After 16 years of losses, why did Bright Dairy fall behind?

Bright Dairy’s “freshness” core advantage—its foundation for survival—faces severe challenges

Author: Xia Tian

“Low-temperature fresh milk dominance” Bright Dairy recently turned in a response that left the market with plenty to sigh about.

On the evening of March 30, Bright Dairy’s 2025 annual report showed that the company achieved revenue of 23.895 billion yuan, down 1.58% year over year; net profit attributable to shareholders was -149 million yuan, compared with 722 million yuan in the same period last year. After going public in 2002, this dairy company first reported losses in 2008, and then—16 years later—suffered another loss.

From “the bright moment” to “the darkest moment,” Bright Dairy has not only been left far behind by Yili and Mengniu in scale, but it is also being aggressively chased by regional dairy players; now it is even facing a contraction in profitability.

Once the giant that guarded East China with its “freshness” moat—why did it fall behind significantly in 2025?

East China “base camp” wavers

Recently, multiple dairy companies—including Mengniu, Synutra (New Dairy), Yingtang Dairy, and Tianrun Dairy—have released their 2025 annual reports.

Against the backdrop of raw milk prices running at a low level and adjustments in market supply and demand, the dairy products industry has faced overall pressure. Although the above companies’ 2025 performance moved both up and down, they generally remained profitable; losses like those of Bright Dairy are relatively uncommon.

In 2025, Bright Dairy’s business performance showed a clear sense of “fracture” and “weakness.” While its total revenue decline (1.58%) had narrowed compared with the previous two years, this still could not prevent a collapse on the profit side.

Judging from product structure, Bright Dairy’s foundation is being challenged. As liquid milk—the core business—Bright Dairy recorded revenue of 13.223 billion yuan in 2025, down 6.65% year over year. This figure sends an extremely dangerous signal: under Yili and Mengniu’s price-war strangling of the low-temperature milk market, as well as competition from regional dairy players, the solidity of Bright Dairy’s “freshness” moat—something it has long taken pride in—has weakened.

Even more worrying is the performance in terms of regional data. For a long time, Shanghai and the East China region have been viewed as Bright Dairy’s “cash cow” and “base camp,” seen as its “moat” for resisting attacks from national brands across the country. However, in 2025, Bright Dairy’s revenue in the Shanghai market was only 6.108 billion yuan, down sharply by 9.22% year over year. This drop far exceeds the company’s overall average and is also much higher than the slight increase in out-of-town markets (a micro rise of 0.17%) and the growth in overseas markets (a rise of 2.84%).

The loss of Shanghai is significant in an unusual way. In 2025, as cold-chain logistics became even more widely adopted and costs declined, the penetration capability of many private brands (such as supermarket private labels) was strengthened; at the same time, Yili and Mengniu seized market share in the high-end fresh milk segment through price wars.

Under the double squeeze of weak consumer demand and intensifying competition, Bright Dairy’s pricing power and market share in its “base camp” were damaged at the same time. A 9.22% decline means its most core and most loyal consumer group is starting to wobble.

A “bleeding” wound

If the shrinkage of the domestic market is a matter of “internal trouble,” then the “breaking down” of its overseas subsidiary Synutra (New Zealand) (New Laitte) located in New Zealand is “external trouble.”

In its 2025 performance pre-loss announcement, Bright Dairy stated directly that production problems occurred at the production base of its subsidiary New Laitte, resulting in direct losses such as inventory write-offs and increased production cost expenses; these affected New Laitte’s profit or loss for the period, leading to an operating loss for New Laitte for fiscal year 2025. The company holds 65.25% of New Laitte’s shares. As a result of New Laitte’s operating loss, the net profit attributable to the parent company became negative.

The 2025 annual report shows that New Laitte achieved revenue of 7.65 billion yuan, but its net profit loss was as much as 407 million yuan.

Bright Dairy’s “partnership” with New Laitte began with an acquisition in 2010. At that time, Bright Dairy acquired New Laitte, attempting to learn from competitors by laying out overseas milk sources, seeking to break through with a model of “domestic bases + overseas resources.” However, this acquisition, once expected to deliver great benefits, has in recent years repeatedly become a “point of bleeding” for Bright Dairy. In 2023 and 2024, New Laitte posted losses of 296 million yuan and 450 million yuan, respectively.

After three consecutive years of massive losses, Bright Dairy finally made up its mind to “cut losses and divest.” In September 2025, Bright Dairy announced that it plans to sell New Laitte’s assets in North Island to Abbott’s subsidiary for 170 million US dollars (about 1.21 billion yuan RMB).

This transaction is scheduled to close in April 2026, which is expected to bring Bright Dairy back some funds. But when reviewing this 16-year overseas M&A, Bright Dairy seemingly did not get a good bargain. Not only did New Laitte fail to become a profit engine for Bright Dairy, but at a critical moment it pulled the parent company into a loss quagmire due to internal management mistakes.

A loss of 407 million yuan looks more like the expensive tuition Bright Dairy paid for its overseas management footprint being too wide and risk controls failing.

