Welcome to the July issue of Dairy Products China News.
China's GDP grew 5% to reach USD 8.7 trillion (RMB61.7 trillion) in the first half of 2024, according to the National Bureau of Statistics, with retail sales of consumer goods were up by 3.7 % to USD3.3 trillion (RMB23.6 trillion). However, there appears to be little improvement in the dairy sector, which continues to face an oversupply of raw milk and a persistent imbalance between supply and demand.
In the first half of the year, national raw milk production rose 3.4% year-on-year to 18.56 million tonnes. Not only are dairy farms under pressure, but the milk surplus has also accelerated the decline of the domestic beef market. The national beef price plunged 25.20% to USD 8.4/kg (RMB 60.2/kg) from January to July this year as more dairy cattle were culled and beef supply surged.
Amid the weak dairy consumption and increased market competition, dairy brands are suffering: Tianrun Dairy, Zhuangyuan Pasture, Maiquer and Xiangpiaopiao all struggle with H1 losses for example. Some, to boost sales, have introduced new, differentiated offerings, including New Hope Dairy launching its high-end fresh milk brand "Zhao Ri Weipin" in HK last month, and Nestlé announcing an ice cream collaboration with Oreo, world's top-selling cookie brand in Chinese mainland in May. These again remind many of the importance of product differentiation in gaining a foothold in the China market.
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