奶不如水贵？现代牧业“过冬”：两年累亏25亿 3年换2任董事长

This article details the operational challenges and turnaround efforts of China Modern Dairy, a leading domestic dairy farm operator, after the country’s raw milk industry entered a downcycle. Key takeaways are as follows:

1. Current industry status: China’s raw milk market has been oversupplied since 2021. The average price dropped to just 3.06 yuan per kilogram in 2025 – lower than the price of ordinary bottled mineral water. Industry-wide losses once exceeded 90% of all market participants. While oversupply has not been fully resolved, total output continues to grow modestly: herd size has declined, but yield per cow has increased, offsetting the drop.

2. Modern Dairy’s operational crisis: The company posted a cumulative loss of 2.546 billion yuan over 2024 and 2025, erasing all profits it accumulated over the previous four years. As of the end of 2025, it held 19.26 billion yuan in interest-bearing debt, including 7.14 billion yuan in short-term obligations. With only less than 7 billion yuan in working capital, it cannot cover its near-term debt, putting severe pressure on its cash flow. The company has also seen management instability, with two chairmen replaced over three years.

3. Turnaround efforts: Modern Dairy is acquiring and integrating China Shengmu, another raw milk producer owned by its majority shareholder Mengniu, in a bid to expand its scale of high-end milk sources. However, China Shengmu is also unprofitable, leaving the outlook of this integration highly uncertain.

This article outlines current consumer trends and upstream industry developments in China’s raw milk market, offering actionable insights for dairy brand decision-making. Key takeaways are as follows:

1. Shifting consumer trends: Overall domestic dairy demand is declining, and demand for high-end milk has weakened. Consumers are no longer willing to pay a premium for "premium milk source" branding. Even China Shengmu, known for its "desert organic" high-end source, is facing falling revenue and widening losses.

2. Changing cost dynamics: Sustained declines in raw milk prices, paired with falling feed costs, have lowered upstream input costs, creating a cost tailwind for downstream brands. However, weak overall demand will intensify price competition in the market.

3. Implications for upstream strategy: Against a backdrop of industry-wide overcapacity, leading dairy companies have already begun consolidating their dairy farm assets to raise industry concentration. Brands can follow this consolidation path, but should be wary of integration risks associated with acquiring loss-making assets during a downcycle, which can drag down their own performance.

This article summarizes the current state and shifts of China’s raw milk industry during its downcycle, outlining key risks and opportunities for dairy-related sellers. Key takeaways are as follows:

1. Risk alerts: The raw milk industry entered its downcycle in 2021, and oversupply has driven persistent price declines, with more than 90% of operators posting losses at one point. Even leading dairy farms are facing massive losses, and heavy asset-reliant operations are facing extreme cash flow pressure. Sellers should guard against price competition risks from weak demand, as well as the risk of cash chain collapse from aggressive heavy-asset expansion.

2. Opportunity outlook: The industry is currently accelerating capacity exit, with leading players rapidly consolidating milk sources and concentration rising quickly. Small and medium-sized industry players can choose to tie themselves to the industrial chain of leading dairy companies to share the market benefits of consolidation, or seek to be acquired by leading players to reduce their own operational risk.

3. Actionable coping strategies: Leading dairy farms are currently cutting costs by culling low-yield cows and reducing capital expenditure. Industry players can adopt similar measures to optimize capacity and control costs to weather the downcycle.

This article analyzes demand shifts and industry structure changes during the raw milk downcycle, offering insights for upstream dairy farms and downstream dairy processing plants. Key takeaways are as follows:

1. Shifts in production and product design needs: Consumers have become more sensitive to milk prices, eroding the premium for "high-end" branding, as they are no longer willing to pay more for premium milk source claims. Producers should adjust their product mix, avoid blindly expanding high-end production capacity, and prioritize controlling production costs.

2. Business opportunities: As the industry goes through capacity exit and leading players accelerate milk source consolidation, farms and processing plants with cost advantages and high-yield cow resources will see more acquisition and integration opportunities. For downstream dairy processors, falling raw milk prices create an input cost tailwind, which they can leverage to adjust pricing and gain market share in the mass market segment.

3. Lessons for transformation: During a downcycle, companies should control debt levels, reasonably scale back non-essential capital expenditure, avoid blind expansion, and prioritize cutting costs and boosting efficiency by eliminating low-yield, inefficient capacity to preserve cash flow safety and navigate the industry cycle.

This article outlines the latest industry trends and core pain points of leading players in China’s raw milk sector, providing guidance on business direction for dairy industry chain service providers. Key takeaways are as follows:

1. Industry trends: The raw milk industry is currently in a deep downward correction, with capacity exiting at an accelerated pace and concentration gradually rising. Leading dairy companies are frequently moving to acquire and integrate their dairy farm assets – a prominent example is Mengniu’s push for Modern Dairy to acquire China Shengmu. Industry consolidation will continue in the coming period.

2. Core client pain points: Leading dairy farms are broadly facing massive losses, tight cash flow, weak demand for high-end milk, and greater management difficulty after mergers and acquisitions. Most small and medium-sized dairy farms are already loss-making, creating strong demand for solutions to cut costs, access capital, and improve management.

3. Guidance for business development: Service providers can develop targeted solutions to address these needs, including dairy farm capacity optimization services, low-cost financing services, M&A integration management consulting, and marketing services for high-end milk sources. These solutions help industry players navigate weak demand and resolve core pain points related to capital and management.

This article’s breakdown of China’s raw milk industry clarifies core industry demand and operational direction for dairy-related platform operators. Key takeaways are as follows:

1. Core industry demand for platforms: Current raw milk oversupply has left many farms with excess capacity and insufficient sales channels, creating demand for platforms to connect them with downstream B2B and B2C customers. Most farms also face tight cash flow, so they need supporting services such as supply chain finance from platforms to address working capital needs.

2. Risk mitigation guidance: With the entire industry currently loss-making and demand remaining weak, platforms looking to expand into upstream dairy-related business should control risk exposure, and avoid onboarding too many highly leveraged, persistently loss-making assets that could hurt the platform’s own operational health.

3.招商运营 opportunities: After accelerated industry consolidation, leading consolidated milk source companies have strong demand to expand sales channels. Platforms can carry out targeted招商, launch special sections for high-end raw milk to meet niche demand, and introduce raw milk price index services to improve pricing transparency and attract more users to the platform.

This article provides the latest first-hand case and industry developments from the raw milk downcycle, offering high research value for dairy industry analysts. Key takeaways are as follows:

1. Latest industry developments: China’s raw milk industry is currently in a deep downcycle. Oversupply has driven raw milk prices below the price of ordinary mineral water, a large share of the industry remains unprofitable, and overcapacity has not been fully resolved. Leading dairy company Mengniu has pushed for the consolidation of its two core upstream assets, Modern Dairy and China Shengmu, kicking off a wave of consolidation among leading milk source companies that will rapidly raise industry concentration going forward.

2. New industry questions: Even high-end organic milk sources are facing weak demand and widening losses during this downcycle. It remains unproven whether leading players’ strategy of integrating loss-making assets as a turnaround move will succeed. In addition, the frequent management turnover at leading dairy farms has created open questions about its impact on the execution of long-term corporate strategy that warrant further exploration.

3. Suggested research directions: Future research can focus on the performance of leading dairy companies’ vertical integration models for upstream milk sources, the effectiveness of cost-cutting and consolidation strategies for dairy farms during downcycles, and the pace of industry capacity exit and future raw milk price trends.