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Guangming Dairy’s core advantage of “freshness,” which it has long relied on to stand firm, faces severe challenges

Author: Summer

“The temperature-controlled fresh milk leader” Guangming Dairy recently turned in a market-baffling report card.

On the evening of March 30, Guangming Dairy’s 2025 annual report showed that the company achieved revenue of 23.895 billion yuan, a year-on-year decrease of 1.58%; net profit attributable to shareholders was -149 million yuan, compared with 722 million yuan in the same period last year. This dairy company listed in 2002, after posting its first loss in 2008, incurred losses again 16 years later.

From “Guangming’s Moment” to “the darkest hour,” Guangming Dairy has not only been left far behind in scale by Yili and Mengniu, but is also being aggressively chased by regional dairy companies; it now faces further shrinkage in profitability.

Once a giant that held its ground in East China with its “fresh” barrier, why did it fall significantly behind in 2025?

East China “headquarters” is shaken

Recently, several dairy companies, including Mengniu, New Dairy, Yantang Dairy, and Tairun Dairy, released their 2025 annual reports.

Against the backdrop of raw milk prices running at low levels and adjustments in market supply and demand, the dairy products industry as a whole is under pressure. Although the above companies’ performances in 2025 vary, most still achieved profits; losses like those of Guangming Dairy are relatively rare.

In 2025, Guangming Dairy’s business performance shows a distinct sense of “tearing” and “weakness.” Although the decline in total revenue (1.58%) has narrowed compared with the previous two years, it has not prevented a collapse on the profit front.

From the perspective of product structure, Guangming Dairy’s foundation is being challenged. As liquid milk, its core business, it generated revenue of 13.223 billion yuan in 2025, down 6.65% year on year. This figure releases an extremely dangerous signal: under the price war in the low-temperature milk market among Yili, Mengniu, and regional dairy companies, the solidity of Guangming’s long-standing “freshness” barrier has weakened.

Even more worrying is the performance in regional data. For a long time, Shanghai and East China—Guangming Dairy’s “cash cow” and “headquarters”—have been regarded as its “moat” protecting it against nationwide brand offensives. However, in 2025, Guangming Dairy’s revenue in the Shanghai market was only 6.108 billion yuan, down sharply by 9.22% year on year. This decline is far greater than the company’s overall average, and also much higher than the slight growth in other regions (a marginal increase of 0.17%) and the overseas markets (an increase of 2.84%).

The loss of the Shanghai market has unusually significant meaning. In 2025, as cold-chain logistics further became widespread and costs declined, the penetration capability of private labels strengthened. Meanwhile, Yili and Mengniu captured market share in the high-end fresh milk segment through price wars.

Under the dual squeeze of soft consumer demand and intensifying competition, Guangming Dairy’s pricing power and market share in its “headquarters” both suffered. A 9.22% drop means that its most core and most loyal consumer groups are starting to waver.

“The wound of bleeding”

If the shrinkage of the domestic market is “internal trouble,” then the blowout of overseas subsidiary New Zealand-based Newland—comes from “external threat.”

In its 2025 performance forecast pre-loss announcement, Guangming Dairy stated directly that production problems occurred at Newland’s production base, resulting in large direct losses such as inventory write-offs and increased production cost expenses, which affected Newland’s profit or loss for the period and led to Newland’s operating loss for 2025. The company holds 65.25% of Newland’s shares; Newland’s operating loss caused the net profit attributable to the parent company of Guangming Dairy to become negative.

The 2025 annual report shows that Newland achieved revenue of 7.650 billion yuan, but its net profit loss was as high as 407 million yuan.

Guangming Dairy’s “handshake” with Newland began with its acquisition in 2010. At that time, Guangming Dairy acquired Newland in an attempt to emulate competitors’ overseas milk sourcing layouts, seeking breakthroughs with a “domestic base + overseas resources” model. However, this acquisition—once highly anticipated—has repeatedly become a “bleeding point” for Guangming Dairy in recent years. In 2023 and 2024, Newland recorded losses of 296 million yuan and 450 million yuan, respectively.

Three consecutive years of massive losses finally forced Guangming Dairy to make a firm decision to “cut off and let go.” In September 2025, Guangming Dairy announced that it plans to sell Newland’s North Island assets to Abbott’s subsidiary for 170 million US dollars (about 1.21 billion yuan RMB).

The deal is scheduled to settle in April 2026. It is expected to bring Guangming Dairy back some funds; however, looking back on this overseas M&A spanning 16 years, it seems Guangming Dairy did not get a good bargain. Newland not only failed to become an engine for Guangming’s profits, but instead, at the critical moment, due to internal management mistakes, pushed the parent company into a loss-quagmire.

A loss of 407 million yuan is more like the expensive tuition Guangming Dairy paid for having an overseas management radius that was too long and for risk-control failure.

