Retailing, Franchising, and Consumerism Business Intelligence in China

China's Mengniu To Increase Gross Margin To 28% In Five Years

Lu Jianjun, vice president of the Chinese dairy company Mengniu, told local media that though the price of raw milk continues to grow, the company's gross margin will also increase year over year.

The company's gross margin is expected to increase from the current 26% to 28% in the next three to five years.

Lu said in response to the cost increase, the company implemented two measures, which are product structure adjustments and internal management refinements. He predicted that the overall growth of the Chinese diary industry will slow down in the next five years. However, large diary enterprises will still lead the market by growth rate, attributing to their concentrated brands, high quality and reputation.

For the next step of its development, Mengniu will further strengthen its liquid milk business while enhancing the development of some low ratio products such as milk powder, which has high gross profit.

At the same time, Lu revealed that Mengniu has initially formulated its international strategy, which is to become one of the world's top ten dairy enterprises in five years and to realize sales of CNY50 billion.

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