Bright Dairy's “Flash Marriage†After Price Flashes, Suspected of Passing Costs
The plant of No. 2 of New Zealand’s Xinlian Xinlian acquired by Bright Dairy was completed and put into operation. However, the overseas merger and acquisition of “Flash Marriage†by Guo Mingheng, president of Guangming Dairy, did not seem to bring much joy to consumers. Since December, more than a dozen models of "milk-to-the-home" products of East China Bright Dairy will increase by an average of 3%. This is the second time that Bright Dairy has raised product prices since February this year. It has also caused many consumers to suspect that the competitiveness of enterprises should be reflected in the improvement of inexpensive products rather than frequent price increases in order to pass on costs.
Some of the average product increase of about 3%
The reporter called Guangming customer service on the 23rd to be informed that starting next month, some milk products including bottles, cups, and bags will increase by an average of about 3%, and bottled milk and bagged milk will increase by 0.1 yuan, involving the entire East China region. . Variety prices also include fresh milk and yogurt, as well as fresh yogurt cups, etc., boxed product prices have not yet changed. Some old milk-milk subscribers also complained that they were suddenly told that they would raise prices from next month without warning.
Bright Dairy Public Relations official said that raw milk prices have been rising since the beginning of this year, rising more than 8%, bringing great cost pressure to light. Bright has tried to optimize the product structure and increase the cost of the supply chain. However, in order to maintain normal operations, the price of some products has been adjusted upwards by an average of 3%.
Cao Mingshi, deputy secretary-general of the Shanghai Dairy Association, told reporters that since the beginning of the year, according to the cost estimation of the Shanghai milk price consultation mechanism, the price has been raised twice. At present, the basic price of raw milk in Shanghai is 3.77 yuan, if protein, etc. The price of raw milk with slightly better indicators may be as high as 4.2 or 4.3 yuan, while the milk collection price of Bright Dairy is usually around 4.3 yuan, so the price increase is also reasonable.
However, according to informed sources, Bright Dairy's price adjustment is also related to a recent "weaning" incident. According to sources, on October 31, some workers in the logistics company were dissatisfied with the status of “low wages†and “high-loaded†work, resulting in the loss of bright fresh milk in some areas of Shanghai the next day, involving nearly one million households. This also led to a sharp increase in the number of complaints received by the Shanghai Consumer Protection Committee during the week.
Guangming Dairy Company stated on its official website that “Because of the large volume of business at the end of the month, logistics has caused the failure to ship milk in a timely manner,†the rumors of “sending milkers’ emotions†have also been denied. For the price of some products raised this time, Bright Dairy Public Relations also strongly denied that it was relevant.
A dairy analyst told the reporter that the logistics cost of sending milk has not changed, and the increase in raw milk prices has also been digested by the previous price increase. It is reasonable to say that Bright Dairy has no reason to increase prices again. The price increase is very skeptical. It is a bright pass-through cost that allows consumers to pay for it. Since there is only one bright family in Shanghai at present, there is price increase. In supermarkets and shopping malls, there are many similar products and the competition is fierce, so Bright Dairy does not dare to raise prices.
Financial tight sales are also limited Bright Dairy's 2011 third quarterly report shows that due to the large amount of borrowing from New Zealand business, the company’s financial expenses increased by 162.18% year-on-year, and the asset-liability ratio has reached 61%. The cash position is severe.
According to a report issued by Orient Securities, the main reason for the increase in financial costs is that Guangming Dairy purchased a 51% stake in Xinlian Co., Ltd. for 382 million yuan last year. The purchase funds mainly come from US dollar borrowings. At the same time, in the first half of this year, the New Zealand company increased its bank loans by more than 200 million yuan. The superposition of the two resulted in a large amount of interest charges.
Haitong Securities also pointed out that Bright Dairy's chilled dairy products accounted for a relatively large proportion, and its business model was dominated by direct sales agents. This model led to the company's large accounts receivables and the large use of funds. In the future, the company's rapid development relying directly on super-channels will require sufficient working capital support.
