China`s Yili: Can it Dominate the Global Dairy Market with its Focus on Innovation and Sustainability?

Case Code: BSTR648 Case Length: 17 Pages Period: 1956-2022 Pub Date: 2023 Teaching Note: Available

Price: Rs.400 Organization : Inner Mongolia Yili Industrial Group Company Limited Industry : Food & Beverage Countries : China Themes: Business Level Strategies, Marketing Mix, Competitive Strategy,Sustainable Innovation

Abstract Case Intro 1 Case Intro 2 Excerpts

Excerpts

Yili’s Marketing Strategy – to Achieve Market Penetration

As of 2022, Yili had more than 1,000 products under six key product categories – liquid milk, milk powder, yogurt, ice-cream, cheese, and bottled water. In addition to the parent brand, it had 20 ‘sub-brands’. While the annual sales of the brands Yili, AMBPOMIAL, and Satine were over RMB20 billion, the brands Jinlingguan and Youngfun each surpassed RMB10 billion. Its products were available in over 60 countries and regions in five continents..

Innovation – To Fuel Growth

From the time it was established, Yili’s emphasis was on innovation, which not only served as the foundation for its growth, but also re-defined the Chinese dairy industry. The company constantly strove to introduce new categories, and consequently create new growth points..

International Expansion – To Become A World-Class Brand

In the 2010s, internationalization became an important development strategy for Yili. It believed that Chinese companies could grow into world-class brands only if they penetrated deeply into international markets. Yili’s philosophy in achieving international growth was to actively collaborate with partners to achieve mutual development through “global mind-sets and local operations”. In some markets, Yili entered the market through strategic acquisitions..

Strong Supply Chain With The Use Of Technology – To Assure Quality

Yili had 75 production bases across China that helped it serve China in its entirety. Over the years, it managed to streamline its entire supply chain, which enabled it to achieve certain efficiencies and ensure good product quality. A company statement said, “Yili has established a holistic internal quality management system that involves all employees and whole operation processes, featuring over 1,000 inspections that each Yili product goes through.” ..

Sustainable Practices at Yili – To Gain Differentiation

Yili first came up with the concept of Green Leadership in 2007. This was later upgraded to the Green Industrial Chain Strategy in 2009. It built the organizational framework of the ‘Sustainable Supplier Network’ and did the full life-cycle management of suppliers in seven modules over four stages, i.e., supplier development, supplier classification..

The Road To Domination of The Dairy Industry

By 2020, China was the world’s second-largest dairy market after the US and the world’s largest market by dairy imports. The Chinese dairy market had US$ 90 billion (RMB 572 billion) in revenues and nearly 28 million tons of products were consumed. Milk, baby formulas, and yogurt were the top three most consumed dairies by volume, accounting for 39.3%, 27.6%, and 23.6% of the market respectively..

Exhibits

Exhibit I: A Glimpse of the Chinese Dairy Industry
Exhibit II: Yili’s Awards and Recognitions, 2021
Exhibit III: Consolidated Income Statement of Inner Mongolia Yili Industrial Group Co., Ltd. for the year of 2021
Exhibit IV: Top 10 Most Valuable Dairy Brands, as of 2022
Exhibit V: China’s Dairy Products Consumption Volume Between 2015 and 2020 (In Million Tons)
Exhibit VI: Imported Dairy Products sold in China between 2015 and 2020 (In USD)

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