Founded in 1956, Yili’s predecessor was a dairy cows raising cooperative based in Hohhot, Inner Mongolia. It was restructured to become Inner Mongolia Yili Industrial in 1993, and since 1996, its total revenue generated has been growing every year.
At present, 11 out of its 20 products are reaping sales of more than RMB$1bn (US$149m). These key brands include “Ambrosial”, “Satine”, “Chang Yi 100%”, “Chang Qing”, and “Joy Day”.
Its six main categories of products are liquid milk, milk powder, cheese, healthy beverage, cold beverage, and yogurt.
In its latest financial report, the againg population and younger generation are key consumer s, and that both e-commerce and new retail models will continue to drive growth.
“The reduced size of the new-born and the aging population structure made the post-90s population become the main consumers.
“Along with the continuously advanced domestic urbanisation process, the urban population increased, and the income and consumption levels of urban and rural residents narrowed. The innovative development of e-commerce and new retail models will help dairy products and other healthy foods continue to grow,” according to Yili’s latest annual financial report.
As such, it expects categories related to adult health and nutrition to enter a rapid growth track. Other categories, such as the baby food industry, will need to achieve growth through quality upgrades and differentiated services.
Pushing itself further, the firm has set a total revenue target of RMB$90bn (USD$13bn) and a total profit before tax of RMB$7.6bn (USD$ 1.1bn) this year.
“In 2019, Yili would take advantage of its brand reputation, sales channels, and its industry standing to actively promote new business models, build new sales channels, and penetrate into more instances where there are chances for consumers to spend,” chairman Pan Gang said.
According to market research firm Kantar Worldpanel, Yili was the most consumed food and beverage brand in China last year, surpassing global firms operating in China.
Growth engines
According to Yili, product types, sales channels, and new products are the main factors contributing to growth.
In terms of product types, liquid milk remained the main revenue source, contributing RMB$65.6bn (USD$9.8bn), which is 83.4% of the firm’s entire core business revenues.
On the other hand, the greatest growth came from milk powder and milk products, with revenue jumped up 25.1% to reach RMB$8bn (USD$1.2bn). Overall, this category contributed 10.2% of the total core business revenue.
As for sales channels, e-commerce took the lead, as revenue increased by 61%, while brick-and-mortar sales also delivered good performance, as sales in maternal-infant stores went up 32%.
To strengthen its offline business, Yili had increased the number of liquid milk offline retail points by 23.2%.
By the end of last year, it has 1.75 million of offline points of sales selling liquid milk.
Going healthy and global
To achieve its goals for this year, Yili said they would focus on enhancing product quality, developing new products, going global, and realising a data-driven business.
“In the future, Yili will be the leader in promoting growth in the health food industry, and will become the most trustworthy provider of health food,” Pan said.
It is also planning to enter the mineral water sector and expand its global footprint.
“Yili continue to develop international business. Through building an international business operation management platform and talent introduction to strengthen the capabilities of running international business, and provide support for the efficient development of the company's overall business.”
Just three months ago, it acquired Chomathana, Thailand’s largest domestic ice-cream and frozen food enterprise.
Earlier in September last year, it also upgraded its R&D centre in Europe to Innovation centre.