Dairy Companies' Annual Reports Review: Divergence, Growing Pains, and Three Strategies for Breakthrough

By | Hu Jingjie Deep-Lens Finance

Last year, the entire dairy industry was shrouded in a “cold spell.” Data from NielsenIQ showed that in the first 11 months of 2025, the total sales value of domestic dairy products across all channels fell 8.8% year over year. In addition, more than 60% of companies saw negative revenue growth, and profit margins continued to narrow.

However, as the 2025 earnings season wrapped up, most listed dairy enterprises that had reported their results unexpectedly managed to deliver book profits.

For example, Synlait’s parent-company attributable net profit reached RMB 731 million, up 35.98% year over year; Mengniu Dairy’s profit attributable to equity holders was RMB 1.55B, up 1,378.9% year over year; China Feihe’s basic earnings per share and diluted earnings per share were both RMB 0.21, but they were down from RMB 0.39 in 2024……

Yet this faint dawn, amid low raw-milk prices, an unbalanced supply-demand situation, and overall industry pressure, does not look “bright.” As the era of “growing through broad-based volume increases” gradually comes to an end and the industry enters the deep-water zone of “structural value uplift,” dairy companies that once built a moat through scale are now collectively facing a major test of survival and transformation.

01 The “Golden Age” of the two oligarchs losing momentum in liquid milk comes to an end

As each annual report is released one by one, the picture of differentiation inside the industry becomes even clearer. Still, at the top tier are Yili and Mengniu—undisputed two oligarchs in China’s dairy sector.

Yili has not yet released its 2025 “year-end results,” but based on last year’s third-quarter report data, in the first three quarters of 2025 it achieved total operating revenue of RMB 90.56B, showing positive year-over-year growth; non-recurring items adjusted attributable net profit was RMB 10.1B, up 18.73%.

Against the backdrop of overall industry pressure, this “growth in revenue leading to growth in profit” performance highlights its resilience through an all-category layout. But what is even more worth attention is the continued optimization of Yili’s business structure.

According to financial report data, in the first three quarters of last year, Yili’s revenue from milk powder and dairy products was RMB 24.26B, the highest in history for the same period, up 13.74% year over year. The share of liquid milk revenue in total revenue has also fallen from 67.79% at the end of 2023 to 60.66% in 2025 Q3, while the combined share of milk powder, cold drinks, and other businesses has risen to nearly 40%.

This “multi-engine” structure, to a certain extent, offsets the downward pressure on liquid milk. But that does not mean Yili can afford to be complacent.

According to financial report data, in the first three quarters of 2025, Yili’s liquid milk revenue was RMB 54.94B, down 4.44% year over year, and after the third quarter, the decline even widened.

At the same time, issues such as a reduction in operating cash flow and increased pressure on short-term debt repayment were also reflected in the third-quarter reports. In the first three quarters of 2025, Yili Co., Ltd.’s net cash flow from operating activities was RMB 9.4 billion, down 32.23% year over year; net cash flow from financing activities was RMB -5.39 billion, down RMB 44.7292 million year over year; and net cash flow from investing activities was RMB -15.61 billion. These signals indicate that how to maintain growth on a high base remains a long-term issue Yili will face next.

By contrast, Mengniu’s 2025 performance is more complicated. Its full-year revenue was RMB 82.25B, down 7.3% year over year, mainly because its liquid milk—what supported its performance—declined, especially that the decline in its room-temperature milk dragged down the entire group’s results; but profit attributable to equity holders surged 1,378.9% year over year to RMB 1.55B.

Unlike Yili, Mengniu’s main pain point lies in an imbalanced business structure. In the first half of 2025, its liquid milk revenue still accounted for as much as 77.4%, while milk powder business revenue was only RMB 1.68 billion, roughly one-tenth of Yili’s milk powder and dairy products business revenue of RMB 16.58B. Such over-reliance on a single product category leaves it with insufficient buffering in this industry downturn cycle.

