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2016 Domestic Dairy Industry Analysis

Date: October 17th, 2016     Source: www.hexun.com


 

 

         Since 1990s, global dairy market has been in a stable development stage. Growth rate of dairy industry was 2.4% in 2014, reaching 48.11190 billion kg. During the five years from 2010 to 2014, the growth rate reached 2.8%. In 2015, the growth rate was still around 2%.

Europe is still the biggest market around the world, accounting for 39.8% in global dairy market, followed by the Americas accounting for 29.5%. The Asian-Pacific region accounts for 27.5%, of which the Chinese consumer market accounts for about 10% in the global market.

Analysis of China's dairy industry

Dairy production of China was 27 million tons in 2015, with year-on-year growth rate of 4.6%. During January to May 2016, the production was 11 million tons with year-on-year growth rate of 6.00%. According to statistical data of China's dairy industry, income of the dairy industry was RMB 332.9 billion in 2015 with year-on-year growth rate of 0.93%, reaching total profits of RMB 24.2 billion with year-on-year growth rate of 7.25%. In general, dairy products are influenced by macro economy and dairy industry keeps increasing at a low speed in 2016.

Data shows that retail sales of yogurt products, such as normal temperature yogurt, normal temperature lactobacillus beverage and low temperature yogurt, increased by 91.1%, 35.9% and 10.2% in 2015 from the year-earlier period, much higher than the growth rate (2.7%) of liquid milk products.

Compound growth rate of normal temperature yogurt was 80% in the past three years, and it is expected to grow rapidly in the future. The estimated market scale of normal temperature yogurt in 2015 is RMB 13-14 billion, with year-on-year growth rate of about 70%. Its compound growth rate was about 80% in the past three years, expected to grow rapidly in the future. Through calculation according to the compound growth rate of 20%-25% in future five years, market scale of normal temperature yogurt is expected to reach around RMB 35-40 billion.

Rapid growth of normal temperature yogurt

At present, concentration ratio of normal temperature yogurt industry is relatively high, and the estimated proportion of the first three industries is about 90%. Among them, (1) Compound growth rate of Momchilovtsi was 89% from 2009 to 2015, expected to reach the growth rate of around 10% in 2016; (2) Market scale of AMBROSIAL was about RMB 3.6 billion in 2015 with year-on-year growth rate of 350%, and it is expected to reach more than RMB 7 billion in 2016; and (3) Market scale of Mengniu Chunzhen in 2015 is estimated to be about RMB 2.5 billion, expected to keep increasing at a high growth rate of 50% in 2016.

Competition pattern of normal temperature yogurt in 2015

In 2015, market scale of low temperature yogurt was about RMB 25 billion, with year-on-year growth rate of around 15%. In 2012, per capita yogurt consumption of urban residents in China was 3.46kg. Compared with 11kg in America in 2011 and 7.6kg in Australia in 2012, there is still room for it to be doubled. With the increase of per capita income and development of cold chain, it is estimated that low temperature yogurt will keep growing at a compound growth rate of 10-15% in the future three years.

In yogurt market, Mengniu Dairy, Yili Dairy and Bright Dairy account for about 65% of the market shares. By acquiring Junlebao Dairy and business of Danone in China, Mengniu obtains a big yogurt market share, and the estimated income of its low temperature yogurt in 2015 is about RMB 8 billion. Low temperature yogurt of Yili includes star product Changqing and Children yogurt, and its growth rate in 2015 is estimated to be more than 20%. Bright Dairy suffered from the competition in the same industry, with a declining trend in 2015. Besides, enterprises with a good developing trend of yogurt include Huishan Dairy and Tianrun Dairy (600419).

There is still room for per capita consumption of low temperature yogurt in China to be doubled.

Competition pattern of yogurt industry in 2015

Income rate of major products including Yili "Satine", "AMBROSIAL", "Changqing" and "PRO-KIDO" in 2015 was increased by 5% compared with last year. Among them, Satine is anticipated to reach the growth rate of 20% in 2016, and AMBROSIAL still increases nearly by two times. Gross profit rate of the above products is relatively high. Thanks to structure upgrade, integrated gross profit rate of Yili rises from 29.73% in 2012 to 41.74% in the first quarter of 2016.

 

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