A veteran figure in the dairy industry, Li Dongming, who has 30 years of experience in post-investment management in M&A restructuring, recently pointed out that after Bright Dairy acquired New Laitte, not only did business synergies not go smoothly, but it also saw loss of management control and missed the opportunity to use New Laitte’s financial crisis to strengthen governance. After 2020, Bright Dairy only exerted influence on New Laitte through the board of directors; the key executives had no Bright Dairy background. This prevented Bright Dairy from getting deeply involved in New Laitte’s day-to-day operations and strategic decision-making.

To make matters worse, Bright Dairy’s heavy-asset investments at home also did not escape the shock from industry cycles.

In 2021, Bright Dairy raised 1.93 billion yuan through a private placement to increase capital, significantly stepping up investment in building milk sources. Among the important components was the 10,000-head dairy cattle farm project in Wanzhou, Zhongwei, Ningxia. The following year, Bright Dairy’s wholly owned subsidiary Bright Farming announced an investment of nearly 2.5 billion yuan to build a cluster of farms in Dingyuan County, Anhui Province, planning to keep 47,500 dairy cows.

However, changes in the market came far faster than capacity construction. Since 2022, domestic raw milk prices entered a long downward channel. By December 2025, the average price of fresh milk in the major producing provinces had fallen to 3.03 yuan per kilogram, reaching the lowest level in nearly a decade. Raw milk prices have been below the cost line for three consecutive years. Industry data shows that in the first half of 2025, the average loss ratio across radiating farms nationwide reached 60%, and more than 20% of farms exited the industry.

Against this backdrop, Bright Dairy’s farms built at great expense turned from “strategic assets” into “cost burdens.” The capacity it invested during the industry’s peak expansion period happened to hit a downturn in a cycle characterized by weak demand, sharply reducing investment returns.

Reflected in the financial statements, the farming segment achieved revenue of 909 million yuan in 2025, down 11.15% year over year; its gross margin was -9.71%, down 4.95 percentage points from the previous year.

Where are the barriers?

Facing difficulties both internal and external, Bright Dairy management took a series of measures in 2025, showing a clear posture of contraction and defense.

First is cost reduction and efficiency gains. According to the financial report, Bright Dairy saw a reduction in headcount in 2025. In 2025, the number of company employees was 10,760 (excluding New Laitte, same below), compared with 11,251 in the same period last year—down by nearly 500.

On compensation, management led the pay cuts. Data shows that Chairman Huang Liming’s compensation in 2025 was 1.3028 million yuan, down clearly from 1.7287 million yuan in 2024; the General Manager Ben Min’s compensation also fell from 1.6397 million yuan in 2024 to 1.3028 million yuan. This reflects both the stance of executives and the company weathering the hard times together, and also, from another angle, the company’s strict control of labor costs after its profitability declined.

Second is strategic “cutting off and divesting.” In addition to disposing of the North Island assets of New Laitte, Bright Dairy also plans to complete full control of Qinghai Xiaxiniu (by acquiring the remaining 40% of equity). With moves both forward and back, Bright Dairy’s strategic intent is clear: reduce overseas risks and focus on controlling domestic—especially Western—distinctive milk source resources.

Looking ahead to 2026, Bright Dairy, in its financial report, issued a relatively optimistic “order of the command” style pledge. The company plans that in 2026 it will achieve total operating revenue of 24.858 billion yuan, and net profit attributable to shareholders of 313 million yuan.

This means that, based on the loss base in 2025, Bright Dairy needs to complete “turnaround to profitability” within one year and realize a profit increase of more than 460 million yuan.

For this performance outlook—where revenue edges up slightly and net profit turns around from loss—some in the industry have adopted a relatively optimistic attitude.

“Domestic milk prices in 2026 will establish a bottom reversal trend; in the second half, the upward momentum will be more pronounced. From 2027 to 2028, there will enter a clear upward channel. This change will reshape the competitive landscape among dairy companies.” Song Liang, head of the expert group of the China Agricultural Reclamation Dairy Industry Alliance, analyzed to a reporter, saying that since 2023, low milk prices have fostered the brutal growth of contract-manufacturing brands and the self-owned brands of small and medium farms (most of which are low-temperature products), continuously siphoning off market share from leading dairy companies; while an upturn in milk prices will accelerate the clearing of smaller brands that rely on purchasing milk from outside, narrowing the siphoning effect, and leading firms’ performance will bring a clear improvement.

Although the industry-wide trend favors leading dairy companies with cost advantages across the whole value chain, the real challenges Bright Dairy faces—heightened competition in the low-temperature milk market—cannot be ignored.

In the past, Bright Dairy used “freshness” as a differentiated weapon, avoiding head-on clashes with Yili and Mengniu in the room-temperature milk segment. But under the consumption environment in 2025, the low-temperature milk market has changed from a “blue ocean” to a “red ocean.” As raw milk prices keep falling, cold-chain costs decline, and channel barriers dissolve, Bright Dairy’s core “freshness” advantage that it relies on is facing severe challenges.

When product homogeneity intensifies, it is the volume of brand marketing and the depth of channel penetration that determine market share—and this is precisely the area where Bright Dairy has been relatively weak in recent years.

In dairy’s marathon, Bright Dairy used to be a frontrunner, but now it has become the chaser. In 2026, it must run faster than itself.

（Source: China Fund News）