Within a year, New Dairy Industry lost nearly 400 distributors.

Questioning AI · East China revenue growth but dealer loss, what hidden integration challenges lie behind?

On March 22, Xinhuo Dairy (002946), a listed dairy company under New Hope, released its 2025 financial report.

As of now, Xinhuo Dairy is the first leading dairy company to disclose its annual report. Last year, the company achieved revenue of 11.233 billion yuan, a year-on-year increase of 5.33%; net profit attributable to shareholders was 731 million yuan, up 35.98%. Xinhuo Dairy’s revenue size has long been in the “second tier” among domestic dairy companies, only behind Yili, Mengniu, Bright Dairy, and Junlebao.

In 2025, the dairy industry is not optimistic, with overall cyclical oversupply and declining prices and volumes. Low-temperature dairy products are among the few sectors growing against the trend. Xinhuo Dairy’s growth is largely due to “choosing the right track,” as it early invested in low-temperature dairy, with brands like Asahi Weipin, Today’s Fresh Milk Shop, and Huorun.

However, Xinhuo Dairy faces multiple operational pressures: intensified industry competition, nearly stagnant growth in its core Southwest market, and shrinking dealer numbers.

Water Lotus / Photo

Notably, last year, Yili Jindian, Mengniu Daily Fresh, and Junlebao Yuexianhuo increased promotional activities in offline supermarkets. Facing intensified competition from industry giants, Xinhuo Dairy significantly increased advertising and promotional spending.

The financial report shows that last year, the company’s sales expenses grew by 9.05% year-on-year to 1.81 billion yuan, outpacing revenue growth. Among these, advertising expenses reached 316 million yuan, an increase of over 30%, accounting for 17.47% of sales expenses.

Looking at the longer timeline, Xinhuo Dairy’s sales expense ratio (sales expenses/total revenue) rose from 13.55% in 2022 to 16.11% in 2025, indicating a decline in marketing conversion efficiency and brand competitiveness.

In March this year, Xinhuo Dairy announced plans to list in Hong Kong. If successful, it will become the first domestic dairy company to achieve “A+H” listing. However, the capital market is not optimistic; the day after the announcement, the company’s stock price plummeted 9.21%.

Xinhuo Dairy states that the Hong Kong listing aims to “meet business development needs, deepen internationalization strategies, and build an international capital operation platform.” But entering the dairy industry’s overseas markets is difficult and lengthy. Based on the just-released financial report, its national expansion faces challenges, with regional disparities evident. How can it achieve globalization?

In 2025, Xinhuo Dairy’s growth in the entire Western region nearly stalled. The core Southwest region’s revenue was 3.83 billion yuan, only 0.04% higher than the previous year; the Northwest region’s revenue was 1.266 billion yuan, unchanged from the previous year.

East China has become Xinhuo Dairy’s main growth market, with revenue of 3.524 billion yuan last year, up nearly 15%. However, dealer numbers in this region experienced large-scale loss, dropping from 1,051 to 785, a reduction of 266 dealers.

This is not an isolated regional phenomenon. Last year, Xinhuo Dairy only increased dealers in the Southwest, while other regions shrank. The total number of dealers decreased from 3,461 to 3,078, an 11% reduction. The company only explained in its financial report that North China’s dealer count decreased by 31.6% year-on-year due to the optimization of low-yielding, less-contributing dealers, without clarifying the shrinkage in other regions.

Overall growth but significant regional divergence, partly related to Xinhuo Dairy’s development history. The company previously acquired over a dozen local small dairy brands and operated them independently.

Xinhuo Dairy’s earlier acquired fresh yogurt brand, “Yichu Yogurt Cow” (一只酸奶牛) / Photo by Zuo Yu

This model’s advantage is rapid expansion in the short term, maintaining local distribution channels for regional dairy products. The downside is difficulty in forming a strong national brand synergy. Consumers have low awareness of “Xinhuo Dairy,” making marketing resource concentration challenging, which is not conducive to nationwide brand development.

Frequent acquisitions also led to high asset-liability ratios. In 2022, this indicator approached 72%, which the market viewed as a main reason for Xinhuo Dairy’s pursuit of Hong Kong stock listing. The 2025 financial report shows the company’s debt ratio at 56.51%, down 8.1 percentage points from the previous year.

Water Lotus / Reporter

Text editor: Zuo Yu