In order to reduce the company's financial risks, Guangming Dairy announced on October 10 that it is planned that no more than 178 million shares of non-public offerings will be issued to a specific target of not more than 10, and the issuance price is not less than RMB 8/share. The total amount of funds to be raised is not More than 1.421 billion yuan, the funds raised will be used to invest in Minhang Maqiao Guangming Dairy Industrial Park Construction Project.
According to Chen Lianfang, a dairy expert from Oriental Agritech Co., Ltd., Mengniu and Yili currently occupy more than half of the country's dairy market, especially at room temperature milk, which has certain competitive advantages. The main battleground of Bright Dairy is difficult to tap into other provinces in East China. The cost of logistics for its core competitive product, Pasteurized Milk, is quite high, and in the normal temperature milk market, influenced by Mengniu and Yili, Bright Dairy's The competitive advantage is not prominent and sales are limited. Although Guangming has already been focusing on the development of the normal temperature milk sector this year, it is still not enough for national brand building. Therefore, it is difficult to see a breakthrough in performance in the short term.
The above-mentioned dairy analysts told the reporter that Bright Dairy's “weaning†incident also exposed the weakness of insufficient investment in its logistics segment. In fact, it can completely subcontract the milk from this part of the logistics, which will not only help reduce the risk of logistics, but also help reduce labor. cost.
Cai Jin, deputy chairman of the China Federation of Logistics and Purchasing, also believes that there is not much technology in the delivery of bright milk to urban households. It can be completely outsourced, which can not only save the company's costs, but also benefit consumers. The most important thing is that it can also reduce the risk of bright management and avoid the recurrence of events such as "weaning."
The overall market price increase is unlikely. After the opening of the A-shares on the 22nd, the dairy stocks have been in a stronger contrarian trend. Among them, Bein America is a strong daily limit, leading the sector, Xinhualian also rises 5% against the trend, Bright Dairy rose 3%, Yili shares rose 2.26. %. Some market participants believed that the main reason was the news that Bright Dairy and foreign milk powder brands Wyeth and Abbott raised the prices of their products, and strengthened the capital market's expectation of prices of domestic dairy products.
However, in the opinion of Zhou Sianran, a food industry researcher at China Investment Advisors, the initiator of the price increase in dairy products is often foreign milk powder. The liquid milk industry is less competitive due to fierce competition. The price increase may easily lead to the loss of some consumer markets. Business performance, therefore, domestic dairy companies generally do not easily raise prices, even if prices are very cautious.
"The average national raw milk price next year will maintain the level of 3.2 yuan this year, there will be no significant increase, the cost pressure of major milk enterprises will be less than this year, the overall price increase is less likely, is expected next year's performance The increase will be better than this year," said a dairy analyst.
In some supermarkets in Shanghai, reporters saw that fresh milk, yogurt, etc., including bright products, did not show significant price increases, and consumers did not carry out “boiled milk†due to rumors of price increases. One consumer claimed that the shelf life of dairy products was short and not easy to store, so there was no way for manufacturers to raise prices.
Mengniu, Yili and other dairy companies said that there is no price increase plan in the near future. An executive from Mengniu said that companies should try their best to absorb the impact of rising costs and adopt internal digestive measures such as reducing sales costs, reducing advertising investment, and developing new products to avoid increasing prices.
In May this year, the National Development and Reform Commission had interviewed several major ocean milk powder giants and hoped to maintain the stability of the market price of foreign milk powder. However, only two months later, the surge in prices of foreign milk powder reappeared. Starting in July, Wyeth in the four major foreign milk powder giants raised the price of new products by 10% on the basis of formula promotion, while Abbott said that the cost of raw materials has risen and the price has also increased by 10%. According to insiders, the annual price increase of several ocean milk powders ranges from 15% to 18%.
Dairy experts told reporters that the output of milk powder and the export volume of European and American markets will increase significantly next year, and the foreign milk powder may not continue this year's price increase trend. The price of domestically produced milk powder will also remain at the current level.
