Core Viewpoint - The article highlights how Mengniu Dairy has achieved a 13.4% increase in profit amidst a challenging consumer environment and low raw milk prices, showcasing its innovative strategies to navigate the industry downturn [2]. Product Innovation - Mengniu launched over 100 new products in the first half of 2025, addressing diverse consumer needs across various categories, including long-life milk, low-temperature yogurt, fresh milk, ice cream, functional milk, and infant formula [5][6]. - The company introduced 72 new products in the long-life milk segment to enhance basic nutrition and improve "quality-price ratio" [6]. - High-end fresh milk brand "Daily Fresh" incorporated self-developed HMO to cater to children’s nutritional needs, especially for lactose-intolerant consumers [6]. - The infant formula brand "Ruibaoen" utilized innovative MLCT technology to enhance DHA content by 48% and double absorption rates [10]. Channel Upgrade - Mengniu accelerated channel upgrades by restructuring its RTM model, integrating traditional and emerging channels, and enhancing online and offline synergy [13]. - The company launched customized products in membership stores and warehouse supermarkets, achieving significant sales, such as the "Cuan Yi Ru" early morning bucket becoming a bestseller [13]. - In the live-streaming e-commerce sector, Mengniu leveraged consumer attention through engaging content, leading to increased market share in various segments [15]. Sustainable Development - Mengniu's GREEN sustainable development strategy focuses on creating a low-carbon supply chain, establishing 37 green factories, and committing to "zero deforestation" [22]. - The company has maintained an AA rating in MSCI ESG for two consecutive years, demonstrating leadership in sustainable practices within the industry [22]. Financial Performance - In the first half of 2025, Mengniu reported revenues of 41.57 billion yuan and operating profits of 3.54 billion yuan, with a 46.2% increase in operating cash flow [2][10]. - The operating profit margin improved by 1.5 percentage points to 8.5% [2]. Brand Strategy - Mengniu's flagship brand "Te Long Su" maintained its market position by avoiding price wars and focusing on continuous innovation to sustain brand vitality [19]. - The brand's organic series experienced growth, particularly the newly launched "Sand Gold Set Sea Desert Organic Pure Milk," which has gained recognition among quality-conscious consumers [20].

Core Insights - The Chinese dairy industry is currently facing a supply-demand imbalance, leading to a need for capacity reduction as a key strategy for alleviating industry distress [2][4][10] - The bottom of the current milk price cycle has been established, with a potential reversal expected within a year, making the second half of this year or the first half of next year critical [10] Industry Overview - From 2018 to 2022, the dairy industry saw an increase of over 1 million dairy cows, resulting in excessive production capacity amid declining consumption [2][4] - The dairy farming sector is projected to incur cumulative income losses of 70 billion yuan from 2023 to 2025, with losses from fresh milk powder reaching 20 billion yuan [2] Production Trends - The total production of raw milk in China is expected to decline by 2.8% in 2024, marking the first decrease since 2018 [3] - The number of dairy cows in the top 10 producing provinces is estimated to decrease by 6.7% by the end of 2024, with around 12 million dairy cows expected to be eliminated from the industry [3][4] Market Dynamics - Despite the acceleration of capacity reduction and favorable conditions such as rising international milk prices and falling feed costs, the domestic raw milk supply remains ample due to slowing downstream demand [4] - The average price of fresh milk in major producing provinces was 3.04 yuan/kg as of early July 2025, reflecting a year-on-year decline of 6.5% [4] Strategic Recommendations - Industry leaders are advised to control the overall increase in dairy cow numbers to no more than 500,000 during the 14th Five-Year Plan period, with an annual increase capped at 100,000 [5] - Major dairy companies should enhance their self-sourced milk supply through mergers, equity stakes, and long-term management of social farms to stabilize foundational production capacity [4][5] Consumer Trends - There is a shift in consumer preferences towards high-quality, nutritious dairy products, with a notable increase in demand for B-end (commercial) dairy products, which currently sees 70%-80% of its market share dominated by imported brands [7] - The industry is responding to the evolving nutritional needs of various demographic groups by developing tailored products for different age segments [7][8] Future Outlook - The dairy industry is expected to see a significant adjustment in production capacity, with a projected decline exceeding 5% in the fourth quarter of 2024 and the first quarter of 2025 [9] - The market is anticipated to reach a supply-demand balance by the third quarter of 2025, driven by the exit of smaller farms and consumption stimulus policies [9][10]

