Core Insights - The dairy industry is facing increasing survival pressures, with major players like Mengniu and Yili needing to collaborate to reshape the industry landscape [3][8] - The average price of fresh milk in Q2 this year was only 3.04 yuan/kg, significantly below the breakeven point of 3.5 yuan/kg for most farms, leading to over 90% of dairy farms operating at a loss [3][8] Company Strategies - Mengniu's premium product, "Te Long Su," has achieved sales exceeding 30 billion yuan, becoming the largest single product in the global dairy industry, while also launching a new "desert organic" product [5][8] - Yili's "Jindian" focuses on creating a high-end image through organic branding but lacks a clear connection between organic and source quality, which may limit its competitive edge [5][8] Market Trends - The dairy market is characterized by a dominance of liquid milk, with 92.7% of total dairy production in China being liquid milk, while deep-processed products like cheese and butter account for less than 7.3% [8][9] - The B2B dairy market has expanded to a scale of hundreds of billions, with significant demand for dairy products from coffee chains like Starbucks and Luckin Coffee [9] Competitive Landscape - Both Mengniu and Yili have faced challenges with product packaging similarities, leading to consumer confusion, but Mengniu has chosen to focus on its development strategy rather than legal disputes [6][7] - The overall dairy consumption has declined, with a 9.6% drop in sales across all channels, prompting companies to shift focus towards product quality and pricing [7][8]