Photograph by Yan Shuxin

  Sino-Singapore Jingwei Client, October 19th (Yan Shuxin) The expected delivery date is approaching, and the expectant mother Meng Nan is in trouble.

  Due to physical reasons, Meng Nan cannot breastfeed her upcoming baby. How to choose a good milk powder has become a major problem that currently plagues her.

  Meng Nan told the Sino-Singapore Jingwei client that he had "learned" from multiple mother groups, but the mothers had different opinions. Some recommended domestic milk powder, others madly planted foreign milk powder, and some even said, "Which one is more expensive? "," because "you get what you pay for."

  But is it really "you get what you pay for"?

Recently, the vice president of Junlebao revealed the inside story of the industry, saying that the domestic price of five to six hundred milk powder cost only a few dozen yuan.

This makes Meng Nan more anxious: what kind of milk powder should I choose for my baby?

"The cost is tens of yuan, the price is five or six hundred"?

  Recently, Liu Senmiao, vice president of Junlebao, said at the 20th Maternity, Infant and Child Industry Summit that domestic milk powder is too expensive to sell. It costs tens of dollars to sell for four to five hundred, five to six hundred, but some people still buy it.

This remarks aroused the attention of the outside world to the price of domestic milk powder.

  How expensive is domestic milk powder sold?

According to Wind data, as of October 9, 2020, the retail price of domestic brand infant milk powder was 207 yuan/kg, and the retail price of foreign brand infant milk powder was 253.27 yuan/kg.

  A reporter from Sino-Singapore Jingwei learned that the current infant formula milk powder on the Chinese market can be divided into ultra-high-end milk powder, high-end milk powder and ordinary milk powder based on factors such as pricing and formula ingredients.

Among them, ultra-high-end and high-end milk powders are uniformly classified as high-end milk powders, while ordinary milk powders can be divided into mid-range and low-end milk powders.

  According to the previous disclosure of Feihe's prospectus, the pricing of ordinary milk powder (referring to the average retail price of segments 1 to 3, the same below) is generally less than 350 yuan/kg, and the price of high-end milk powder is between 350 yuan/kg and 449 yuan/kg In between, the price of ultra-high-end milk powder is 450 yuan/kg or more.

  On October 16, China-Singapore Jingwei reporters visited offline supermarkets and maternal and child stores and found that the price of 700-900g infant formula is generally above 300 yuan, of which some products such as A2 to Chu and Wyeth Qifu are more expensive. It's nearly 500 yuan.

  It is worth mentioning that Junlebao, which denounced "China's milk powder is expensive", has some of its products more than 200 yuan in price.

According to the official flagship store of Junlebao, Junlebao Youcui Organic is priced at 235 yuan (3 sections, 565g), and Junlebao Zhizhen is priced at 210 yuan (1 section, 800g).

  Compared with foreign countries, domestic milk powder prices are indeed much higher.

Taking Japan as an example, Wind data shows that as of September 29, 2020, the retail price of milk powder in Tokyo, Japan is 2,260 yen per can, which is approximately RMB 143.58.

  A reporter from Sino-Singapore Jingwei learned from a purchasing agent that on an international e-commerce platform, the average price of a2 infant milk powder is about 231 yuan; the average price of Aita's US dollar package is about 157 yuan, and the average price of platinum package is about 223 yuan.

On a domestic e-commerce platform, the price of ordinary Aitamei's infant formula has reached 255 yuan (section 1, section 2, 800g).

  "The average price of domestic milk powder is basically 2-3 times that of foreign milk powder, or even higher." Dairy analyst Song Liang said in an interview with the Sino-Singapore Jingwei client.

  Song Liang revealed to the Sino-Singapore Jingwei client that, under normal circumstances, the production cost of a can of infant milk powder is between 35-80 yuan, and some products will reach 90-120 yuan.

"Only production costs, not counting other costs such as circulation and customs clearance." Song Liang said.

Why is domestic milk powder so expensive?

  So, why is domestic milk powder sold so expensive?

Really, as Liu Senmiao said, when it sells cheaply, consumers are afraid to buy it?

Or not exactly.

  Caitong Securities analyst Liu Yufei pointed out in the research report that the overall high average price of China's milk powder industry is determined by multiple factors such as the history and demand of my country's dairy industry.

  On the one hand, food safety incidents have caused multiple rounds of price increases in the industry.

Liu Yufei said that with the gradual advancement of consumption upgrades, in the context of the quality and brand upgrade of infant formula milk powder, it was originally a trend to increase the price band.

However, the occurrence of food safety incidents has caused a structural shift in the overall demand of the industry, and consumers have ignored domestic brands while pursuing foreign brands.

Because infant formula milk powder has high health and safety requirements, consumers are willing to trade a certain premium for high quality and reliability.

  On the other hand, differences in channel layout and profit appeals have also pushed up the price of milk powder in China.

According to the 2018 China Shopper Report jointly released by Bain & Company and Kantar Consumer Index, foreign-funded milk powder accounted for 80% of the first- and second-tier markets in 2017.

In addition, according to channel research, foreign brands such as Wyeth have a market share of 80-90% in first- and second-tier cities, while only 40-50% in third- and fourth-tier cities.

