China’s dairy industry, once a sure bet for investors amid rising incomes and living standards, is nearing the end of a “multi-decade boom” as a slowing economy, aging population and declining birth rates take their toll, according to S&P Global Ratings. Sales of the country’s top dairy firms fell between 9% and 13% in the first half of 2024, according to a report published by the rating agency. Among them, China Mengniu Dairy reported a 12.6% revenue slump to CNY44.7 billion in the year's first half, while rival Inner Mongolia Yili Industrial Group’s sales fell 9.5% to CNY59.9 billion amid waning consumer appetite.
“A steep drop in revenue in the China dairy sector suggests that a multi-decade boom is finally ending,” and this moderating growth could prompt companies to expand into new product categories or tap overseas markets, analysts said. The report added that the downturn was likely to be temporary and that China’s dairy market will continue to grow, albeit at a slower pace. “A shrinking population and moderating economic gains will translate to a likely 2% to 3% compound annual growth rate (CAGR) in volume sales over the next two decades – half the rate of the prior two decades,” S&P said, as reported by the South China Morning Post.
