"Good is expensive", China Feihe harvested the Baoma group, which has invested less than 2%?

Produced ｜ Company Research Office Consumer Team

Text ｜ Wu Yu

"No matter how hard you can, you can't suffer your children, no matter how poor you can't educate," this childcare concept is rooted in tens of millions of families in China.

Almost everything related to children, parents will provide the best within the scope of power. As an important source of nutrition in the growth process of babies, milk powder is directly related to the child's growth and development and health. High -end milk powder has become the first choice for most parents.

Leng Youbin, chairman of China Feihe, once said that consumers' cognition is "good is expensive." Leng Youbin also said that Feihe milk powder is discounted to kilograms, the most expensive in the world. Driven by the ultra -high -end single product "Xingfei Fan", China Feihe's income exceeded 20 billion yuan, and the gross profit margin exceeded 70%, which was much higher than the peers.

However, in the context of the decline of the birth population in my country, the "quantity" of the current infant formula milk powder has shrunk, and the Chinese Feihe also faces the dilemma of revenue decline. In addition, has been questioned that marketing is far greater than the Chinese Feihe, which matches the title of domestic milk powder "one brother"?

01 Marketing -driven milk powder "one brother"

For consumer goods companies, marketing is a war that seizes user mind, and consumers' minds are the ultimate battlefields for building a brand.

After the 2008 melamine incident, domestic milk powder collectively fell into a crisis of trust. The market that the original domestic brand and foreign brands opened were instantly reversed by foreign brands.

In 2014, the size of the domestic infant milk powder market was between 70 billion and 80 billion, but the sales scale of local brands was only between 2 billion and 5 billion, and none of them exceeded 10 billion. In 2015, the top 3 domestic markets were Wyle, Mead Johnson, and Abbott, all of which were foreign brands.

Under the cognition of "foreign milk powder is equivalent to safety milk powder" at that time, Feihe could highlight that it could not be separated from its re -positioning of the brand. The brand positioning of "more suitable for Chinese babies" allows Feihe to start the road of reversing the wind.

When the salesman of the front line of Feihe communicates with customers, it often uses such marketing words. "The biggest difference between us and foreign milk powder is that our milk powder is more suitable for Chinese babies' constitution."

As the so -called "one side of water and soil raising one person", this concept is deeply rooted in people's hearts. Due to the differences between the dietary structure, physical fitness of the Chinese and the westerners, foreign milk powder faces the global promotion and sales, and it is difficult to emphasize that it is specially developed for Chinese babies, which allows Feihe to seize the opportunity.

In 2016, Feihe's high -end product series increased by 80%year -on -year, becoming the first domestic brand; in 2018, Feihe sales exceeded 10 billion; in 2021, Feihe sales exceeded 20 billion. The positioning of differentiation with foreign brands brings immediate results.

Behind the growth of sales is the large -scale marketing of Feihe.

In 2014, Feihe's sales fee was 760 million, and the sales fee rate was 21.1%. In 2015, that is, when the brand was positioned again, Feihe's sales cost was 1.17 billion, a year -on -year increase of 55.3%.

In 2015 and 2016, Feihe's income was almost in place, but the sales costs rose steadily, and the sales cost rate in 2016 exceeded 36%.

After one or two years of publicity, Feihe's sales ended in 2017, with revenue of 5.89 billion, a year -on -year increase of 58.1%. After the income improved, Feihe did not stop in marketing. In 2018, Fei He invited "International Film Star" Zhang Ziyi to serve as a brand image ambassador.

Sohu News reported, "Zhang Ziyi's endorsement fee for Feihe is as high as 36 million, which should be the most expensive spokesperson in the milk powder industry." However, when Zhang Ziyi's advertisement was broadcast on TV, some consumers would question, " Will Zhang Ziyi really give her children with domestic milk powder? "

From 2019 to 2021, Feihe was slightly raised on the marketing end, and the marketing cost rate was controlled between 28%and 30%. However, in 2020 and 2021, Feihe's revenue growth rates were 35.5%and 22.5%, and the growth rates of sales costs were 36.6%and 27.9%, respectively.

