Production|Tiger Sniff Pro Investment Research Group
Author | Chen Manlei
On August 25, Bright Dairy released its first half of 2020 financial report. Data shows that during the period, the company achieved revenue of 12.146 billion yuan, a year-on-year increase of 9.52%, and achieved a net profit of 308 million yuan attributable to the parent, a decline of 16.09%. The former exceeded expectations, while the latter fell short. But overall the epidemic was still defeated.
(Data source: company announcement)
Previously affected by the epidemic, Bright Milk’s revenue fell 5.84% in the first quarter, and its net profit attributable to its mother plummeted 45.35%. However, the company’s Q2 overall was quite good, with single-quarter revenue exceeding 7 billion yuan, a year-on-year increase of 24.36% far exceeding the previous period, while net profit attributable to the parent reached 231 million yuan, a small increase of 2.16% year-on-year. It was the good performance of Q2 that smoothed out the impact of the epidemic on Q1’s performance and regained a good momentum of development.
In general, Bright’s growth in the first half of the year was mainly due to the successful promotion of the company’s product diversification strategy. After the growth of liquid milk has entered a bottleneck, today’s diversified dairy products have become the core driving force of the company’s revenue. In terms of regions, New Zealand’s Synlait performed well. During the period, the company’s overseas market revenue reached 3.174 billion yuan, an increase of 33%.
In addition to brand diversification, Guangming is also continuing to expand nationwide, trying to get rid of its high dependence on the East China base camp. The current frequent milk source layout is its means of gradually landing.
It’s just that the competition in the fresh milk industry is becoming increasingly fierce. Mengniu and Yili, both of which started as giants with room temperature milk, have entered the track, and each regional company has national ambitions and is trying to break into other competitors’ Base camp.
In the face of a market full of smoke, where are the bright opportunities?
The road to brand diversification
The key to Bright Dairy’s good answers in the first half of the year lies in the product diversification strategy launched by the new chairman Pu Shaohua after he took office in 2018.
In terms of product breakdown, Bright Milk’s revenue in 20H1 was 6.64 billion yuan, a year-on-year increase of 2.31%, and other dairy products revenue was 4.03 billion yuan, a year-on-year increase of 25.6%. It can be seen that the current diversified products are the core of the company’s growth. Driving force. It is precisely because of the expansion of categories that Bright Dairy’s growth rate under the background of the epidemic is still better than that of the same period in 2019, getting rid of the extremely slow growth from 2015 to 2018, and even the bottleneck period of shrinking.
Actually, a large part of Guangming’s previous dilemma is related to the logic of the large single product caused by the previous hit product “Mosleyan”.
The company launched Mosslian in 2009 and officially opened up the new track of room temperature yogurt, and this product did not disappoint, becoming the brightest growth engine at that time, with sales reaching 60 in 2014 100 million yuan, accounting for up to 34% of total revenue. However, due to the lag in product innovation and the continuous advent of competing products, the bright situation has taken a turn for the worse. Mosleyan’s retail sales have fallen from 8 billion yuan at its peak to 5.1 billion yuan in 2019, and its market share has dropped from 11.7% in 2014 to 3.4% in 2019. It can be said to have been beaten by competitors.
In order to reverse the deteriorating situation of the river, Pu Shaohua launched a diversification strategy after taking office, increasing investment in low-temperature products, which is the “leading freshness” strategy in the company’s mouth, and continued to launch new pasteurized milk products, choosing to avoid Mengniu and Yili occupies an absolute advantage in the field of room temperature milk, and strives to survive in the market with a differentiated competition strategy.
In addition to low-temperature fresh milk, Bright also successively acquired 66.27% equity in Milk Shed and 100% equity in Yimin Food Factory No. 1 in 2018. The former is a bakery and the latter is a cold drink factory, symbolizing the company’s all-round Layout ambition.
Especially Yimin Food Factory No. 1 has an obvious complement to the company’s overall product matrix, bringing in seasonal best-selling products such as ice cream. In terms of specific products, Yimin Food No. 1 Corong>Although Guangming has made frequent moves in the past two years and has made obvious strategic adjustments, it must adapt to the increasingly bloody competitive environment of low-temperature milk as soon as possible.
In today’s dairy product market, the growth of room temperature milk has slowed down significantly, and there are constant voices from society about the nutritional value of products. Therefore, the two giants Mengniu and Yili are also paying more attention to the growth rate far exceeding the industry average. Horizontal low-temperature milk circuit. The two leaders have a larger number of milk sources and a wider distribution, and they have stronger channel advantages. Obviously, they are very helpful for the follow-up layout and will put a lot of pressure on enterprises in the industry.
In addition to the leader, the national layout of Bright Dairy is also facing threats from local barriers,
As mentioned above, the low-temperature milk supply chain must be close to supporting ranches and factories, and not too far away from consumers. These factors have led to a clear division of power in the low-temperature milk market-regional companies are segregated from the Quartet, and even if they have capital advantages, it is difficult for outsiders to enter the local market.
For example, Guangming has been coveting the North China market for a long time, but northern dairy companies such as Sanyuan and Junlebao have established themselves in the low-temperature milk market here. It is not easy to break through the barriers of these regional superior companies. How to open up its own “base area” and establish a supply chain in the target market to gradually acquire the market is a problem that the company cannot avoid.
Of course, it is gratifying that the old factory, which has been seeking stability for many years, wants to change, but the market does not believe in qualifications. Bright Dairy wants a “bright” future, and it needs a lot of effort.
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