On 9 March, Zhejiang Panda Dairy Group Co., Ltd. (Panda Dairy) released its
full-year 2015 financial figures with the following highlights:
Sales: USD55.9 million (RMB366 million),
down by 4.3%
Net profit: USD11.0 million (RMB72.0
million), up by 448.1%
The company is best known for its sweetened condensed milk and evaporated milk,
and also produces sweetened milk sauce (a higher concentrated milk) and small
amounts of Mozzarella.
It sells its concentrated milk in two main formats:
Small packs for retail and foodservice, via
distributors throughout the country, organised into 4 sales regions
Bulk sales to food manufacturers, notably
to key accounts which include Unilever, Xiangpiaopiao (local food brand,
well known for milk tea) and Danone
It attributes its sharp rise in net profit to:
Its focus on developing high value-added
products in its branded concentrated milk product range and freeing up its
dealers to operate more autonomously
Improved management, which enabled it to
make a turnaround from the huge deficit it suffered in 2014
The continuously decreasing international
price of milk powder in 2014-2015. This led to the constant declines in prices
of raw milk, benefiting the gross profit margin of its condensed milk business,
from 19.2% in 2014 to 36.5% in 2015
Leading role in China's concentrated milk market
In this category there are many brands, however only a few are well recognised
nationwide, including Nestle, Panda and Fengxing, with the imported brand Black
& White from FrieslandCampina also significant in foodservice. One recent
report suggests that Panda's market share has risen in the last few years, as
the charts below highlight.
The company seeks to mark itself as different: “We are focusing on the premium
segment market, as the leading locally-developed brand. We don't compete with
the other smaller low-end brands. Consumers are mainly influenced by the brand
when they choose condensed milk.... Even though there are newcomers, it will
take a long time for them to establish brand recognition."
According to Panda Dairy’s financial report, it made sales of USD51.5 million
(RMB337 million) in 2015 from dairy products (mainly concentrated milk, but
including a small quantity of cheese). Total local sales of concentrated milk
through all channels (foodservice, retail industrial) are estimated at USD275
million (RMB1.8 billion).
Panda Dairy gives its production capacity for dairy products in total at 20,000
t/a. Its principal supply lines comprise:
Raw milk: Ningxia Panda Dairy Co., Ltd.,
which purchases raw milk from dairy farmers
WMP, SMP and whey powder: Sinocean Dairy
Commodity Co., Ltd., which imports these via agents
It buys product on Fonterra's GDT auction via Zhejiang Cereals, Oils &
Foodstuffs Import & Export Co., Ltd.: in 2015 its purchases from this
company reached USD9.2 million (RMB60 million).
Market Shares, Concentrated Milk, China - 2010 vs. 2015
Note: Panda Dairy = Zhejiang Panda Dairy Group Co., Ltd.
Fengxing Milk = Guangzhou
Fengxing Milk Co., Ltd.
Dongtai Dairy = Guangdong
Dongtai Dairy Products Co., Ltd.
Source: China Fortune Securities
This article comes from Dairy Products China News 1603, CCM
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Tag: Dairy milk