Core Viewpoint - The Chinese dairy industry is experiencing new consumption trends and opportunities, driven by government initiatives and evolving consumer preferences, particularly in the context of deep processing and diversified product offerings [1][2][3]. Group 1: Industry Trends and Opportunities - The Ministry of Agriculture and Rural Affairs, along with nine other departments, released a plan to promote agricultural product consumption, highlighting the importance of dairy products [1]. - The China Dairy Association's report indicates that the quality and competitiveness of domestic dairy products are improving, with a fresh milk inspection pass rate of 99.96% in 2024 [2]. - The domestic cheese consumption has surged by 120% over the past five years, indicating a shift in consumer preferences towards dairy products that can be integrated into various food items [3]. Group 2: Market Dynamics and Consumer Preferences - The B2B dairy market in China is nearing 100 billion yuan, with 70% to 80% of this market share currently held by imports, suggesting a significant opportunity for domestic producers to replace imports [4]. - The average per capita dairy consumption in China is less than one-third of the global average, with a low penetration rate of cheese and butter products, indicating room for growth [4]. - The government aims to increase per capita dairy consumption to 47 kg by 2030, promoting the development of low-temperature dairy products and cheese [4]. Group 3: Product Innovation and Differentiation - Dairy companies are increasingly focusing on product differentiation to meet diverse consumer needs, including low-sugar yogurt and high-protein dairy products [9]. - The market for functional dairy products is growing rapidly, with an annual growth rate of 8% to 10%, driven by rising health consciousness among consumers [9]. - Specialty dairy products, such as goat and buffalo milk, have seen their market share increase from 5% to 12%, reflecting changing consumer preferences [9]. Group 4: Supply Chain and Production Challenges - The production of cheese requires high-quality raw milk and advanced processing technology, much of which is still imported, posing challenges for domestic producers [5]. - The dairy industry is facing pressure from declining fresh milk prices, necessitating structural adjustments in dairy product offerings and herd management to achieve supply-demand balance [12][14]. - The integration of technology in dairy farming, such as smart management systems, is enhancing milk production efficiency and quality [11][12]. Group 5: Policy and Regulatory Environment - Recent government policies emphasize the importance of quality control and safety in dairy production, aiming to strengthen consumer trust in domestic dairy brands [10][14]. - The central government's support for integrated development of dairy farming and processing is expected to benefit capable farms and ensure farmers' income [14].