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Chinese home-grown dairy company Junlebao initially built its brand and reputation in the dairy sector through its yogurt products. The company then set its eyes on China’s infant formula sector, where it proved to be hugely successful, recording revenue of 5 billion yuan in 2018, translating to a year-on-year increase of more than 100%. The newest move of this domestic dairy giant (based in north China’s Hebei) is to tap into the fresh milk market by introducing a new product line called Yuexianhuo.
An Extended Shelf Life of 19 Days
The shelf life of traditional pasteurized milk is 2-10 days, which puts limits on transportation and storage. However, Junlebao uses INF009S sterilization technology and low-temperature aseptic filling technology to extend the shelf life of its fresh milk to 19 days[1], helping ameliorate transport and storage issues and retaining more active proteins such as alpha lactalbumin. Yuexianhuo is the first fresh milk product sold in China to utilize this technology.
Upward Trajectory of Pasteurized Milk Market
Junlebao's entry into China's fresh milk market is indicative of the strong growth potential of the sector. Reliable data reveals that fresh milk in China has a market share of less than 25%, while the rate is as high as 90% in some developed countries[2].
China's consumption upgrade and the development of cold chain logistics at a national level have also paved the way for greater expansion.
At the 2nd Global Forum on Dairy Cooperation during the 2nd CIIE, Ms. Kateryna Edelshtein, vice president of Nielsen China, shared her insights and thoughts on trends in China's liquid milk industry in 2019. In line with China's consumption upgrade, sales of products that are perceived as fresh and nutritious have achieved rapid growth. Sales of fresh milk have grown by 21% in 2019[3].
Increased Competition
As the market continues to heat up, competition between the major players has also increased. Domestic companies dominate the market, such as Bright Dairy (Shanghai), Sanyuan (Beijing), Weigang (Nanjing) and New Hope (Chengdu)[4].
China's two largest dairy giants Yili and Mengniu are also significant players in the market. Yili's pasteurized milk brand Besgreat hit the market in northeast China last year, using household delivery as the primary driver of sales. Last year, Mengniu launched 3 new fresh milk brands, Freshness Best Choice (household delivery), GREENHOUSE(mid-to-high-end product) and SHINY MEADOW(high-end product).
Additionally, foreign companies are also trying to win a piece of the fresh milk market. In April this year, Fonterra's Anchor brand launched fresh milk product, meaning its official entry into China's fresh milk market. Later in September, Japanese dairy company Meiji forked out 624 million yuan to set up a subsidiary in Tianjin to produce fresh milk, yogurt, cream and other products.
According to senior dairy analyst Song Liang, the competition in the fresh milk market has just started, with no one reigning supreme yet. Junlebao as a local brand has its own advantages, however, the participation of more well-positioned enterprises is poised to put more pressure on regional dairy enterprises.
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