Business Strategy and Outlook| Jacky Tsang |
Mengniu is the second-largest dairy processor in China, with majority of its revenue derived from the liquid milk business, while ice cream and cheese are smaller revenue drivers. The company is leveraging its acquired companies including Yashili and Bellamy to expand its milk powder segment. After management change in 2016, Mengniu has restructured its organization and distribution channel, which in our view has rejuvenated its liquid milk business and resulted in rebounding profit growth. The company’s premium shelf stable milk lineup, Deluxe, has become the number one brand in China since 2020, which we think reflects improving channel execution and effective portfolio construction. Mengniu has currently built out a competitive liquid milk portfolio spanning shelf stable, yogurt and chilled products.