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interface news reporter | zhao xiaojuan

interface news editor | ya hanxiang

on september 10, zhejiang liziyuan food co., ltd. (hereinafter referred to as "liziyuan"), a listed dairy beverage company, released the minutes of its 2024 semi-annual performance briefing, saying that the company's revenue in the first half of the year declined slightly, and the increase in consumption promotion and related expenses led to a decline in profits. among them, the increase in sales expenses was mainly due to the increase in spokesperson and marketing expenses.

according to the 2024 semi-annual report released by li ziyuan, in the first half of the year, its revenue was 679 million yuan, a year-on-year decrease of 3.08%; its net profit was 95.1205 million yuan, a year-on-year decrease of 29.29%. in particular, in the second quarter of this year, li ziyuan achieved operating income of 350 million yuan, a year-on-year decrease of 3%; its net profit was only 40 million yuan, a sharp year-on-year decrease of 49.3%.

regarding the reasons for the huge decline in net profit, li ziyuan said that it was mainly due to the decline in revenue. in order to promote sales, the company invested more in advertising, resulting in a significant increase in sales expenses and administrative expenses.

according to the expense details given in the semi-annual report, lizhiyuan's sales expenses in the first half of this year were 100 million yuan, an increase of 47.16% compared with 68 million yuan in the same period last year.

on april 20 this year, liziyuan officially announced for the first time that new generation actor cheng yi was its brand spokesperson, and its outdoor advertising also covered core airports in super first-tier cities across the country, and occupied multiple real-life scenes such as giant screens in shopping districts, subways, high-speed railways, and elevator advertising spaces, totaling more than 1,000 commercial advertising screens in more than 100 core cities.

at the same time, li ziyuan chartered and named dozens of high-speed trains. not only were the interiors filled with cheng yi's advertisements, but the bodies of the trains were directly labeled "li ziyuan x cheng yi". few brands are so keen on recommending their spokespersons to the world.

the effect of this high-profile marketing strategy is also very obvious. within 14 hours after the official announcement of the spokesperson on april 21, tian niu milk achieved online sales of 15 million. on july 8, when the new product "li ziyuan luck milk" was launched, the online daily sales exceeded 5 million by further increasing the marketing enthusiasm.

however, this enthusiasm could not be sustained, and this was reflected in the performance. the revenue of lizhiyuan’s main products and main regions all declined to varying degrees.

in terms of products, in the first half of the year, the revenue of lizhiyuan's dairy beverages represented by sweet milk and other products were 656 million yuan and 20.1429 million yuan, respectively, with year-on-year changes of -4.87% and 139.46%, respectively.

by region, the three major markets of east china, central china and southwest china had revenues of 337 million yuan, 119 million yuan and 130 million yuan, respectively, with year-on-year changes of -3.14%, -15.93% and 2.73%, respectively.

even with the support of a spokesperson, as a representative of milk-containing beverages, it is unable to compete with the general trend of slowing industry growth and fierce competition among brands.

the main raw materials for milk-containing beverages are milk and white sugar. products such as liziyuan sweet milk, mengniu "sour milk", and jule "sour milk" are all representatives of milk-containing beverages. according to data disclosed by jule food, which is applying for an ipo, among the top ten milk-containing beverages in the country in 2021, the top five are wahaha ad calcium milk, yili yogurt, mengniu yogurt, yakult probiotic drink, and liziyuan flavored sweet milk.

as the growth rate of lactic acid bacteria beverages and milk products declines, the market growth rate of milk-containing beverages has also begun to slow down. according to statistics from toubao research institute, the market size of milk-containing beverages is expected to be 136.17 billion yuan in 2022, with a compound annual growth rate of 7.41% from 2017 to 2021. the chinese milk-containing beverage market has experienced nearly 10 years of rapid growth, but it is expected that the milk-containing beverage industry will maintain an average annual compound growth rate of 5.4% in the next five years, and the market size is expected to reach 161.23 billion yuan in 2026.

since 2022, the entire category of milk-containing beverages (including lactic acid bacteria beverages and milk beverages) has faced great challenges. data from the fast-moving consumer goods data monitoring company mashangying brand ct also confirms that milk-containing beverages have been the largest category in the chinese beverage market in the past few years, occupying about 1/4 of the overall beverage market all year round. in the past two years, the market share and average price per 100 ml of milk-containing beverages have shown a downward trend.

longer-term data is verifying this trend. from 2021 to 2023, lizhiyuan's revenue has generally shown a downward trend, reaching 1.47 billion yuan, 1.404 billion yuan, and 1.412 billion yuan respectively, while its net profit has dropped from 226 million yuan to 237 million yuan.

in a horizontal comparison, juneyao health (sh: 605388), a listed company that also produces dairy drinks and lactic acid bacteria drinks, has seen its net profit decline for four consecutive years. unlike lizhiyuan, which mainly relies on large single-product dairy drinks, juneyao health has already explored transformation in the direction of mineral water, probiotics and other directions.

liziyuan stated in its semi-annual report that it will increase its efforts in new product development in 2024 and continue to launch new products such as aseptically filled cup juice drinks, sparkling milk flavored drinks, fruit juice drinks, and daily five black. at present, the sales growth rate of other categories to which the new products belong has exceeded 100%.

however, with the trend of consumption moving downwards and competition intensifying, lizhiyuan also has to face low-price competition from large dairy companies.

as the price of raw milk continues to fall this year, domestic large enterprises such as mengniu and yili have used their own brand advantages in channels and brand building to continuously threaten liziyuan's position through more price-competitive products. huaxin securities' research report also issued risk warnings for liziyuan, including the risk of a downward macroeconomic situation, the risk of new product promotion failing to meet expectations, the risk of a sharp rise in raw materials, the risk of production capacity release failing to meet expectations, and the risk of a single product.