30 Billion Dividend or Dairy Industry "Five Tigers"

It is reported that the list of the first batch of dairy companies that will receive state support has been finalized, and the “five tigers will” Yili, Mengniu, Feihe, Wandashan and the Highlands treasure will be finalists. The industry estimates that the amount of supporting funds for the entire industry will exceed 30 billion yuan.

In the face of the crisis of foreign milk powder, domestic brands may usher in an opportunity period. On September 22, it was reported that the list of the first batch of dairy enterprises that had won state support was finalized. Five tigers will join Yili, Mengniu, Feihe, Wandashan, and Gaoyuanbao. According to media reports, the above five companies are expected to receive support policies such as the central government special fund, the China Development Bank policy loan, the provincial financial matching fund, and the tax incentives for the merger companies. The industry estimates that the amount of supporting funds for the entire industry will exceed 30 billion yuan.

Yesterday, the relevant person in charge of Mengniu did not deny it when interviewed by a reporter from International Finance News, but said that "China Dairy Products Association and the Ministry of Industry and Information Technology will release relevant information in the near future, and all official information shall prevail." In addition, several other companies Although the company did not give a precise reply, it did not deny it.

According to relevant sources, the China Dairy Industry Association will hold a press conference in the near future and promote the new high-end milk powder brands launched by the above-mentioned companies to restore market confidence. Subsequently, the Ministry of Industry and Information Technology will also announce the relevant rules and announce the first list of approved milk enterprises. In addition, the reporter learned from relevant sources that in the recent past, many milk companies have been active in their actions, and they are eager to “behave well” with ministries and commissions such as the Ministry of Industry and Information Technology, hoping to become “lucky children” who are supported. At the same time, companies are also opening up relationships and contacts. We hope to gain some inside information, even the actions of competitors, so that we can "know ourselves, know ourselves, and fight each other well."

According to previous news, the Ministry of Industry and Information Technology has now completed the "Plan for Merger and Reorganization of Infant Formula Milk Powder Industry Enterprises" and submitted it to the State Council for approval. The plan proposes that after five years of efforts, the total number of enterprises in the infant formula milk powder industry in China will be consolidated to around 50, and the industry concentration of the top ten domestic brands will exceed 80%.

Once the plan is announced, it means that the “five fingers” opened in the past by the domestic dairy enterprises will be tightened into punches in the future, and they will join forces to enter the market. The price of clenching fists is that nearly 60% of the existing milk enterprises will be merged.

It is reported that at present, there are 127 infant formula milk powder production enterprises across the country with an annual output of 600,000 tons, and only 3 companies with an annual output of more than 30,000 tons. The top ten domestic brands have sales of about 18 billion yuan, and the market concentration is about 45%. Ministry of Industry spokesman Zhu Hong Ren Ren told reporters before the media revealed that at present, China's milk powder business is not a high degree of concentration is a reality. "The proportion of the top ten milk powder companies only accounts for about 40%. If we are required to comply with the GMP standards, the excessive status quo is inconsistent with the production standards."

The reporter learned from relevant sources that, next, China's infant formula milk powder will refer to the management model of pharmaceuticals, and improve the industry access, the entire supervision and the company's exit system. In other words, in the current wave of mergers and acquisitions, whether the GMP standard can be achieved is a “fight” for the survival of dairy companies.

It is not surprising that the “Five Tigers” who are guessing outsiders will give priority to support, and many people interviewed by the “International Finance” reporter said. "Most of these companies have a background in state-owned assets and rank higher in the industry. Both the operation and management, as well as the mode of operation of the company, have room to grow bigger and stronger." Statistics from international market research company Eurocore show In terms of retail sales in 2012, Yili’s share of the domestic infant milk powder market was 7.8%, making it the largest domestically produced milk powder producer; Mengniu and its Yashili market share were 0.2% and 4.7%, respectively. The mountain is 1.7%, and the “Plateau of the Plateau”, which is not well-known, is not included in the statistics, but it is also a key supportive enterprise in Tibet. The above person did not give a response to why they would be shortlisted, but for the largest milk powder brands in the country, Sanyuan and Beinmei were not shortlisted. They expressed "a little pity."

Northeastern China and Inner Mongolia are two major dairy bases in China. According to the data of the Ministry of Industry and Information Technology, there are currently 44 infant formula milk powder manufacturing enterprises in the three northeastern provinces, which is more than 1/3 of the national total.” Under the New Dairy Policy, Northeast dairy enterprises, In particular, Heilongjiang's dairy companies will be targets of mergers and acquisitions or investment by large-scale dairy companies," said a related person. Forward-looking Industry Research Institute pointed out that due to the particularity of the milk powder industry, channel and brand barriers are higher than those of the general fast moving consumer goods industry. For new entrants in the industry, market development will be very difficult. For small businesses, the future development will be more and more difficult, facing the threat of being shuffled out.