In dairy industry experts' opinion, the gross profit of infant formula milk is higher, and domestic milk formula has a long way to go to catch up with the profitability of foreign milk powder. For state-owned dairy enterprises, it is the most important to raise prices and cultivate consumer confidence.
Some of the average product increase of about 3%
The reporter called Guangming customer service on the 23rd to be informed that starting next month, some milk products including bottles, cups, and bags will increase by an average of about 3%, and bottled milk and bagged milk will increase by 0.1 yuan, involving the entire East China region. . Variety prices also include fresh milk and yogurt, as well as fresh yogurt cups, etc., boxed product prices have not yet changed. Some old milk-milk subscribers also complained that they were suddenly told that they would raise prices from next month without warning.
Bright Dairy Public Relations official said that raw milk prices have been rising since the beginning of this year, rising more than 8%, bringing great cost pressure to light. Bright has tried to optimize the product structure and increase the cost of the supply chain. However, in order to maintain normal operations, the price of some products has been adjusted upwards by an average of 3%.
Cao Mingshi, deputy secretary-general of the Shanghai Dairy Association, told reporters that since the beginning of the year, according to the cost estimation of the Shanghai milk price consultation mechanism, the price has been raised twice. At present, the basic price of raw milk in Shanghai is 3.77 yuan, if protein, etc. The price of raw milk with slightly better indicators may be as high as 4.2 or 4.3 yuan, while the milk collection price of Bright Dairy is usually around 4.3 yuan, so the price increase is also reasonable.
However, according to informed sources, Bright Dairy's price adjustment is also related to a recent "weaning" incident. According to sources, on October 31, some workers in the logistics company were dissatisfied with the status of “low wages†and “high-loaded†work, resulting in the loss of bright fresh milk in some areas of Shanghai the next day, involving nearly one million households. This also led to a sharp increase in the number of complaints received by the Shanghai Consumer Protection Committee during the week.
Guangming Dairy Company stated on its official website that “Because of the large volume of business at the end of the month, logistics has caused the failure to ship milk in a timely manner,†the rumors of “sending milkers’ emotions†have also been denied. For the price of some products raised this time, Bright Dairy Public Relations also strongly denied that it was relevant.
A dairy analyst told the reporter that the logistics cost of sending milk has not changed, and the increase in raw milk prices has also been digested by the previous price increase. It is reasonable to say that Bright Dairy has no reason to increase prices again. The price increase is very skeptical. It is a bright pass-through cost that allows consumers to pay for it. Since there is only one bright family in Shanghai at present, there is price increase. In supermarkets and shopping malls, there are many similar products and the competition is fierce, so Bright Dairy does not dare to raise prices.
Financial tight sales are also limited Bright Dairy's 2011 third quarterly report shows that due to the large amount of borrowing from New Zealand business, the company’s financial expenses increased by 162.18% year-on-year, and the asset-liability ratio has reached 61%. The cash position is severe.
According to a report issued by Orient Securities, the main reason for the increase in financial costs is that Guangming Dairy purchased a 51% stake in Xinlian Co., Ltd. for 382 million yuan last year. The purchase funds mainly come from US dollar borrowings. At the same time, in the first half of this year, the New Zealand company increased its bank loans by more than 200 million yuan. The superposition of the two resulted in a large amount of interest charges.
Haitong Securities also pointed out that Bright Dairy's chilled dairy products accounted for a relatively large proportion, and its business model was dominated by direct sales agents. This model led to the company's large accounts receivables and the large use of funds. In the future, the company's rapid development relying directly on super-channels will require sufficient working capital support.
In order to reduce the company's financial risks, Guangming Dairy announced on October 10 that it is planned that no more than 178 million shares of non-public offerings will be issued to a specific target of not more than 10, and the issuance price is not less than RMB 8/share. The total amount of funds to be raised is not More than 1.421 billion yuan, the funds raised will be used to invest in Minhang Maqiao Guangming Dairy Industrial Park Construction Project.
