It is said that from March onwards, Mead Johnson’s milk powder prices for infants and young children increased by an average of 10%. There was also a domestic milk powder produced by Wandashan. It is reported that Wandashan has implemented the latest ex-factory price since midnight on February 21st and plans to complete the adjustment of the supply price and retail price of distributor terminal stores by the end of March. The price increase is mainly due to raw materials and processing costs. Dashan's price increase rate is also 10%.
In recent years, as most consumers have fallen to imported brands, foreign milk powder has a strong say in China and has a large market share. We know that infant milk powder is an essential food for special populations, and there are few alternative products, so it is a lack of elastic products with a demand price elasticity of less than 1. In economics, the lack of elastic product price increase is higher than the price reduction promotion. The monopoly of foreign capital on the market and consumers’ over-preferred import brands make infant formulas more inflexible. It is precisely for this reason that foreign brands can avoid frequent price increases. However, in the past two years, the cost of domestic raw material manpower logistics packaging has risen sharply, and the overall level of food prices, including beverage-speed foods, has risen significantly. Compared with Dumex Abbott, the price increase is understandable for Mead Johnson who has not raised prices for two years.
However, domestic powdered milk that has undergone melamine banning has still been branded by consumers as untrustworthy compared to imported brands. What is even more unfortunate is that from 2010 onwards, raw materials including raw milk, as well as packaging logistics, and other costs have risen sharply, causing most companies to fall into trouble, and about 40% of them have gone bankrupt. The surviving enterprises are either trying to maintain hardships or are choosing to import milk sources to establish their own alternatives. According to the Ministry of Agriculture's statistics on raw milk prices in more than 10 major producing areas in Heilongjiang, Inner Mongolia, the average price in January 2012 was 3.26 yuan/kg, up 2.5% year-on-year, but up by 21.6% over the same period of 2010.
It can be seen how difficult it has been for domestic milk powder companies in recent years. The author hereby emphasizes that for those enterprises with good quality who are still sticking to the use of domestic milk sources, they are the real backbone of the Chinese dairy industry and deserve to be respected. However, these enterprises are also the real victims of the deterioration of China's dairy industry's "bad money drives out good money." These enterprises have high-quality milk sources and have not experienced any food safety accidents for many years. No problems were detected even during the melamine period. However, the frequent occurrence of dairy safety incidents in these years has further deepened the overall trust crisis of domestic milk powder. The overall sales performance of these companies has been greatly affected, and production and operations have been at a low point.
Today, Wandashan finally responded by raising prices. In a deepening crisis of confidence and increasingly brutal competitive pressure, companies dare to raise prices, which requires courage. Because the price increase will face a decline in market share, facing more pressure from peer competition. But if it does not increase prices it will continue to die. For companies such as Wandashan Feihe, the excellent quality of products is frozen in the snow, and it is better to break through with rising prices. As one expert said, “The adjustment of Wandashan price is a boost to the confidence of domestic milk powder companies. The domestic milk powder is not without hope in the market, compared with the previous domestic milk powder price increase, domestic companies rose Behind the price is the affirmation of the value of the brand, or will gain more right to speak in the future."
The author believes that as long as the domestic milk powder companies can adhere to the "quality first, benefit the people", will eventually win the consumer's approval. At present, domestic milk powder enterprises should continue to accelerate the pace of integration and increase their competitive strength. The government associations should play an active role in coordinating and avoiding a vicious price war among domestic milk powder companies, and promoting the development of enterprises and joint development. At the same time, it increased the positive publicity and guidance for the safety of domestic milk powder and reshaped the new image of domestic milk powder.
In recent years, as most consumers have fallen to imported brands, foreign milk powder has a strong say in China and has a large market share. We know that infant milk powder is an essential food for special populations, and there are few alternative products, so it is a lack of elastic products with a demand price elasticity of less than 1. In economics, the lack of elastic product price increase is higher than the price reduction promotion. The monopoly of foreign capital on the market and consumers’ over-preferred import brands make infant formulas more inflexible. It is precisely for this reason that foreign brands can avoid frequent price increases. However, in the past two years, the cost of domestic raw material manpower logistics packaging has risen sharply, and the overall level of food prices, including beverage-speed foods, has risen significantly. Compared with Dumex Abbott, the price increase is understandable for Mead Johnson who has not raised prices for two years.
However, domestic powdered milk that has undergone melamine banning has still been branded by consumers as untrustworthy compared to imported brands. What is even more unfortunate is that from 2010 onwards, raw materials including raw milk, as well as packaging logistics, and other costs have risen sharply, causing most companies to fall into trouble, and about 40% of them have gone bankrupt. The surviving enterprises are either trying to maintain hardships or are choosing to import milk sources to establish their own alternatives. According to the Ministry of Agriculture's statistics on raw milk prices in more than 10 major producing areas in Heilongjiang, Inner Mongolia, the average price in January 2012 was 3.26 yuan/kg, up 2.5% year-on-year, but up by 21.6% over the same period of 2010.
It can be seen how difficult it has been for domestic milk powder companies in recent years. The author hereby emphasizes that for those enterprises with good quality who are still sticking to the use of domestic milk sources, they are the real backbone of the Chinese dairy industry and deserve to be respected. However, these enterprises are also the real victims of the deterioration of China's dairy industry's "bad money drives out good money." These enterprises have high-quality milk sources and have not experienced any food safety accidents for many years. No problems were detected even during the melamine period. However, the frequent occurrence of dairy safety incidents in these years has further deepened the overall trust crisis of domestic milk powder. The overall sales performance of these companies has been greatly affected, and production and operations have been at a low point.
Today, Wandashan finally responded by raising prices. In a deepening crisis of confidence and increasingly brutal competitive pressure, companies dare to raise prices, which requires courage. Because the price increase will face a decline in market share, facing more pressure from peer competition. But if it does not increase prices it will continue to die. For companies such as Wandashan Feihe, the excellent quality of products is frozen in the snow, and it is better to break through with rising prices. As one expert said, “The adjustment of Wandashan price is a boost to the confidence of domestic milk powder companies. The domestic milk powder is not without hope in the market, compared with the previous domestic milk powder price increase, domestic companies rose Behind the price is the affirmation of the value of the brand, or will gain more right to speak in the future."
The author believes that as long as the domestic milk powder companies can adhere to the "quality first, benefit the people", will eventually win the consumer's approval. At present, domestic milk powder enterprises should continue to accelerate the pace of integration and increase their competitive strength. The government associations should play an active role in coordinating and avoiding a vicious price war among domestic milk powder companies, and promoting the development of enterprises and joint development. At the same time, it increased the positive publicity and guidance for the safety of domestic milk powder and reshaped the new image of domestic milk powder.
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