Dairy majors bank on green models

China's leading dairy producers are making greater efforts to reshape the sector with intelligent manufacturing, smart pastures and zero-carbon factories, to further tap consumers with green products.

Mengniu Dairy Co Ltd, based in the Inner Mongolia autonomous region, said it would expand investments in innovation, digitalized management and green factories.

In May, Mengniu established the world's first fully intelligent dairy factory in the Ningxia Hui autonomous region in Northwest China. Compared to traditional companies that require some 3,000 employees, this factory only needs 100 workers.

Mengniu has also set up China's first zero-carbon factory in Yunnan province, and the production base has been certified both in China and overseas.

"Next, we will focus on sustainable development, innovation, digital intelligence and brand power. We will carry out the zero-carbon strategy by pushing forward green production and upgrade the industrial chain with the latest technologies," said Lu Minfang, president of Mengniu Group, during the just concluded World Dairy Industry Conference in Hohhot, capital of the Inner Mongolia autonomous region.

Mengniu is planning to build a group of world-class "lighthouse factories" and smart pastures. By 2030, it aims to reduce carbon emissions by 1 million metric tons, the company said.

Lighthouse factories are cutting-edge manufacturing sites that pioneer sustainable and profitable growth. These were recognized by a global initiative launched by the World Economic Forum and consultancy McKinsey in 2018.

Mengniu has also launched an artificial intelligence model to provide complementary nutritional consulting services for consumers. The model can provide one-on-one services for 24 hours.

In 2022, Mengniu achieved whole-year sales revenue of 92.59 billion yuan ($12.9 billion), up 5.1 percent year-on-year. During the period, its net profit reached 5.42 billion yuan, up 11.6 percent on a yearly basis, according to its annual report.

Since the outbreak of COVID-19, Chinese consumers have shown higher awareness about health and have consumed more dairy products to enhance their immunity.

Despite this, Chinese residents consume relatively lower volumes of dairy products compared to some major dairy-consuming countries. China's annual dairy consumption volume is less than one-third the global average, and there exists significant growth potential, according to the China Dairy Industry Association.

Meanwhile, another major Chinese dairy producer, Yili Group, which is also based in the Inner Mongolia autonomous region, has continued to invest in innovation and intelligent manufacturing.

Yili has established 75 production bases globally, and it has more than 2,000 partners across the world.

In May, Yili started building a lactoferrin factory in New Zealand. After the factory is put into operation, the production capacity of lactoferrin at the factory is expected to rank among the top three globally, and further enhance the company's control over the core resource.

In addition, Yili has built 15 innovation centers across the world, and these centers will conduct scientific research on cutting-edge global health issues, it said.

Last year, Yili achieved sales revenue of 123.2 billion yuan, up 11.37 percent year-on-year. During the period, its net profit reached 9.43 billion yuan, growing 8.34 percent year-on-year. Both sales and net profit hit record highs, the company said in its annual report.