(CN) Milk Production

[Guest guest]

South China Morning Post 24 June 2006

http://www.scmp.com/

 

Mengniu achieves sales target

by Cara Loong and Kandy Wong

 

China Mengniu Dairy, the country's biggest liquid milk supplier, said

first-quarter sales rose more than 20 per cent, although it was still

facing falling prices and high raw material costs.

 

Chairman Jiao Shuge said after an annual general meeting yesterday

that Mengniu met its internal sales target in the first three months

and beat the industry average of 20 percent. But he said sugar

prices soared in the first quarter this year. The competitive dairy

market also made it difficult for milk producers to raise prices

easily, he said.

 

Mengniu plans to launch new high-end products every month to ease

pricing pressure on older products, a report from investment bank

Merrill Lynch says.

 

The group, which competes with Inner Mongolia Yili Industrial Group,

has launched two high-end products this year - OMP Milk Deluxe and

Milk Supreme.

 

OMP was priced at seven to eight yuan higher per packet than its

other standard milk product while Milk Supreme was priced four to

five yuan higher.

 

" The gross profit for the high-end milk products is 100 per cent

higher than the standard milk products which often have a 20 per cent

to 25 per cent profit margin, " said president Niu Gensheng.

 

Net profit rose 43 per cent last year, helped by strong growth in

liquid milk as Chinese were getting used to dairy products.

 

The Dairy Association of China expects per capita dairy consumption

to almost double to 24kg in 2010 from 13kg now.

 

Mengniu executive director and vice-president Yang Wenjun said due to

China's economic growth, supply could exceed demand in the short run.

 

Shares of Mengniu rose 1.04 per cent yesterday, closing at $9.75.

The stock has gained 47-73 per cent so far this year.