China Dairy

Long-Term Boost from Covid-19

March 23, 2021

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Key Takeaways


  • We believe the consumption of milk and dairy products in China will continue to grow, as the Covid-19 outbreak has increased Chinese consumers’  awareness on the nutritional and health benefits of milk and dairy products.

  • We think Chinese consumers are willing to pay a premium for the health benefits offered by dairy products, and this will encourage Chinese dairy companies to enhance their product mix. However, margin expansion may be muted as the gains from premiumization will likely be reinvested into sales and marketing activities to support future growth, in our view.

  • We like Inner Mongolia Yili Industrial Group (Yili) and China Mengniu Dairy Company (Mengniu) for their market leading position in China’s dairy industry (collectively accounted for nearly 50% of domestic dairy market share) and vertically integrated business models.



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