How long to froth milk: What Did Yili's Q3 Briefing Say About Sugar-Free Tea?

Yili held its 2024 third-quarter earnings briefing, reporting total revenue of 89.039 billion yuan for the first three quarters and net profit attributable to shareholders of 10.868 billion yuan. Third-quarter net profit rose 8.53 percent year on year. The company said it will increase investment in sugar-free tea, citing rapid growth for its Icedew Fresh-Brewed Tea series.

The move responds to a 2.1 percent decline in all-channel dairy sales while the beverage market grew 6.9 percent. Yili Fresh-Brewed Tea comes in Huangshan Maofeng Jasmine green tea and Wuyishan Dahongpao oolong, using Arxan volcanic mineral water and a tea-water separation freshness-lock cap that seals freeze-dried tea powder until drinking.

Dairy leader Yili recently held its 2024 third-quarter earnings briefing, reporting total revenue of 89.039 billion yuan for the first three quarters and net profit attributable to shareholders of 10.868 billion yuan, maintaining its position at the top of the industry. Notably, Yili explicitly stated during the meeting that it would increase investment in sugar-free tea beverages, with its Icedew Fresh-Brewed Tea series growing rapidly thanks to its differentiated design. Against the backdrop of a 2.1% decline in all-channel dairy sales while the beverage market grew at 6.9%, Yili's move is seen as an important strategy to counter the contraction in dairy and seek new growth points. This article reviews the product features of Yili's fresh-brewed tea, the current state of its channel layout, and the prospects for the sugar-free tea market, along with comparative third-quarter performance data for dairy companies.

Recently, domestic dairy giant Yili held its 2024 third-quarter earnings briefing. According to disclosed data, Yili's total revenue for the first three quarters of 2024 reached 89.039 billion yuan, with net profit attributable to shareholders of the listed company at 10.868 billion yuan, continuing to hold the industry's top position. Third-quarter net profit attributable to shareholders rose 8.53% year-on-year, exceeding market expectations.

In the meeting minutes of the earnings briefing, when discussing the water and tea beverage segments, Yili noted that fresh-brewed tea products are showing quite strong growth momentum, with the series positioned as sugar-free tea beverages and featuring a differentiated fresh-brewed design.

Public information shows that Yili Fresh-Brewed Tea is an innovative beverage series created by Icedew, a brand under Yili Group. It currently includes two flavors: Huangshan Maofeng Jasmine Tea (green tea) and Wuyishan Dahongpao Oolong Tea (black tea).

According to Yili, the series uses natural volcanic mineral water from Arxan, paired with carefully selected premium teas from specific origins, including Huangshan Maofeng, Guangxi Hengxian jasmine, and Wuyishan Dahongpao, striving to lock in the aroma and flavor of the tea leaves to the greatest extent possible.

In terms of product design, Yili Fresh-Brewed Tea employs a tea-water separation freshness-lock cap technology, sealing freeze-dried tea powder inside. When drinking, simply twist the cap and the tea powder automatically drops into the water, dissolving in 3 seconds for fresh-brewed, ready-to-drink tea. This significantly improves convenience and solves the problem of traditional tea beverages gradually losing flavor during shelf life.

Regarding its health positioning, Yili emphasizes that Fresh-Brewed Tea follows a pure formula with no sugar, no fat, and zero calories, containing no food additives, marketed under the concept of healthy and guilt-free.

However, Yili also acknowledged that Fresh-Brewed Tea is still in the market cultivation stage, with channels mainly concentrated in selected key cities as well as e-commerce and OTO home delivery platforms. At the earnings briefing, Yili stated: "Due to current limited production capacity, the product is only available in convenience stores and e-commerce channels in certain regions nationwide. As production capacity is gradually released, we will increase channel distribution and promotional efforts."

As a leading enterprise in the dairy industry, Yili's foray into the sugar-free tea beverage sector comes against an industry landscape where dairy is contracting overall while the beverage market continues to expand. NielsenIQ data shows that from January to August 2024, all-channel dairy sales decreased 2.1% year-on-year, while the beverage market's all-channel sales growth rate was 6.9% during the same period.

This trend is directly reflected in dairy companies' revenue performance. Third-quarter financial reports from major domestic dairy companies show that Yili's revenue was 29.037 billion yuan, down 6.66% year-on-year; Bright Dairy's revenue was 5.699 billion yuan, down 12.66% year-on-year; New Hope Dairy's revenue was 2.785 billion yuan, down 3.82% year-on-year; and Sanyuan Foods' revenue was 1.544 billion yuan, a year-on-year decline of 17.59%.

Looking at Yili's own business structure, in the third quarter, liquid milk, milk powder and dairy products, and cold drinks product series generated revenue of 20.637 billion yuan, 6.821 billion yuan, and 1.022 billion yuan respectively, representing year-on-year changes of -10.31%, +6.56%, and -16.61%. Yili explained at the earnings briefing: "Affected by the external environment, industry growth is facing阶段性 pressure."

Meanwhile, bottled tea, as an important segment of China's tea beverage market, has gone through a evolution from black tea and green tea to oolong tea, herbal tea, and other diversified offerings. With the continuous enhancement of national health awareness, the tea beverage industry is gradually entering the "sugar-free era." Sugar-free tea beverages are rising rapidly by catering to consumers' health demands, becoming a new market hotspot. According to a report previously released by EO Intelligence, the sugar-free tea beverage market is projected to exceed 10 billion yuan by 2025 and reach 12.4 billion yuan by 2027. Faced with such rapidly expanding market space, it is hardly surprising that Yili and its competitors are accelerating their layout in the sugar-free tea track.

Image source: Internet

The above content is compiled by CoffeeHunters, a coffee news website.