  “Although domestic brands are catching up in recent years, foreign brands are still dominated by offline channels such as maternal and child stores in first- and second-tier cities. Compared with third- and fourth-tier cities, the overall average price in first- and second-tier cities is higher. In addition, due to foreign investment Brands tend to have higher demands on the profits of the business divisions in China, so the overall ex-factory price is higher." Liu Yufei said.

  Screenshot source: Caitong Securities Research Report

  Song Liang also mentioned that 70% of the milk powder cost is basically the circulation cost, and the production cost only accounts for about 30%.

"In the distribution costs, marketing costs again accounted for the bulk, mostly above 60%."

  A reporter from Sino-Singapore Jingwei combed Wind data and found that in 2019, the operating costs of Feihe, Beinmate, Ausnutria, and Yashili were 4.112 billion yuan, 1.390 billion yuan, 3.203 billion yuan, and 2.145 billion yuan respectively. The sales of these companies in the same period The expenses were respectively 3.848 billion yuan, 1.103 billion yuan, 1.772 billion yuan, and 964 million yuan, accounting for 93.58%, 79.35%, 55.32%, and 44.94% of operating costs.

  Song Liang pointed out that behind the high price of domestic milk powder is actually a huge benefit distribution system, which feeds a large number of people from production to sales to retail.

"The entire domestic infant milk powder industry, from R&D and design to production and processing, to supporting service companies and sales companies, has an employment population of one million or so."

  In addition, Song Liang believes that the Chinese people's inertial thinking about products-the more expensive the better, has also encouraged businesses to customize so-called high-end products for consumers to meet consumers' psychological needs.

  Chinese food industry analyst Zhu Danpeng also mentioned in an interview with Sino-Singapore Jingwei Client that the high-end infant formula milk powder is actually the result of the consumer side pushing the industry side.

"Nowadays, the threshold of consumer parenting is rising, and the professional knowledge and literacy of parenting are constantly improving. For companies, it must provide better products to meet and match the core demands of consumers."

Consumer: Do I have to "buy expensive"?

  The remarks made by the vice president of Jun Lebao undoubtedly magnified the anxiety of the expectant mothers and new mothers such as Meng Nan: Do you want to "buy expensive"?

  A reporter from China-Singapore Jingwei noted that some consumers continue to hold the consumer psychology of "cheap but no good goods".

"Everyone is scared by the tainted milk powder. I would rather spend more money to keep the children healthy. I don't know if they are really healthy, but at least it is a kind of comfort." Beijing consumer Ms. Liu said.

  Weibo netizen @愚者不那 also believes, “Children’s affairs are nothing trivial. People don’t know the goods and money, and they want to try their best to give them the best things they can. It’s safer for them to buy things that are more expensive.”

  However, there are also some consumers who say that they will comprehensively consider the "price ratio" of the product.

"I will look at online reviews. Which product is nutritious, which is suitable for babies, and which product is the same. I will definitely choose the cheap and good product. Why have to buy expensive." Tianjin consumer Ms. Wei told Sino-Singapore Jingwei Client Said.

  So the question is, what is the difference between milk powders of different prices in terms of nutritional content?

  Feihe mentioned in the prospectus that ultra-high-end infant formula milk powder usually contains a variety of high-quality nutrients, such as OPO structural fat, lactoferrin, whey protein hydrolysate probiotics, hydrolyzed whey protein and DHA/ARA Some products are made from fresh milk or even organic milk, and are produced by a wet-mixing-spray drying process; high-end milk powder meets the same high standards as ultra-high-end infant formula milk powder in terms of protein, fat and other key ingredients. Manufactured from imported milk powder; ordinary milk powder is a basic substitute for breast milk, and is generally produced by a dry blending process.

  However, in Song Liang's view, milk powder at different prices is actually not much different.

"The basic nutritional supplements are strictly in accordance with the national standard of infant formula milk powder of the People's Republic of China, so as long as the basic nutritional supplements are guaranteed, the difference is not too great. Of course, we must encourage technological progress, scientific research and innovation, and allow high-end and ultra-high-end milk powder The existence of this is because after companies have made money with these high-end and ultra-high-end milk powders, they can invest in research and development, so they have the ability to add some new nutrients to their products.” Song Liang said.

  It is worth mentioning that, according to Song Liang, the price of domestic milk powder has been gradually falling this year.

Take high-end and ultra-high-end milk powder as an example. In 2020, 70% of high-end and ultra-high-end milk powder will be sold at a discount. According to actual sales, the price has fallen to the mid-range price, that is, between 200-300 yuan.

  On October 16, a milk powder promotion was being carried out in a supermarket in Beijing.

Photo by Yan Shuxin, Sino-Singapore Jingwei

  "Most merchants use disguised price reduction methods, such as buying as a gift, which used to be'buy eight and get one free, or buy seven and get one free'. Now it has become'buy two and get one free, buy three and get one free', etc." Song Liang said. .

  Zhu Danpeng pointed out that, unlike previous years, high-end milk powder no longer only shows "high price", but pays more attention to "high quality" and technical content.

"It's not that consumers will pay when companies set a high price. They start to consider the brand's advantages in milk sources, formulas, and core technologies, and this also places higher requirements on companies." Zhu Danpeng said .

  "With the improvement of consumers' awareness of products, as well as more and more symmetrical information in various aspects, consumer behaviors become more and more rational, and the price of domestic milk powder will gradually return to its due value." Song Liang said.

(Zhongxin Jingwei APP)

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