However, Mengniu’s financial report also has some “highlights.” In 2025, Mengniu continued to make large-scale impairment provisions, recording one-time impairment of RMB 2.2 billion—RMB 2.4 billion for idle assets, accounts receivable, low-efficiency businesses, and so on. Some institutions believe this move is intended to clear off the burdens left over from historical acquisitions, optimize asset quality, and enable the 2026 financial statements to start on lighter footing.

Meanwhile, segments such as Mengniu’s fresh milk, cheese, and ice cream also achieved double-digit growth in 2025, and its “One Body with Two Wings” strategy is gradually taking effect. However, whether the growth in these emerging segments can sustain in 2026 and gradually make up for the decline in liquid milk is still something to watch.

At the end of the day, an unavoidable fact is that the golden age of room-temperature liquid milk has ended. Even for two oligarchs like Mengniu and Yili, they need to answer as quickly as possible how to find the next certain growth engine in a stock-size market.

02 Guangming’s losses, Feihe’s decline, Junlebao taking the lead—who is exposed in a “naked swim”?

If the two oligarchs are facing growth losing steam, then the second tier has fallen into a survival melee.

Guangming Dairy, a long-established dairy company that once held the third-place seat steadily, suffered a setback in 2025. Full-year revenue was RMB 23.9B, down 1.58% year over year, and loss attributable to shareholders was RMB 149 million, down 120.67% year over year.

This was Guangming Dairy’s first loss after 16 consecutive full years of profitability. The direct trigger was its New Zealand subsidiary Newlyt. During the reporting period, Newlyt’s revenue was RMB 7.65 billion, but its net profit was a loss of RMB 407 million—massive losses swallowed up all of the parent company’s profit.

More fundamentally, however, Guangming’s low-temperature milk strategy—while it built barriers in its East China stronghold—also caused delays in its nationwide expansion. When Yili and Mengniu completed nationwide coverage in the room-temperature milk market and Junlebao and Synlait accelerated their pursuit on the low-temperature track, Guangming found itself in a “squeezed from both ends” predicament.

China Feihe represents another kind of dilemma.

In 2025, Feihe achieved revenue of RMB 18.11 billion, down 12.7% year over year; net profit was RMB 2.09 billion, down 42.7% year over year. As a “key player” with a six-year consecutive No. 1 market share in the infant formula market, Feihe’s bottleneck lies in an overly single business structure, with infant formula powder accounting for more than 90% of total revenue.

China’s National Bureau of Statistics shows that in 2025, the number of births in China fell to 7.92 million, down by one-third compared with 2020. When the number of newborns keeps declining year after year, this “most solid fortress” instead becomes a siege.

To hold onto its share, Feihe has fallen into a quagmire of “burning money to buy volume.” In 2024, selling expenses surged to RMB 7.18B, and in the first half of 2025, the selling expense ratio was still as high as 34.61%. Heavy marketing spending has eroded profits, while the second growth curve—adult milk powder, children’s nutrition products, and others—has not yet formed a significant scale. This means Feihe’s absolute advantage in a single track seems to be gradually evolving into structural risk.

As for Junlebao, it is the most active challenger.

Junlebao, which submitted its Hong Kong IPO prospectus in January 2026, claimed to be “China’s third comprehensive dairy company,” with a market share of 4.3%, based on 2024 China retail sales, trailing only Yili and Mengniu.

In the first three quarters of 2025, Junlebao achieved revenue of RMB 15.13B and net profit of RMB 900 million. Its growth momentum comes from multiple flowers blooming. It is reported that Junlebao holds the No. 2 position nationally in the low-temperature liquid milk market; its “Yuexianhuo” brand has become the No. 1 premium fresh milk brand; its “Jianchun” zero-sugar yogurt has been the top seller nationwide for five consecutive years; and even in milk powder, it has also ranked among the top three local infant formula milk powder companies for five consecutive years.

It can be seen that Junlebao has built a comprehensive product matrix spanning multiple tracks such as low-temperature dairy, fresh milk, yogurt, and milk powder. With the posture of an “all-round player,” it is moving to challenge for the industry’s No. 3 spot.

However, behind the “multiple flowers blooming,” Junlebao also faces hidden concerns. According to financial report data, its net profit margin has long hovered around 3%—4%, far lower than Yili and Mengniu, and not even comparable to Feihe. This shows that the cost of taking market share with a high-value-for-money strategy is that profit margins are constrained.

