Mengniu's "Stability" and "Vitality": A Capability Rebuilding for Paving the Way for Cyclical Reversals

Want to test a company’s true quality, you shouldn’t just look at how fast it runs in good times. You also need to examine its ability to evolve and its operational resilience in tough conditions.

The chill in the dairy industry in 2025 is still lingering. Slowing economic growth, insufficient consumer drive, and continued downward pressure on prices for raw milk have created three layers of pressure, forcing the entire industry to go through a “stress test.” Against this backdrop, Mengniu has delivered an answer worth pondering.

According to the financial report, in 2025 Mengniu achieved revenue of RMB 82.24B and operating profit of RMB 6.56B. Not only did the company’s segments—fresh milk, cheese, milk powder, and domestic ice cream—record double-digit growth, but three key indicators—the company’s gross margin, net cash flow from operating activities, and free cash flow—each hit the highest levels in history. Even more noteworthy is that in 2025, Mengniu also proactively optimized its asset structure, offloading burdens for growth in the next stage.

This naturally raises questions: Against the backdrop of industry-wide pressure, why can Mengniu’s major segments still grow against the trend? Where exactly is its “evolution” ability reflected? And how does it accumulate “resilience” to get through the cycle during the winter?

** 　I. One body, two wings: strategic resolve in the industry’s deep winter**

The more complex the environment is, the more you fear “random moves.”

“In 2025, we will stay committed to long-termism and maintain strategic resolve!” Mengniu President Gao Fei’s opening remarks at the press conference held on the 26th were forceful and unambiguous.

Indeed, Mengniu’s most valuable thing in 2025 is that it has consistently maintained strategic “resolve.” It didn’t easily waver due to short-term market fluctuations; instead, it firmly pushed forward the “one body, two wings” strategy, using clear top-level design to counter external uncertainties.

What “one body” means is strengthening and improving the basic plate of six core dairy businesses.

Mengniu didn’t simply engage in a price war. Instead, through a “dual-wheel drive” of base products and premium products, it carried out a systematic reconfiguration in product innovation, marketing communication, and channel fine-tuning.

For example, Mengniu launched “soft milk,” as well as functional milks such as prebiotics and vitamins, continuously expanding the audience that drinks milk and opening up incremental markets; Beingmate, leveraging its 20th anniversary opportunity, rolled out the premium organic milk “Shajin Tanghai,” further consolidating its leadership position in the premium market; segments such as Mengniu fresh milk and cheese provided multiple customized products for Sam’s Club and Hema, and after listing, they quickly became bestsellers.

The financial report shows that in 2025, Beingmate’s organic series maintained positive growth against the trend; after the launch of the desert organic series, performance was strong and won broad recognition from consumers. In the fresh milk track, Daily Fresh Language achieved high double-digit growth by precisely entering a niche market with lactose-free twin proteins, A2β-casein, and so on; low-temperature yogurt has ranked first in market share for 21 consecutive years, with steadily improving profitability; the cheese segment also demonstrated a strong growth momentum, with full-year growth exceeding 20%.

Behind these results is Mengniu’s best proof of how, under its logic of “drink milk, drink good milk, and drink the right milk,” it stabilizes the basic plate with product strength.

And as the foundation of “one body” continues to be reinforced, Mengniu’s “two wings” layout is also quietly gathering momentum.

On the one hand, Mengniu is accelerating its move toward “healthy cows.” In the realm of deep processing, it has achieved multiple key breakthroughs. Products such as lactoferrin, micellar casein proteins, and de-salted whey powder D90 have successfully met targets. Mascarpone cheese and original mozzarella cheese were rolled out one after another, marking a critical step toward industrialized development—breaking technical bottlenecks and reducing import dependence. Meanwhile, Mengniu’s professional sports nutrition brand “Mizone” completed nearly RMB 100 million in Series A financing, proving that its continuing incubation of the functional nutrition segment has earned recognition from both the market and investors.

(On the other hand), Mengniu is also moving steadily toward “the world of cows.” In the ice cream segment, its ice cream brand Aisxue maintains first-place market share in Indonesia and is extending into emerging markets such as the Philippines, Vietnam, and Africa, as well as across Latin America. On the asset layout for Australia and New Zealand, Mengniu further clarified the strategic positioning: Burra Foods focuses on the B2B segment, while Bellamy’s focuses on the C2C segment. Based in Australia, it is accelerating the expansion of the domestic, Southeast Asian, and other key global markets.

It can be said that it is precisely this consistent strategic resolve and the sense of rhythm of “advancing after others” that enabled Mengniu to form a favorable situation in 2025—“able to push when possible and defend when needed.” Its operating profit margin and cash flow have remained at high levels.

** 　II. From “points” to “a whole”: the internal logic of continuous evolution**

“Strength isn’t shouted—it’s evolved.” Gao Fei emphasized this in the 2025 strategic consensus meeting.

