What Does the Mengniu Leadership Change Mean for the China Coffee Industry?
Mengniu Dairy announced on October 10 that Lu Minfang resigned from all positions including executive director and vice chairman of the board, effective the same day, to devote more time to personal and family affairs. Wang Xi was appointed as a non-executive director with a three-year term.
Lu Minfang became Mengniu's president in 2016 and led the company for eight years, during which revenue grew from 54 billion to 98.6 billion yuan, though the gap with Yili widened. In March 2024 the president's role passed to veteran Gao Fei. How Mengniu performs under new leadership is a focus for the broader China coffee and dairy market.
Mengniu Dairy has once again undergone a major personnel adjustment. On October 10, the company announced that Lu Minfang has resigned from all positions including executive director and vice chairman of the board, citing the need to devote more time to personal and family affairs. At the same time, Wang Xi was appointed as a non-executive director. Lu Minfang took the helm as Mengniu's president in 2016, and over eight years revenue grew from 54 billion to 98.6 billion, but the gap with Yili continued to widen. In March of this year, the president's role was handed over to veteran Gao Fei. With Lu Minfang's complete exit this time, whether Mengniu can break through under new leadership has become a focus of industry attention.
On October 10, Mengniu Dairy published an announcement on the Hong Kong Stock Exchange, revealing that Lu Minfang, wishing to devote more energy to personal affairs and family, would resign from all positions including executive director, vice chairman of the board, and member of the strategy and development committee and the sustainability committee, effective October 10, 2024. After the resignation takes effect, Lu Minfang will no longer hold any position at Mengniu.
On the same day, Mengniu also announced that Wang Xi has been appointed as a non-executive director and member of the strategy and development committee, with a three-year term and corresponding remuneration.
Public records show that Wang Xi is 40 years old this year and previously served as a non-executive director and member of the strategy and development committee of the company from December 2021 to August 2024. He joined COFCO Corporation in July 2015 and currently serves as deputy director of the strategy department and general manager of the industrial investment department, as well as a director of COFCO Womai Investment Co., Ltd. Before joining COFCO, Wang Xi worked in the fourth equity department of China Development Bank Capital Co., Ltd. and the investment banking department of Deutsche Bank's Hong Kong branch.
It is worth noting that Lu Minfang has served as Mengniu's president since 2016. After leading Mengniu for eight years, on March 26 of this year, Mengniu Dairy announced that according to the group's strategic arrangements, Lu Minfang would be promoted to vice chairman of the group, step down as president of the company, and continue to serve as executive director, with the president's position taken over by Gao Fei, Mengniu's former senior vice president and head of the ambient products division.
It is understood that Mengniu's articles of association stipulate that the president's term generally does not exceed two consecutive terms, with each term lasting three years. Previously, Yang Wenjun handed the baton to Sun Yiping after two consecutive terms, and Sun Yiping voluntarily resigned in the fourth year of her term, yielding the leadership position to Lu Minfang. After that, Lu Minfang sat firmly in the president's seat for eight years, far exceeding the tenure of his predecessors.
The announcement shows that Gao Fei, who succeeds Lu Minfang as president, is 47 years old and one of Mengniu's veterans. When Mengniu Dairy was founded in 1999, Gao Fei joined the company and successively held positions including regional manager, center manager, sales general manager, and marketing general manager in the sales and marketing department, witnessing the entire development process of Mengniu, and in 2016 he became vice president of the group and head of the ambient products division. The ambient products division manages Mengniu's core liquid milk business, which includes core brands such as Telunsu.
It is understood that before joining Mengniu, Lu Minfang had long worked at France's Danone Group and was a typical parachuted professional manager. During Lu Minfang's eight years at the helm, Mengniu Dairy's operating revenue grew from 54.097 billion yuan in 2016 to 98.624 billion yuan in 2023; in terms of net profit, it reached 4.809 billion yuan in 2023, which, although declining year-on-year, had more than doubled compared with the highest pre-2016 figure of 2.367 billion yuan.
Although Lu Minfang made significant contributions to Mengniu's development, during his tenure the gap between Mengniu and its competitor Yili indeed continued to widen. Public data show that in the first three quarters of 2023, Yili's revenue reached 97.404 billion yuan, only 1.2 billion yuan less than Mengniu's full-year figure. In addition, with revenue exceeding Mengniu's by about 30%, Yili's net profit was more than double Mengniu's. In the first three quarters of 2023, Yili's net profit was 9.37 billion yuan, and adding fourth-quarter data, it was almost certain to exceed Mengniu's by more than double.
Some analysts pointed out that Mengniu hopes Gao Fei can bring a breakthrough effect after succeeding as president. Although the entire dairy industry has faced a bottleneck period in the past two years, for a company with a scale of one hundred billion yuan, achieving better development requires its leader to open up new prospects at multiple levels.
Image source: Internet
The above content is compiled by CoffeeHunters, a coffee news website.