Core Viewpoint - The Chinese dairy farming industry is undergoing a significant transformation after three years of bottom adjustment, with a notable decline in raw milk production expected in 2024, marking the first decrease since 2018. The industry is focusing on increasing milk yield per cow and eliminating low-yield cows to enhance profitability and efficiency [1][2]. Industry Adjustment - In 2024, China's raw milk production is projected to be 40.79 million tons, a 2.8% decrease year-on-year, with a clear acceleration in capacity clearance [2] - The number of dairy cows in the top 10 producing provinces has decreased by 6.7% as of the first three quarters of 2024, with an estimated 12 million dairy cows eliminated from the industry [2] - The number of large-scale dairy farms is expected to drop from 4,600 in 2022 to 3,700 by the end of 2024 due to ongoing losses and cash flow issues [2] Financial Performance of Companies - Companies like Junhua Agriculture have faced continuous losses, leading to risk warnings and potential delisting due to negative net assets [3] - Other companies, such as Woyue Mufeng, have exited the New Third Board due to ongoing financial struggles, while Xialing Muyu has not recovered from losses post-restructuring [3] - Knight Dairy, the first dairy company listed on the Beijing Stock Exchange, reported its first loss in ten years in 2024, facing criticism for not timely disclosing performance forecast corrections [3] Supply and Demand Dynamics - The average price of raw milk has decreased from 4.4 yuan/kg in August 2021 to 3.1 yuan/kg by December 2024, reflecting a persistent supply-demand imbalance [6][7] - In 2024, the average price of raw milk in major producing provinces was 3.32 yuan/kg, down 13.5% year-on-year [6] - The reliance on imported dairy products has decreased, with imports dropping by 9.5% in 2024, marking the third consecutive year of decline [7] Industry Outlook - The industry is expected to see a turning point in the second half of 2024 as milk prices stabilize and cost-reduction measures take effect, with companies reporting improved operating metrics [9] - Modern Dairy's EBITDA for 2024 is projected at 2.986 billion yuan, a 19.6% increase year-on-year, while Yuran Dairy's EBITDA is expected to rise by 38.3% [9] - The Ministry of Agriculture anticipates a better supply-demand balance in 2025, with potential improvements in milk prices and a reduction in production capacity [10]

Core Viewpoint - The article highlights the unique conditions of the Ulan Buh Desert in Inner Mongolia, which provide an excellent environment for organic dairy farming, particularly at the China Shengmu Dairy's Sand Gold Ranch, emphasizing the harmonious relationship between nature and agriculture [3][5][7]. Group 1: Environmental Conditions - The Ulan Buh Desert is located in the "Golden Milk Source Belt" of China, characterized by its unique climate, soil, water sources, and sunlight, which are conducive to creating a distinctive organic milk source [3]. - The desert's natural virus isolation conditions and the presence of both sandy areas and lakes contribute to its suitability for organic dairy farming [3]. Group 2: Farming Practices - Workers at China Shengmu Dairy are actively planting silage corn seeds, which are crucial for the dairy cows' diet, taking advantage of the growing season [5]. - The ranch features lush pastures of alfalfa, which are vital for the cows, creating a picturesque landscape that enhances the farming environment [5]. Group 3: Dairy Production - The cows at the ranch not only produce high-quality milk but also act as "mobile organic fertilizer factories," enriching the soil and promoting the growth of pastures [7]. - The organic milk produced in the desert is noted for its natural richness and exceptional quality, reflecting a vision of harmonious coexistence between humans and nature [7][8]. Group 4: Animal Welfare - The dairy cows at China Shengmu Dairy enjoy high welfare standards, including comfortable bedding and a customized diet formulated by nutritionists, ensuring their health and productivity [8].