James Song General Manager of MarketingMengniu Dairy (Group) Co

Feb. 24, 2014

The Changing Landscape of China’s Dairy Industry

About Me• 1990-1996 Harbin Institute of Technology majored in Applied Chemistry with Master degree

and minored in Business Administration

• 1996-2007 Procter & Gamble (China) Co. Ltd., Product Manager, Section Head

• 2007-2010 Nestle Co. Ltd. , Business and Brand Development Manager

• 2010-2013 Ariston Thermo (China) Co. Ltd, Marketing & Sales Director

• 2013- present Mengniu Dairy (Group) Co. Ltd, Marketing General Manager

Dairy in China

Defending milk Demand diversification Digitalization Deficiency of raw milk

Defend Milk

Milk Safety issue

Is always a focus of the media and the public around the world.

Pause & Recharge Spoil Delight Provide Satisfy Fill Nourish Good For Refresh

Simple convenient meals Fill

Easy Simple Health

Creative inspiration to impress

Straightforward

balanced family meals

 

 

Pause & Recharge

Indulge

Positive Health

Celebration

Satisfying and

nutritious goodness

Pause & Recharge Indulge Impress Provide Satisfy Fill Nourish Good For Celebration

Stressed & StrugglingYoung Path Finders

Life Jugglers

Optimistic Experience SeekersSettled traditionalistsFoodie Idealists

Health Controllers

Demand Diversity

Young girls spent 10 minutes taking food photos, making boyfriends hungry to tears

DigitalizationThe Internet has totally changed

consumer behavior and experience.

Deficiency of raw milk

The insufficiency of raw milk supply is forcing dairy companies to explore disruptive innovation aggressively

Every day

more than 70 million consumers and 5

million students drink Mengniu products

Mengniu: largest UHT milk provider

Established in 1999Stepped into World Dairy Top 20 in 2008

The 15th in 2013

One of the world's fastest-growing dairy enterprises

High penetration in China

One Mengniu sale outletserves 810 Chinese consumers

• Value: to provide nutritious and healthy food to meet consumers’ diversified needs with strong innovative capability

• Vision: to forge an eco-system with consumers, employees, investors and all related parties and grow together

Mengniu’s Value and Vision

Expanding platformPositive cycle in capital market

– Market value of Mengniu in 2013: from £3.06b to £5.18b

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

61%feel their life will be better in the next 12 months

47%think their

financial situation today is better than 12 months

ago

Forward-Looking

Despite the supposed economic slowdown, consumers in China continue to live better and better lives.

Enjoying Improved Lives

49millionChinese homes

earn middle-class incomes by 2013

More Well-Off Than Ever

The changing Chinese consumer

As a result, much has been said about how their increased willingness to trade-up their brands across a wide slew of

product categories .

Source: McKinsey & Co. (*weighted averages for 12 categories), Ipsos China

% Agree:“Expensive Products are Better”

Main Reason for Spending Moreon Various Products (%)*

Bought new type of product

Traded up to more expensive products

Bought more frequently or in larger quantities

The Spending Habits of the ‘New Mainstream’ Consumer Trading-Up in Food/Beverage

Yes, 40%

No, 60%

Willingness to Pay forHigh Quality Food & Drinks

Doing business in China

Duplication to innovation People, people, peopleTechnology Real partnership

Get peach blossom and

be lucky quickly.

Be wealthy and get

promotion quickly.

Thanks!