Bright Dairy: Little Chance for the "Veteran" to Return to the Center Stage of Competition
Source: The DairyNews
Due to the high-frequency consumption attribute of fresh milk products, the competition among domestic dairy giants has always attracted media attention. At the same time, the promotional efforts by dairy manufacturers have made their rivalry stories widely known.
Bright Dairy, from Shanghai and honored as "China's First Dairy Stock," was overtaken by Yili and Mengniu a decade ago with "ambient milk," and has since shrunk into its niche of "fresh milk" (pasteurized milk), continuing to enjoy the warm support of Shanghai residents.
However, the three-year pandemic has rendered Bright Dairy's "quality" and "sentiment" insufficient to maintain its position as the third in the industry. The decline in the purchasing power of Shanghai residents, in line with the nationwide consumption downgrade trend, has led to eight consecutive quarters of year-on-year revenue decline for Bright Dairy. This has made its relatively higher-priced and higher-cost "fresh milk" unable to provide reliable returns for investors.
Bright Dairy's corporate strategy has consistently emphasized not seeking to be "big," but striving to become "China's best dairy company." This strategic positioning is difficult to disprove until it completely fails. Coupled with its unique large state-owned enterprise background in the industry, Bright Dairy's various "innovative" attempts over the past decade now seem more like minor adjustments. "Blue Chip Enterprise Review" even believes that Bright Dairy has missed the opportunity to regain a central position in the overall dairy industry competition through strategic adjustments.
On April 28, 2024, Bright Dairy released its financial report for 2023 and the first quarter of 2024. In 2023, Bright Dairy's revenue was 26.485 billion yuan, a year-on-year decrease of 6.13%; total assets were 24.227 billion yuan, a year-on-year decrease of 0.92%.
Notably, its revenue has declined year-on-year for the eighth consecutive quarter, with the first quarter of 2024 revenue at 6.417 billion yuan, a year-on-year decrease of 9.25%. Although in 2023, through confirming land compensation income (424 million yuan) at 777 Chengshan Road, Pudong New Area, Shanghai, its net profit reached 967 million yuan, a year-on-year increase of 168.19%; by the first quarter of 2024, net profit had fallen back to 172 million yuan, a year-on-year decrease of 8.07%.
In 2023, Bright Dairy not only saw continuous revenue decline but also ended its existing goals dismally. The annual revenue completion rate was only 82.64% of the target; operating gross profit was 5.206 billion yuan, less than 70% of the target completion rate.
Reversal in Liquid Milk Growth, Unable to Overcome the "Mountain and Sea Divide"
In 2023, Bright Dairy's main product—liquid milk achieved revenue of 15.648 billion yuan, a year-on-year decrease of 2.75%; operating cost was 11.485 billion yuan, a year-on-year decrease of 3.44%; gross profit margin was 26.60%, a year-on-year increase of 0.52%. Other dairy products achieved revenue of 7.359 billion yuan, a year-on-year decrease of 8.02%; operating cost was 6.621 billion yuan, a year-on-year decrease of 9.00%; gross profit margin was 10.03%, a year-on-year increase of 0.97%. Although Bright Dairy has maintained the first position in the Chinese fresh milk market for eight consecutive years, its penetration rate of low-temperature fresh milk still needs to be improved, and its revenue needs to return to a positive growth track.
Bright Dairy's success relied on fresh milk—"pasteurized milk," which retains the milk flavor and taste but has a short shelf life and high transportation costs, making it prone to encountering the "mountain and sea divide." Although Bright Dairy has consistently adhered to the strategy of "consolidating Shanghai, strengthening East China, and optimizing nationwide," its revenue in domestic regions outside Shanghai continues to decline rapidly. The author also recently conducted field research at two large supermarkets in Beijing and found that Bright Dairy was absent in the dairy and milk products sections.
However, the three-year pandemic has rendered Bright Dairy's "quality" and "sentiment" insufficient to maintain its position as the third in the industry. The decline in the purchasing power of Shanghai residents, in line with the nationwide consumption downgrade trend, has led to eight consecutive quarters of year-on-year revenue decline for Bright Dairy. This has made its relatively higher-priced and higher-cost "fresh milk" unable to provide reliable returns for investors.
Bright Dairy's corporate strategy has consistently emphasized not seeking to be "big," but striving to become "China's best dairy company." This strategic positioning is difficult to disprove until it completely fails. Coupled with its unique large state-owned enterprise background in the industry, Bright Dairy's various "innovative" attempts over the past decade now seem more like minor adjustments. "Blue Chip Enterprise Review" even believes that Bright Dairy has missed the opportunity to regain a central position in the overall dairy industry competition through strategic adjustments.
On April 28, 2024, Bright Dairy released its financial report for 2023 and the first quarter of 2024. In 2023, Bright Dairy's revenue was 26.485 billion yuan, a year-on-year decrease of 6.13%; total assets were 24.227 billion yuan, a year-on-year decrease of 0.92%.
Notably, its revenue has declined year-on-year for the eighth consecutive quarter, with the first quarter of 2024 revenue at 6.417 billion yuan, a year-on-year decrease of 9.25%. Although in 2023, through confirming land compensation income (424 million yuan) at 777 Chengshan Road, Pudong New Area, Shanghai, its net profit reached 967 million yuan, a year-on-year increase of 168.19%; by the first quarter of 2024, net profit had fallen back to 172 million yuan, a year-on-year decrease of 8.07%.
In 2023, Bright Dairy not only saw continuous revenue decline but also ended its existing goals dismally. The annual revenue completion rate was only 82.64% of the target; operating gross profit was 5.206 billion yuan, less than 70% of the target completion rate.
Reversal in Liquid Milk Growth, Unable to Overcome the "Mountain and Sea Divide"
In 2023, Bright Dairy's main product—liquid milk achieved revenue of 15.648 billion yuan, a year-on-year decrease of 2.75%; operating cost was 11.485 billion yuan, a year-on-year decrease of 3.44%; gross profit margin was 26.60%, a year-on-year increase of 0.52%. Other dairy products achieved revenue of 7.359 billion yuan, a year-on-year decrease of 8.02%; operating cost was 6.621 billion yuan, a year-on-year decrease of 9.00%; gross profit margin was 10.03%, a year-on-year increase of 0.97%. Although Bright Dairy has maintained the first position in the Chinese fresh milk market for eight consecutive years, its penetration rate of low-temperature fresh milk still needs to be improved, and its revenue needs to return to a positive growth track.
Bright Dairy's success relied on fresh milk—"pasteurized milk," which retains the milk flavor and taste but has a short shelf life and high transportation costs, making it prone to encountering the "mountain and sea divide." Although Bright Dairy has consistently adhered to the strategy of "consolidating Shanghai, strengthening East China, and optimizing nationwide," its revenue in domestic regions outside Shanghai continues to decline rapidly. The author also recently conducted field research at two large supermarkets in Beijing and found that Bright Dairy was absent in the dairy and milk products sections.
