Core Viewpoint - The Chinese dairy industry is currently facing challenges such as overcapacity and weak consumption, but experts believe that through advancements in deep processing technology and strategic restructuring, the industry can achieve high-quality development and overcome cyclical difficulties [1][6]. Industry Challenges - The industry is experiencing both overcapacity and reliance on imports, with a total milk production of 40.79 million tons last year and fresh milk prices hitting historical lows. The supply of raw milk exceeds demand, leading to increased losses in farming [2][3]. - The consumption pattern in China primarily focuses on liquid milk, which has a short shelf life and a rigid supply chain, causing rapid transmission of consumption fatigue to the farming sector and resulting in volatile raw milk purchase prices [2][3]. Deep Processing Opportunities - Developing deep processing is seen as a key solution to the challenges faced by the dairy industry. By extracting components like cream, butter, whey protein, and casein from fresh milk, companies can significantly increase their revenue. For instance, processing 100 tons of fresh milk can yield over 750,000 yuan compared to 262,500 yuan from direct powder sales [2][3]. Core Challenges in Deep Processing - There are four main challenges in deep processing: 1. Technical path differences, as domestic processes must start from fresh milk rather than whey liquid [3]. 2. Lack of mature application scenarios for by-products like casein and lactose [3]. 3. Absence of regulatory standards for residual materials post-extraction [3]. 4. Insufficient collaboration across the industry chain, requiring participation from cheese, infant formula, and baking sectors [3]. Strategic Recommendations - Companies are advised to abandon the "small but beautiful" mindset and instead compete directly with leading brands through large product branding to achieve scale [4]. - The concept of "freshness" should be integrated into brand positioning, product structure, and channel development [4]. - Regional dairy companies should leverage local advantages to create differentiated brand systems, as demonstrated by Shandong Jiasheng Dairy's 60% growth during the pandemic [4]. Successful Case Study - Xinjiang Tianrun Dairy has achieved 1 billion yuan in sales outside its region by capitalizing on the unique qualities of its milk and innovating its distribution channels, including over 800 self-built specialty stores and a new retail model combining online and offline strategies [5]. Future Transformations - The dairy industry is expected to undergo three major transformations: 1. Accelerating the localization of deep processing technology and addressing the value realization of components [6]. 2. Shifting from opportunistic strategies to a more structured approach through brand remodeling and comprehensive channel strategies [6]. 3. Regional companies focusing on geographical advantages, product differentiation, and channel innovation to establish an irreplaceable position in niche markets [6].