Chinese dairy company Mengniu has reported revenues down 3.5% and net profit down from 4.3% to 3.5% of revenues. China’s economy grew 7.8% during the year, but slowed by 1.4 percentage points compared with the prior year.
Mengniu’s production capacity increased by 7.5% to 7.58 million tonnes.
In response to the erosion of consumer confidence in Chinese dairy products caused by several food quality and safety incidents during the year – which Mengniu felt may have had some adverse impact on sales – the company turned to the west to implement best practice in quality and safety management.
2012 was the year in which Mengniu announced its long term strategic cooperation agreement with Arla. The company said that the measures it has taken have laid a solid foundation for quality management within Mengniu. In 2013, Mengniu will further implement standardised quality and safety management and introduce more sophisticated internationalised inspection techniques into the production process through cooperation with Arla Foods. It also worked with Arla on the esign of its “standardised ranches”.
Mengniu said that it and Arla Foods efficiently formulated a range of plans to expedite cooperation, which has been implemented in phase. Supported by the Ministry of Agriculture of the PRC and the Ministry of Food, Agriculture and Fisheries of the Kingdom of Denmark, and prepared over the course of several rounds of negotiation, the China-Denmark Milk Technology and Cooperation Centre (“China-Denmark Cooperation Centre”) was officially established on 26 November 2012. Combining the resources of both parties, a professional team was set up to facilitate technical exchanges.
The company said that it would bring premium dairy products including UHT milk, milk powder, cheese and butter produced by Arla Foods to consumers in China through Mengniu’s channels. Mengniu also sees the opportunity to open a window for the Chinese dairy industry through its relationship with Arla.
Mengniu also noted that the vision of “New Mengniu” has been reconstructed with a brand concept focusing on “Quality” and “Happiness”. Under this theme, the overall sub-brand structure was established, marking the birth of a brand-oriented vision driven by consumer need. Through the concept, Mengniu delivered the corporate vision of caring for the needs of consumers and bringing happiness to consumers by paying every bit of attention to every drop of raw milk.
In line with this concept, Mengniu said that it has not only enhanced its product quality, but also actively launched a diversity of branding activities to deliver the brand promise of quality and happiness to its consumers. Mengniu’s new packaging of its pure milk and basic functional milk products uses the pattern of a drop of milk to demonstrate the company’s determination to change by “beginning from a drop”.
