China Dairy Giants Under Pressure: 60% Report Declining Results

Over 60% of China's listed dairy companies reported declining revenue or profits in their latest annual reports, signaling persistent structural pressure in the world's second-largest dairy market. Out of 29 publicly traded firms — including industry leaders Yili Group and Mengniu Dairy — only 10 achieved growth in both revenue and net profit.

Raw Milk Oversupply Drives Industry-Wide Squeeze

The Chinese dairy sector has been battling a prolonged downturn driven by raw milk oversupply combined with weaker-than-expected consumer demand recovery. Falling milk prices and mounting inventory pressure have kept the industry operating in a low-performance zone for multiple consecutive years.

According to analysis by Chinese industry publication Xinjingxiao, the 2024 fiscal year results paint a stark picture of divergence. The majority of companies fell into one of two categories: simultaneous revenue and profit declines, or a structural imbalance where margins improved but top-line sales shrank.

Who Is Actually Growing?

Despite the challenging environment, roughly one-third of listed dairy firms managed to buck the trend. These companies share several common strategies:

• Channel restructuring — finding new distribution pathways and retail partnerships to unlock incremental demand
• Product portfolio optimization — shifting toward higher-value SKUs and premium product lines
• Operational efficiency gains — using more granular cost management to offset margin pressure
• Brand repositioning — strengthening value communication to justify pricing in a deflationary environment
• Regional expansion — targeting underpenetrated lower-tier cities for growth

The key takeaway: companies that proactively restructured their growth models rather than waiting for the market cycle to recover are the ones posting positive results.

Structural Divergence Accelerates

The gap between winners and losers is widening. While top performers are reinventing their go-to-market strategies, weaker players remain trapped in a volume-driven commodity mindset that leaves them vulnerable to price wars and margin erosion.

For global investors and multinational dairy companies watching the Chinese market — valued at over $70 billion — these results carry significant implications. China's dairy consumption per capita still trails Western markets by a wide margin, suggesting long-term growth potential remains intact despite short-term headwinds.

What This Means for the Global Dairy Market

China's dairy struggles have ripple effects across the global supply chain. New Zealand, Australia, and European Union exporters all depend heavily on Chinese import demand, which has softened alongside domestic oversupply.

The industry appears to be transitioning from 'passive pressure absorption' to 'active adjustment,' according to analysts. Companies that successfully navigate this transition — through smarter product strategies, leaner operations, and more targeted distribution — are positioned to emerge stronger when the cycle eventually turns.

For the remaining 60%+ still under pressure, 2025 will likely be a make-or-break year as consolidation pressures mount and consumer spending patterns continue to evolve in post-pandemic China.