And if we were to compare Mengniu’s development in 2025 to an evolution, it is not a breakthrough at a single point. Rather, it is a systematic reconstruction from “point” to “line,” to “surface,” and finally to “body.” What makes it unique is: it’s not simply “doing more,” but “connecting more tightly” and “coordinating more deeply.”

** 　First, product innovation comes first, shaping the “point.”**

As mentioned earlier, in 2025 Mengniu actively responded to the diverse needs of different age groups, launching more than 100 new products including “Shajin Tanghai” desert organic milk, “Hongyun Peanut” raw milk, “Suibian Zhuan” ice cream, soft milk, and the world’s first Sn-2DHA infant formula powder. The lineup covers the full-category matrix—from shelf-stable milk to low-temperature yogurt, from fresh milk to ice cream, from functional milk to infant formula powder.

These innovations may seem scattered, but in reality they point in the same direction: using product value to respond to consumers’ segmented needs, providing the most direct “testing ground” for later industrial coordination and capability upgrades.

** 　Then, industrial integration links points into a “line.”**

The success of product innovation in turn forces the supply chain to evolve in coordination. In the upstream, Mengniu works with partner farms to upgrade eight key structures, including the structure of the cattle herd, feeding structures, and seed industry structures. Data shows that during the “14th Five-Year Plan” period, Mengniu helped partner farms increase average milk yield per dairy cow from 16 kg to 35 kg, and helped farms reduce the cost per kilogram of milk by nearly RMB 0.2.

(Mengniu dispatches technical teams to provide on-site services Source: Mengniu Dairy)

In the midstream, Mengniu’s “lighthouse factory” in Ningxia has already achieved an efficiency breakthrough of “100 people, 1 million tons annual capacity, and RMB 10 billion annual output value.” Meanwhile, Wuhan’s “world’s largest single-unit low-temperature yogurt factory” responds agilely to market demand with intelligent flexible production lines. One south and one north, they echo each other.

In the downstream, Mengniu is accelerating the expansion of its B2B business. Professional dairy products have reached strategic partnerships with leading brands such as Yum China, Miniso? Wait—(Actually, it is Mixue Bingcheng), Bawang Cha Ji, and Starbucks, providing professional solutions for professional solutions in fields such as made-to-order tea drinks, coffee, catering, and baking. The demand signals brought by product innovation are transmitted step by step along the industrial chain, amplified, and responded to.

** 　Next, the four capabilities weave into a “surface.”**

Once every link in the industrial chain is connected, Mengniu begins upgrading its capabilities covering branding, technology, digitalization/intelligence, and channels.

In branding, Mengniu Ruibaoen co-branded with “Nezha 2” achieves a crossover breakthrough with “Zha real flesh grows meat; choose Ruibaoen,” and fuses IP experience with science-based feeding knowledge to launch offline activities such as public welfare classes. This lets the brand evolve from “reach” to “resonance.” In the technology domain, Mengniu’s proprietary research on the probiotic Lc19 was published in the international top journal Cell, becoming the first applied-result study in the global food science field to appear in that journal, allowing technology to evolve from “following” to “leading.”

(Ruibaoen to infant formula Source: Mengniu Dairy)

In digitalization/intelligence, it builds an end-to-end traceability system from “one plant to a cup of milk” through the “one item, one code” technology. Smart labs help improve detection personnel’s working efficiency by 300%, making digital intelligence evolve from “manufacturing” to “intelligent manufacturing.” In channel development, online it deepens cooperation with regional platforms such as platform e-commerce, content e-commerce, livestream e-commerce, and instant retail; offline it customizes exclusive products for membership channels such as Sam’s Club and Hema. This allows channels to evolve from “stocking shelves” to “fine-tuning.”

These four capabilities fit together and empower one another, jointly forming Mengniu’s “capability fundamentals” for responding to external changes.

** 　Finally, strategic upgrade aggregates into a “body.”**

When capabilities come together and take shape, it ultimately drives the evolution of the top-level strategy: “one body” is no longer just maintaining the business fundamentals; it evolves into a strategic hub capable of flexibly responding to market changes and achieving efficient allocation of resources. “Two wings” are no longer peripheral explorations; instead, they become independent growth engines with the ability to generate their own cash, capable of feeding back into new growth for the core. Ultimately, attaching the “two wings” to “one body” lets Mengniu spread its wings and fly higher.

It’s not hard to see that this systematic evolution from “points” to “body,” in essence, is a deep response to the proposition of “how to continuously create value for consumers.” When a company can maintain iteration capabilities at every link, its internal growth logic won’t be thrown off by the external environment.

** 　III. Build strength and shed weight: development resilience across the cycle**

For companies, resilience is not only “holding up under pressure,” but also “becoming steadier under pressure.” Mengniu’s development resilience mainly shows up in three dimensions.

First is the resilience of its category structure. In the past, many dairy companies relied heavily on a single category. Once the core business was hit, the whole system would easily become unbalanced. Today, however, Mengniu has formed a business pattern with incremental contributions from shelf-stable products, growth momentum from low-temperature products, and pleasant surprises from ice cream, with cheese, milk powder, and other steady-following businesses.