According to Chen Lianfang, a dairy expert from Oriental Agritech Co., Ltd., Mengniu and Yili currently occupy more than half of the country's dairy market, especially at room temperature milk, which has certain competitive advantages. The main battleground of Bright Dairy is difficult to tap into other provinces in East China. The cost of logistics for its core competitive product, Pasteurized Milk, is quite high, and in the normal temperature milk market, influenced by Mengniu and Yili, Bright Dairy's The competitive advantage is not prominent and sales are limited. Although Guangming has already been focusing on the development of the normal temperature milk sector this year, it is still not enough for national brand building. Therefore, it is difficult to see a breakthrough in performance in the short term.
The above-mentioned dairy analysts told the reporter that Bright Dairy's “weaning†incident also exposed the weakness of insufficient investment in its logistics segment. In fact, it can completely subcontract the milk from this part of the logistics, which will not only help reduce the risk of logistics, but also help reduce labor. cost.
Cai Jin, deputy chairman of the China Federation of Logistics and Purchasing, also believes that there is not much technology in the delivery of bright milk to urban households. It can be completely outsourced, which can not only save the company's costs, but also benefit consumers. The most important thing is that it can also reduce the risk of bright management and avoid the recurrence of events such as "weaning."
The overall market price increase is unlikely. After the opening of the A-shares on the 22nd, the dairy stocks have been in a stronger contrarian trend. Among them, Bein America is a strong daily limit, leading the sector, Xinhualian also rises 5% against the trend, Bright Dairy rose 3%, Yili shares rose 2.26. %. Some market participants believed that the main reason was the news that Bright Dairy and foreign milk powder brands Wyeth and Abbott raised the prices of their products, and strengthened the capital market's expectation of prices of domestic dairy products.
However, in the opinion of Zhou Sianran, a food industry researcher at China Investment Advisors, the initiator of the price increase in dairy products is often foreign milk powder. The liquid milk industry is less competitive due to fierce competition. The price increase may easily lead to the loss of some consumer markets. Business performance, therefore, domestic dairy companies generally do not easily raise prices, even if prices are very cautious.
"The average national raw milk price next year will maintain the level of 3.2 yuan this year, there will be no significant increase, the cost pressure of major milk enterprises will be less than this year, the overall price increase is less likely, is expected next year's performance The increase will be better than this year," said a dairy analyst.
In some supermarkets in Shanghai, reporters saw that fresh milk, yogurt, etc., including bright products, did not show significant price increases, and consumers did not carry out “boiled milk†due to rumors of price increases. One consumer claimed that the shelf life of dairy products was short and not easy to store, so there was no way for manufacturers to raise prices.
Mengniu, Yili and other dairy companies said that there is no price increase plan in the near future. An executive from Mengniu said that companies should try their best to absorb the impact of rising costs and adopt internal digestive measures such as reducing sales costs, reducing advertising investment, and developing new products to avoid increasing prices.
In May this year, the National Development and Reform Commission had interviewed several major ocean milk powder giants and hoped to maintain the stability of the market price of foreign milk powder. However, only two months later, the surge in prices of foreign milk powder reappeared. Starting in July, Wyeth in the four major foreign milk powder giants raised the price of new products by 10% on the basis of formula promotion, while Abbott said that the cost of raw materials has risen and the price has also increased by 10%. According to insiders, the annual price increase of several ocean milk powders ranges from 15% to 18%.
Dairy experts told reporters that the output of milk powder and the export volume of European and American markets will increase significantly next year, and the foreign milk powder may not continue this year's price increase trend. The price of domestically produced milk powder will also remain at the current level.
In dairy industry experts' opinion, the gross profit of infant formula milk is higher, and domestic milk formula has a long way to go to catch up with the profitability of foreign milk powder. For state-owned dairy enterprises, it is the most important to raise prices and cultivate consumer confidence.
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