Core Viewpoint - The new regulation implemented by the Ministry of Agriculture and Rural Affairs starting September 16 mandates that sterilized milk (long-life pure milk) can only be produced using raw milk as the sole ingredient, prohibiting the use of reconstituted milk, which has sparked widespread attention in the dairy industry and consumer market [1][2]. Industry Impact - The regulation is expected to benefit consumers by ensuring that long-life milk truly returns to its essence of being made from raw milk, thereby enhancing public trust in dairy products [1][2]. - For companies, the regulation represents a survival of the fittest scenario, as those that previously relied on reconstituted milk to lower costs will need to increase their raw milk procurement, driving demand for raw materials and pushing the industry towards the construction of high-quality milk source bases [1][2]. Challenges - Short-term production costs for long-life milk may rise, potentially leading to price increases for some mid-to-low-end products [2]. - The stability and sufficiency of raw milk supply will be critical in assessing the effectiveness of the new regulation; insufficient supply may force companies to cut production capacity, further concentrating the industry and squeezing the survival space for small and medium-sized dairy enterprises [2]. Long-term Perspective - The regulation is not just an adjustment of raw material standards but a correction of the development logic of China's dairy industry, aiming to solidify market foundations by requiring higher production standards to ensure consumer confidence [2][3]. - The policy encourages companies to accelerate the construction of milk source bases and improve cold chain logistics and processing technology, presenting an opportunity for the dairy industry to transition towards high-quality development [2][3]. Regulatory Enforcement - Effective implementation of the regulation requires a "complementary package" approach, including strict enforcement by regulatory bodies to prevent companies from evading the new rules through ambiguous labeling or concept substitution [2]. - There is a need for increased public education to help consumers understand the differences between reconstituted milk and raw milk, avoiding societal panic over the demonization of reconstituted milk, which is not inherently a problematic food but should be used appropriately in specific contexts [2]. Quality Orientation - The new regulation reflects a decisive shift in dairy regulation towards a quality-oriented approach, responsible for consumer health and an important step towards industry upgrading [3]. - If companies can achieve quality improvement and efficiency under the new regulation, the Chinese dairy industry can break free from the "low-end competition" trap and move towards a new phase where quality and brand trust drive market success [3].