This means that fluctuations in any single category will not shake the overall foundation, and the company’s ability to cope with cyclical fluctuations has increased significantly.

Second is resilience in operating quality. In 2025, Mengniu pushed forward systematic quality-improvement and efficiency-enhancement at the management level. According to the financial report, its gross margin reached 39.9%, sales and administrative expenses both declined, and inventory turnover days and accounts receivable turnover days further improved. Even more worth noting is that Mengniu also proactively optimized asset quality—such as once-stopped idle production facilities and accounts receivable with recovery risk—making one-time impairment provisions with a total amount of about RMB 2.2 billion to RMB 2.4 billion.

This “proactive slimming down,” though it may cause short-term discomfort, helps the company shed unnecessary burdens. The result is that Mengniu’s operating cash flow and free cash flow reached RMB 8.75 billion and RMB 6.3 billion respectively, the highest levels in history, providing ample “ammunition” to prepare for a reversal in the cycle.

Third is resilience in innovation deployment. When traditional businesses enter a steady period, innovative businesses become Mengniu’s way to address the future “second growth curve.” As mentioned earlier, in deep processing Mengniu broke the dependence on imports, and the functional nutrition track has gained dual recognition from both the market and capital. In professional dairy, it has already launched more than 10 new products, and its international business is also accelerating its expansion into emerging markets.

Although these deployments have not yet fully released their potential in the present, they provide long-term confidence for the company to get through the cycle.

(Mengniu professional dairy Source: Mengniu Dairy)

Looking ahead to 2026, the industry has already released positive signals at the sector level. According to data from the “Food & Beverage Industry Weekly” report released by East China Securities, raw milk prices have remained in a range of RMB 3.02–3.04 per kg since the second half of 2025, oscillating as a band. Prices have been grinding down, but there are signs that a bottoming out is becoming clear. With upstream farm capacity continuing to be reduced and absorbed, a milk price inflection point may come in 2026.

And within Mengniu, this external warmth is being translated with precision into the动力 for internal growth—led by Mengniu President Gao Fei, through strategic resolve and multi-dimensional evolution.

At the beginning of this year, Mengniu scored a “strong start” for 2026 with a combination of “Winter Olympics marketing + Chinese New Year scenario.” According to Goldman Sachs’ tracking report from early February, benefiting from the calendar effect of a later Chinese New Year, combined with the boost to end-market sell-through from Mengniu’s Winter Olympics marketing, its January shelf-stable milk sales are expected to grow by high single digits to double digits. Citigroup also said in its report that it expects Mengniu’s 2026 sales to return to growth in the mid-single digits to low-single digits, and that profit margins will expand again.

Driven by positive performance news, Mengniu’s stock price rose against the trend on the 26th, surging more than 6% at one point during the trading day. On the 27th, it also continued this momentum, leading the consumption sector in Hong Kong stocks. According to data on Tencent’s “My Stocks” platform, among all 22 institutions participating in the rating, 95% of brokerages issued a buy recommendation, 5% issued a hold recommendation, and no brokerages issued a sell recommendation.

“Over the past period, the industry has been more about ‘game of inventory and stock,’ which actually makes it easier to fall into low-price internal competition. In the future, companies should think more about how to break out of the ‘game of inventory and stock’** and ‘create value by creating value.’**” This is a viewpoint that Gao Fei mentioned multiple times at Mengniu’s full-year 2025 performance communication meeting.

According to what he disclosed, Mengniu’s key next step is to convert this “strong start” into “certainty” of full-year growth. Its core lever is to work together with retail partners to continuously focus on differentiation in product strength for co-creation. At the same time, relying on its digital transformation to deepen coordination in efficiency, it will strive to let the dividend from emerging channels settle into capabilities, find breakthroughs for the transformation of traditional channels, and thus ensure the sustainability of full-year growth.

“We will坚持长远主义?—We will坚持long-termism—focus on the nutrition mission, and accelerate our comprehensive evolution from a ‘traditional dairy manufacturer’ to a ‘provider of nutrition and health integrated solutions,’” Gao Fei said.

In short, over the past two years under Gao Fei’s leadership, Mengniu has already built higher-quality assets, a stronger basic business foundation, and clearer strategic focus. At this moment, Mengniu is like an athlete who has just unloaded sandbags—standing at the starting line of a new cycle, only waiting for the starting gun.

(Editor: Jiao Yue )

【Disclaimer】This article only represents the views of a third party and does not represent Hexun’s position. Investors should operate at their own risk.

	 【Advertisement】This article only represents the author’s own views and is not related to Hexun. Hexun’s website remains neutral toward the statements and judgments made in the text, and does not provide any explicit or implicit guarantees regarding the accuracy, reliability, or completeness of the contents. Please readers use this information only as a reference and bear all responsibility themselves. Email: news_center@staff.hexun.com

Report