Li Dongming, a senior figure in the dairy industry with 30 years of experience in M&A and post-investment management, pointed out recently that after Guangming Dairy acquired Newland, not only did business synergy fail to go well, but management also went out of control. This meant Guangming missed the opportunity to strengthen oversight by leveraging Newland’s financial crisis. After 2020, Guangming Dairy only exerted influence over Newland through the board of directors; the key executive management team had no executives with backgrounds at Guangming. As a result, Guangming Dairy was unable to deeply intervene in Newland’s daily operations and strategic decision-making.

To make matters worse, Guangming Dairy’s heavy-asset investments domestically also could not escape the impact of industry cycles.

In 2021, Guangming Dairy raised 1.93 billion yuan through a private placement to significantly increase investment in milk source construction, with the 10,000-cow herd project in Zhongwei, Ningxia, being an important part. The following year, Guangming Dairy’s wholly owned subsidiary Guangming Husbandry announced an investment of nearly 2.5 billion yuan to build a ranch cluster in Dingyuan County, Anhui Province, with a planned stock of 47,500 dairy cows.

However, market changes came much faster than capacity expansion. Since 2022, domestic raw milk prices have entered a long downward channel. By December 2025, the average price of fresh milk in major producing provinces had fallen to 3.03 yuan per kilogram, the lowest level in nearly ten years. Raw milk prices have been below the cost line for three straight years. Industry data shows that in the first half of 2025, the average loss rate of dairy farms across the country reached 60%, and more than 20% of ranches exited the industry.

Against this backdrop, Guangming Dairy’s massive spending to build new farms turned from “strategic assets” into “cost burdens.” The capacity investments made during the industry’s peak expansion period happened to collide with the period’s demand downturn low point, sharply reducing investment returns.

This is reflected in the financial statements: in 2025, the animal husbandry segment achieved revenue of 909 million yuan, down 11.15% year on year; the gross profit margin was -9.71%, down 4.95 percentage points from the previous year.

Where are the barriers?

Facing difficulties both at home and abroad, Guangming Dairy’s management took a series of measures in 2025, showing a clear posture of defensive contraction.

First is cost reduction and efficiency improvement. According to the financial report, Guangming Dairy saw a reduction in headcount in 2025. In 2025, the company had 10,760 employees (excluding Newland, same below), compared with 11,251 in the same period last year—nearly 500 fewer employees.

On compensation, management took the lead in cutting pay. Data shows that in 2025, Chairman Huang Liming’s compensation was 1.3028 million yuan; compared with 1.7287 million yuan in 2024, the decrease was obvious. General Manager Ben Min’s compensation also fell from 1.6397 million yuan in 2024 to 1.3028 million yuan. This demonstrates both the attitude of top executives and the company weathering the hard times together, and also reflects strict control of labor costs after the company’s profitability declined.

Second is strategic “cutting off and letting go.” In addition to divesting Newland’s North Island assets, Guangming Dairy also plans to complete full control of Qinghai Xiaoxiniu (acquiring the remaining 40% equity interest). Between going in and out, Guangming’s strategic intent is clear: reduce the risks of operations overseas, and focus on controlling milk sources domestically, especially those with western regional characteristics.

Looking ahead to 2026, Guangming Dairy provided a relatively optimistic “order/military plan” in its financial report. The company plans to achieve total operating revenue of 24.858 billion yuan in 2026 and net profit attributable to shareholders of 313 million yuan.

This means that, on the base of losses in 2025, Guangming Dairy needs to achieve a turnaround to profitability within one year and deliver a profit increase of more than 4.6 billion yuan.

For this performance outlook—slight growth in revenue and a turnaround in net profit—some industry insiders have taken a relatively optimistic view.

“By 2026, domestic milk prices will establish a bottom reversal trend, and the upward momentum will be prominent in the second half of the year. In 2027 to 2028, we will enter a clear rising channel. This change will reshape the competitive landscape among dairy companies.” Song Liang, head of the expert group of the China Agricultural Reclamation Dairy Industry Alliance, analyzed to reporters. He said that since 2023, low milk prices have spurred the wild growth of OEM brands and small- to medium-sized ranches’ private brands (most are low-temperature products), continuously diverting market share from leading dairy companies. Meanwhile, as milk prices rise, smaller brands that rely on externally sourced milk will be cleared out faster; the diversion effect will narrow, and top enterprises’ performance will show a clear improvement.

Although the industry’s broader trend favors leading dairy companies with cost advantages across the entire supply chain, the reality that competition in the low-temperature milk market is intensifying poses challenges that cannot be ignored for Guangming Dairy.

In the past, Guangming used “freshness” as a differentiating weapon to avoid direct head-on confrontation with Yili and Mengniu in the ambient milk sector. But in the 2025 consumer environment, the low-temperature milk market has shifted from “blue ocean” to “red ocean.” As raw milk prices keep falling, cold-chain costs decline, and channel barriers break down, Guangming Dairy’s core advantage of “freshness,” which it has long relied on, is facing severe challenges.

When product homogenization intensifies, the volume of brand marketing and the depth of channel penetration determine market share—and this is precisely the area in which Guangming has been relatively weak in recent years.

In the dairy industry’s marathon, Guangming Dairy was once the leader, but now has become the pursuer. In 2026, it must run ahead of itself.

(Source: China Fund News)

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