Mengniu Continues to Face a Rough 2024, but Chilled Dairy Products May Help Drive Growth

Mengniu is the second-largest dairy producer in China, with majority of its revenue derived from the liquid milk business, while ice cream and cheese are smaller revenue drivers. After management change in 2016, Mengniu has restructured its organization and distribution channel, which in our view has rejuvenated its liquid milk business and resulted in rebounding profit growth. The company’s premium shelf stable milk lineup, Deluxe, has become the number one brand in China since 2020, which we think reflects improving channel execution and effective portfolio construction. Mengniu has currently built out a competitive liquid milk portfolio spanning shelf stable, yogurt and chilled products.