Although Feihe took the lead in seizing the consumer's mind with "more suitable Chinese baby constitution", other domestic brand milk powder then used this as a publicity point to grab the market with Feihe.

In addition, it is difficult for Feihe to get rid of the characteristics of the "marketing drive" of consumer goods companies. From the marketing costs and income growth rates, it can be seen that the sales side of Feihe sales is a little faster, and the income growth rate is faster. The growth rate of income is slower.

Since the finding brand positioning in 2015, whether it is the counterattack stage or after becoming the first industry, Feihe is a company that is driven by marketing.

02 The cost of research and development of a can of milk powder is less than 10 yuan

In the melamine incident, the collective thunder of low -cost milk powder makes the Baoma group more trust in high -priced foreign milk powder.

Before 2015, Feihe products penetrated the three grades of low, medium and high. After finding the "more suitable for Chinese babies' constitution", Leng Youbin decided to compete with foreign investment in the high -end market and cut off the low -end product line Feihui series with an annual revenue of nearly 500 million. At the same time, the main high -end product line was promoted Star Feifan adjusts the three grades of the product to ultra -high -end, high -end, and ordinary.

With the improvement of Feihe brand positioning, product prices have continued to rise. Feihe's ultra -high -end products "Xingfei Fan" and "Zhenzi Organic" series, the price of each kilogram has soared all the way. At present, it is close to 500 yuan per kilogram, which is the highest in the industry.

In the first half of 2020, Leng Youbin bluntly said in an interview: "Feihe milk powder is folded into kilograms, the world's most expensive." He also said that consumer cognition is Milk powder products below 200 yuan, but consumers have not bought it anymore. "From the perspective of Feihe's income structure, the company is indeed mainly high -end and ultra -high -end, and ordinary product income contribution is only single. In 2021, Feihe's revenue was 22.78 billion, of which super high -end product revenue was 12.96 billion, accounting for 57%, and Xingfei Fan revenue was 11 billion yuan, an increase of 12%year -on -year; high -end product revenue was 7.4 billion, accounting for 33%, an increase of 37%year -on -year; Ordinary product revenue was 1.1 billion, accounting for 5%.

Feihe's strategy of "holding up high" not only brings high income, but also brings brand premium and ultra -high gross profit margin. In 2021, the overall gross profit margin of Feihe was 70.3%, of which the gross profit margin of infant formula milk powder was 72.4%.

In contrast, the gross profit margin of Yili milk powder and dairy products is 39.2%, Australian excellent gross margin is 50.4%, and Beinmei's gross profit margin is 46.9%. Feihe's gross profit margin is much higher than those of peers, which is similar to Wuliangye, the "second" of the liquor industry.

However, the quality of Feihe products and whether the research and development capabilities are worthy of high prices and high gross profit, which has been questioned by the outside world. In May 2020, Leng Youbin said in an interview, "Our R & D expenses in infant milk powder are absolutely first in the world."

From 2018 to 2021, Feihe's R & D costs were 0.15 million, 109 million, 265 million, and 425 million, respectively, and the R & D costs were 1.05%, 1.09%, 1.43%, and 1.86%, which was far lower than the marketing end.

Among the companies that are mainly engaged in milk powder, in 2021, Australia's R & D costs were 193 million, and the proportion of revenue accounted for 2.18%.

Taking a jar of 750g Feihexing Feifan Zhuo Rui 1 section of milk powder as an example, Tmall sells for 382 yuan, of which cost and marketing costs account for almost 100 yuan, and the research and development costs are only about 7 or 8 yuan.

As Feihe's search for the second growth point, developing children's milk powder, adult milk powder, goat milk powder and other product lines should increase investment in R & D and investment. Compared with the "excessive force" of the marketing side, Feihe was slightly insufficient on the research and development end.

In addition, high -quality milk sources are the prerequisites and foundations of good milk powder. Feihe's Xingfei San series uses Heilongjiang milk source. But in general, the natural environment of New Zealand, the Netherlands, Ireland and other countries has a stricter implementation of regulatory measures, and the quality of milk sources is better. For example, Eli's Golden Crown Crown Saisa uses Danish milk sources, and the Golden collar crown is caring for New Zealand milk sources.

