Hitting the $100bn mark: China’s Yili and Mengniu pour in investment to boost milk production

By Tingmin Koe contact

- Last updated on GMT

Both YIli and Mengniu will be building new manufacturing sites to pump up their milk production. ©Getty Images
Both YIli and Mengniu will be building new manufacturing sites to pump up their milk production. ©Getty Images

Related tags: Yili, mengniu, Milk, Manufacturing

Chinese dairy giants Yili and Mengniu are adding new manufacturing sites to pump up production volume of liquid milk products in a bid to hit the RMB$100bn (US$14.5bn) revenue goal.

Mengniu announced that it is building a new factory in Jiaozuo, a prefecture-level city in northern Henan province.

The factory will be the largest processing site of Mengniu’s dairy products. It is expected to process 1000 tonnes of fresh milk daily, provide direct employment for 1,500 people, and indirectly benefit 20,000 dairy farmers. 

An investment amount of RMB$1.05bn will be poured into this project.

The factory, which is expected to be completed in two years’ time, will feature modern manufacturing technologies, such as AI, automation, and using high volume of data statistics.

As for Yili, the government of Daqing – a prefecture level city in the west of Heilongjiang province, said on May 29 that the firm would invest RMB$2bn in building liquid milk production site in Lin Dian County.

This will be the firm’s largest liquid milk production site in Northeast China with a daily production capacity 1,358 tonnes of milk from 26 manufacturing lines.  

Earlier in January this year, Yili also invested RMB$2.1bn to build a liquid milk production base in Wuwei city of Gansu province.

The facility, which will boast a daily production of 1800 tonnes of liquid milk, is expected to operate from March 2021.

The two firms are aiming to hit RMB$100bn in revenue, and liquid milk is set to be the main contributor.

In addition, Yili also aims to squeeze into the list of top five global dairy companies. It is in fact, closer to its goal as compared to its arch rival Mengniu.

In FT 2018, it reaped a total revenue of RMB$79.5bn​ (US$11bn), while Mengniu lagged behind at RMB$68.9bn (US$10.2bn).

Liquid milk

Liquid milk is the main revenue source for the two dairy firms.

According to Yili’s FY 2018 financial report, liquid milk contributed 83.4% of the firm’s total core business revenues. Best performing brands include Ambrosial and Satine.

For Mengniu, revenue contribution from liquid milk was higher at 86.1%.

Mengniu Pure Milk and the high-end Milk Deluxe were the most popular products, with both recording double-digit sales growth.

Besides the two, other dairy firms are also vying for a slice of the cake with functional milk products. Some examples include Simpire Milk by Tianyou Dairy and Shengmu Mongolian Plateau flavoured yogurt drink with their clean label claims.

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