, in recent years, Mengniu has carried out a large number of sales activities in order to compete for the market, but the result is to increase revenue but not profit.
This overnight change of coach incident can also see that Mengniu is very anxious about the current situation.
Lu Minfang didn't know if he had absorbed his wolf culture of "going up and going down" to himself, anyway, he "slipped" fast, in professional terms, this is called strategic adjustment, that is, turning around quickly if the direction is not right.
But no matter how you turn around, Mengniu has officially entered the "high-flying era", but it is still unknown whether this high-flying can take Mengniu to fly high.