Wei Lihua, the founder of Junlebao, once said, "Milk powder is not too high, and it is conscience." Perhaps Feihe should not use his parents to pay a certain premium to the baby's milk powder, and "intentionally" will increase the price.

03 Feihe needs to find the "second curve"

In January 2021, China Fei Table's stock price hit a historical high of HK $ 24.97 per share, but now Feihe's stock price has fallen 66%, and its market value has evaporated nearly 150 billion Hong Kong dollars.

The second -level market was abandoned by investors. On the one hand, Feihe's performance declined. In 2021, net profit decreased by 7%year -on -year. On the other hand, the market was concerned about the newborn population.

At a event, Leng Youbin said that the birth rate in 2021 may have a "cliff -like decline". Young parents are worried that the effect of vaccine on the fetus may not go to pregnancy within 6 months.

Among the 22.8 billion revenue of Feihe in 2021, infant milk powder revenue accounted for 94.4%. Compared with many businesses such as Yili's 100 billion yuan income, layout liquid milk, milk powder and dairy products, cold drinks, and cold drinks, Feihe’s business line appears very single. This disadvantage can be seen from 2021 Xingfei revenue growth to 12%. come out.

The decline in birth rate has led to the continuous narrowing of the milk powder industry, and the existing competition is more intense, and the pressure and challenges faced by large and small milk powder companies are getting greater and greater. On July 3rd, Australia announced that it is expected that the company's revenue will be reduced by 18.0%to 21.6%year -on -year in the first half of 2022, and the net profit attributable to the mother will decrease by 73.1%to 84.0%year -on -year.

Recently, in the roadshow of Feihe and China Merchants Bank, Feihe Management stated that due to the influence of channel reforms, the number of digits of income in the first half of the year will decline. At the same time, the increase in three fees will increase Essence

Finding the second growth curve is what Feihe is doing.

Adult milk powder is one of the second curves. In 2021, other dairy products, including adult milk powder, revenue of 990 million, an increase of 63.3%year -on -year. However, according to ICBC's research minutes, in 2021, Feihe's adult milk powder revenue was about 700 million, a year -on -year growth rate of 30%. For a business that is regarded as a second curve, 30%of the starting stage is not high.

In addition, in the market of adult milk powder, Swainoma, Yili, Mengniu and other companies have been cultivating for many years, and Feihe does not take the lead in competition. More importantly, the money of adults is far less profitable as children. It is difficult to obtain high hairy profit in Feihe's adult milk powder business. In 2021, the gross profit margin of other dairy products was only 28.4%, which was far lower than 72.4%of infant formula milk powder.

In addition to adult milk powder, Feihe also made other attempts. In 2021, Feihe officially entered the goat milk powder market by acquiring Shaanxi goat milk powder companies. Sheep milk powder is regarded as a high -end product in the field of infant powder, and is regarded as a new income growth point by many milk powder companies. Institutional data shows that in 2021, the size of the Chinese goat milk powder market is 11.1 billion yuan. It is expected that in 2026, the market size will reach about 20 billion yuan, and the proportion of the infant milk powder market will increase from 6%to 8%.

However, the Chinese goat milk powder market has always taken the lead in Australia. Since 2018, Australian Young's goat milk powder brand Jiabeite has occupied more than 60%of the total imports of Chinese infant formulas for four consecutive years.

In 2021, the sales of Australian Yang Yang milk powder were 3.348 billion yuan, and the income of Feihe goat milk powder was about 100 million.

At the same time that Feihe is in the direction of adult milk powder, children's milk powder, goat milk powder and other directions, we must also beware of Yili's impact. In March 2022, Yili became the controlling shareholder of Australia, which greatly increased Yili's market share in infant formula milk powder.

According to Euromonitor data, in the 2021 baby powder market, Australia and Yili have a total market share of 12.5%. After the merger, the two will surpass the market share of 11.7%of Nestle, becoming the second in the industry, second only to Feihe.

Under Yili's offensive, can the status of Feihe's "Milk Powder Brother" still be able to keep it?

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