Thus, it appears that the melee in the second tier reveals a harsh reality: in a stock-size era, no one’s position is secure. Guangming held onto East China but couldn’t hold onto growth; Feihe held onto market share but couldn’t hold onto profit; Junlebao grabbed the market but couldn’t grab high profit. The “second-tier competition” is perhaps, at its core, a competition for the right to survive.

03 Low-temperature, functionalization, B2B—what is the real “way out”?

If the “results” of 2025 can offer the industry any truly meaningful insight, it may not be the difference in scale among giants, but rather the paths to breakthroughs that gradually become clear amid differentiation.

Path one is to bet on low-temperature, using “freshness” to fight homogenization.

While growth in room-temperature milk is reaching its peak, low-temperature fresh milk is accelerating in penetration. The “2024 China Fresh and Live Milk White Paper” shows that the nationwide penetration rate of low-temperature fresh milk rose from 28% in March 2018 to 39% in March 2024. In China’s sinking markets (such as Lanzhou, Gansu), the year-over-year growth rate of single low-temperature fresh milk exceeds 15%.

Under this trend, companies focused on the low-temperature track show stronger resilience. Synlait’s full-year revenue in 2025 was RMB 11.23B, up 5.33%, and parent-company attributable net profit was RMB 731 million, up 35.98% year over year. Its sales of low-temperature fresh milk and specialty yogurt achieved double-digit growth, and its gross margin rose to 29.18%. Junlebao also benefited from its low-temperature business. In the first nine months of 2025, the share of low-temperature liquid milk revenue had already increased to 42.5%.

Low-temperature milk is not only a tool for product differentiation; it also tests companies’ cold-chain capabilities and their depth of regional cultivation. This is precisely the moat that helps regional dairy companies resist being eroded by giants.

Path two is to move toward “functionalization,” using “nutrition” to rebuild pricing power.

When basic dairy products fall into price wars, functional products become the profit stronghold. Even though Feihe’s overall performance declined, its gross margin above 60% still leaves other companies far behind; Yili and Mengniu have been increasing investment in adult nutrition and sports nutrition tracks; Guangming Dairy rolled out targeted high-protein yogurt for fitness people, as well as low-sensitivity milk and functionally targeted nutritional products with benefits such as functional probiotics.

From “drinking milk” to “obtaining specific health solutions,” functionalization helps dairy companies transform from “product providers” into “definers of health solutions,” thereby escaping low-price competition.

Path three is to focus on B2B to open up incremental space with “professionalism.”

The boom in the coffee, tea beverage, and baking markets opens a new battlefield for dairy companies. Mengniu has reached strategic partnerships with leading brands such as Starbucks and Luckin Coffee, helping fresh milk product sales break through; Synlait has also become a supplier to coffee brands such as HEYTEA, Manner, and M Stand……

CITIC Securities has predicted that in 2025 the coffee segment will expand the market for the dairy industry by RMB 26.5 billion, and the expected year-over-year growth rate of demand for thick milk and milk-based substrates from new-style tea beverages will exceed 20%. B2B business not only absorbs upstream raw milk production capacity, but also provides dairy companies with a buffer against volatility in the C2B market through stable, large-scale orders.

These three paths are not mutually exclusive. They point to the same direction: dairy companies must move away from dependence on a single liquid milk business and evolve into “a comprehensive consumer goods and services group centered on nutrition and health.”

In summary, the 2025 earnings season has exposed the differentiation and pain points in China’s dairy industry. The two-oligarch pattern of Yili and Mengniu remains stable, but the loss of momentum in their liquid milk fundamentals forces them to accelerate diversification. Guangming’s losses, Feihe’s decline, and Junlebao’s push— the melee in the second tier is far from over.

When industry incremental demand disappears, it means all growth can only come from stealing market share from competitors—this is the cruel rule of a stock-size era. Perhaps only those companies that can find their own position within low-temperature, functionalization, and B2B strategies can get through the cycle and become true value creators.

Endless information and precise analysis—on the Sina Finance APP