According to data from the National Bureau of Statistics, my country's milk production has continued to rise since 2017, reaching 41.9665 million tons in 2023, an increase of 6.74 percent year-on-year. Corresponding to the high production capacity is the falling raw milk price. The latest data from the Ministry of Agriculture and Rural Affairs shows that as of May this year, the domestic raw milk purchase price has fallen for 27 consecutive months year-on-year, the longest since 2010. At the 2024 China Dairy Industry Development Strategy Seminar held on July 3, Li Shengli, chief scientist of the National Dairy Industry Technology System, said that due to the continuous decline in the purchase price of raw milk, milk prices and costs have appeared since the national dairy system has records. The first upside down.

In addition to the pressure on the supply side to clear inventory, the demand side is also under pressure. According to the data of the National Bureau of statistics, the per capita milk consumption of Chinese residents has been flat in the past 10 years. At the moment when the demographic dividend has faded, this means that the growth momentum of milk consumption demand in the domestic market as a whole is hardly sufficient. The Q1 2024 China Shopper Report released by Bain and Kadodo shows that yogurt and cheese are categories that have seen sales decline for three consecutive years in the integrated global market.

With high raw milk inventory and weak demand for dairy products, in such a competitive environment of stock market, seeking structural growth is a way to choose. But where is the direction of diversification of China's dairy industry structure?

The CBNData found that the low-temperature yogurt category maintained a high growth rate online, with a compound growth rate of 78.4 percent in online sales from January to May in the past three years, and a number of new players relying on the category emerged. In this context, we will discuss the reasons behind this in terms of channel evolution, brand landscape and product diversification. Who are the core players? What kind of products have a better chance to help brands gain a foothold in this track and achieve structural growth?

What are the expansion opportunities brought about by the evolution of channels?

For a long time, low-temperature dairy products are subject to objective conditions such as cold chain logistics, and often take offline as the main consumption scene. Hypermarkets and supermarkets have become the main sales channels of low-temperature dairy products. With the increasing penetration of e-commerce and the accelerated improvement of cold chain logistics facilities in recent years, the objective constraints that originally affected the online sales of low-temperature dairy products are receding.

The 2023 annual reports of dairy companies such as Mengniu, Yili, and New Hope also mentioned that at the level of sales channels, the retail sales of dairy products in offline physical stores of large supermarkets showed a downward trend compared with the previous year, while the retail sales of dairy products in near-field channels such as convenience stores and online community group buying showed an upward trend compared with the previous year, and online channels maintained rapid development.

The decline of traditional offline channels is hard to hide, and emerging retail channels focus on differentiated layout.

Specific to the traditional offline channels, the overall growth of dairy products is weak. The immediate win data show that the offline yogurt category in the first quarter of 2024 overall sales fell 11.46 percent year-on-year, sales fell 12.69 percent year-on-year, while the comparison of normal temperature yogurt sales and sales are more than 20% year-on-year decline, low-temperature yogurt in the overall dairy product segment has been in a lower level of decline.