Mengniu Dairy reports growth in 2022 despite sluggish consumer market in China 04-28-2023

On March 29, Mengniu Dairy released its 2022 annual report announcement. According to the announcement, Mengniu achieved an annual income of RMB 92.6 billion, which was a YoY increase of 5.1%. The operating profit was RMB 5.4 billion, a YoY increase of 11.6%. Among the products, room temperature pure milk and high-end brands achieved strong growth. Additionally, the company's fresh milk and ice cream outperformed its industrial competitors, and low temperature cheese continued to be an industry leader.

Mengniu's steady performance growth in 2022 is very prominent amind a sluggish consumer market in China. Statistics show that in 2022, the total retail sales of social consumer goods in various industries in China decreased by 0.2% year-on-year, showing an overall recession. Mengniu's growth against the decreasing trend in the consumer market shows that Mengniu holds a leading role in China's dairy industry, and that there is still room for growth in China's dairy industry market.

Mengniu's ice cream business line acheives growth in 2022

Currently, Mengniu has four main production lines, namely liquid milk, ice cream, milk powder and cheese. Liquid milk is still Mengniu's basic market. In 2022, the company achieved a revenue of RMB 78.3 billion from liquid milk, accounting for 84.5% of the company's total revenue, a YoY increase of 2.3% compared to 2021. The growth was mainly driven by high-end products such as Deluxe Milk and Shiny Meadow.

While the basic market is growing steadily, Mengniu's other business lines have also recorded rapid growth. Among them, the ice cream business earned the most, with revenue increasing by 33.3% YoY to RMB 5.7 billion. Mengniu's ice cream business surpassed its milk powder business for the first time in the past 10 years and became Mengniu's second-highest performing business unit. Although the current revenue shares from cheese and milk powder are small, less than 10%, these business continue to improve.

Mengniu acquires Milkland as part of "first" growth strategy

Mengniu has completed a tender offer for the cheese giant Milkland at the end of 2022, with its shareholding ratio increasing to 35.1%. The cheese business is recognized by the dairy industry as the next important growth point for dairy products, with a market potential of over RMB 100 billion. Milkland has lived up to Mengniu's high expectations, and the cheese and other sectors of this company almost doubled their YoY revenue in 2022. The strong growth momentum is expected to become Mengniu's second main revenue source.

According to Mengniu’s CEO, Minfang Lu, the company plans to create a “new Mengniu” in the next five years. The so-called rebuilding of a new Mengniu does not refer to sales targets, profits, volume or market value, but to adopt the "first" strategy, which means that the company aims to become a first choice for customers, to be more international, and to have more responsibility, passion, and technology. Through achieving these goals, Mengniu Dairy aims to continue leading the Chinese dairy industry far into the future.

More information can be found at CCM Dairy Products China Monthly Report.

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