Chapter 369 - 177: Steady Rise (Part 2)

Chapter 369: Chapter 177: Steady Rise (Part 2)

Ma Qianyang did a quick mental calculation and then asked, "Manager Li, how many stores are we going to open on our end?"

After a rough calculation of the situation in Gan Province, Li Xinhua gave an approximate figure. "The province has 11 prefecture-level cities, 61 counties, and one provincial capital. We’ll need at least 87 stores."

"So, including Eastern Guangdong, our company will have nearly 300 physical stores by the end of the year." Ma Qianyang quickly calculated the approximate scale of their retail presence.

Li Xinhua nodded. "More or less."

Ma Qianyang considered the performance of the specialty stores run by the three major domestic dairy companies, then rubbed his chin. "Based on industry sales figures for specialty dairy stores, a new physical store sells about 200 to 300 cartons a day initially. The vast majority of those are 250-milliliter packages, which works out to about 150 kilograms of liquid milk sold per day..."

"That comes out to about 1,350 tons of liquid milk per month. Even with promotions and the online store, we’d sell 2,000 tons of liquid milk a month at most."

"Yes, your assessment is pretty close to the market research department’s report." Li Xinhua nodded. "That’s why, after discussing it with headquarters, we decided not to add any new liquid milk production lines for now. The lines left over from the old Hero Dairy will be sufficient."

"The old lines are definitely enough for now. After all, they have a capacity of 30,000 tons of liquid milk... no, it should be 60,000 tons." Ma Qianyang corrected himself mid-sentence.

After all, back when Hero Dairy was on life support, the production lines had a very low utilization rate. If they ran twenty-four hours a day, around the clock, they could reach an annual production capacity of 60,000 tons of liquid milk.

"Exactly!" This was precisely why Li Xinhua didn’t plan to expand the production lines for the time being.

Even if they were going to expand, it would be the liquid milk production lines at the headquarters’ dairy farm in Gongping Town, which would make it convenient to supply the nearby Eastern Guangdong and Pearl River Delta regions.

Since they weren’t adding liquid milk production lines, Ma Qianyang figured their side wouldn’t need to produce liquid milk. "In that case, Manager Li, will the Gannan Breeding Base and Luling Breeding Base continue with their previous raw milk production quotas?"

"Correct. The raw milk for the Yuzhang Base’s liquid milk processing will be supplied locally. Their feeding regimen was adjusted half a month ago, and they now have a monthly raw milk capacity of about 11,000 tons. That’s more than enough to meet our liquid milk production needs, so for now, we don’t need supplies from the Luling Base or the Gannan Base."

Ma Qianyang pondered for a moment. "Manager Li, I don’t think producing only milk powder is a viable long-term strategy."

"What do you propose?"

"We should produce cheese! Domestic demand for cheese has increased significantly in recent years."

Li Xinhua took out his phone and pulled up a dairy market research report from the marketing department. After looking it over, he saw that the idea had serious potential.

"It’s definitely worth considering. Domestically, 350,000 tons of cheese products were consumed last year, and 120,000 of those were imported. The price of domestic cheese is generally over 55 yuan per kilogram, and imported products are even more expensive. In Europe and America, annual per capita cheese consumption is over ten kilograms, while here it’s less than 0.25 kilograms. Even with different dietary habits, it shouldn’t be that low."

Lin Datong, who was also present, hit the nail on the head. "Ultimately, it’s because the price is too high and people are strapped for cash. Otherwise, the market could easily absorb a tenfold increase in domestic per capita cheese consumption."

"That makes sense." Li Xinhua agreed that this was the core issue behind the sluggish domestic market.

"Our raw milk cost is currently about 3 yuan per kilogram. The yield for making cheese from raw milk is between 10 and 12 percent. That puts the raw milk cost for every kilogram of cheese at around 27 yuan. Plus, during the cheese-making process, we can also extract whey protein powder, further enhancing the product’s overall value."

Of course, this was just the cost for pure cheese.

Take the cheese sticks that were currently popular in the country, for example. The best of them had a cheese content of 55% at most. Lower-quality products could have a cheese content as low as 16%.

And yet, these cheese stick products often sold for over a hundred yuan per kilogram—nearly double the price of pure cheese—while their production cost was only 20 to 50 percent of pure cheese. It was an absolutely outrageous profit margin, a clear case of taking advantage of uninformed consumers and ripping them off.

After discussing it with Ma Qianyang and the others, Li Xinhua decided to move forward with developing cheese products.

After all, the Gannan Base and Luling Base could each produce approximately 366 tons of raw milk per day.

The larger their raw milk production capacity became, the more milk powder they had piling up in inventory. Bulk milk powder was typically only needed by other manufacturers or for direct export to foreign companies to be made into reconstituted milk or cheese.

The domestic milk powder market was already saturated with overcapacity as it was.

Ever since taking over Hero Dairy, Li Xinhua had been working diligently, but the milk powder inventory remained a source of frustration and anxiety for him.

Fortunately, he wasn’t the type who refused to listen to advice. He was aware of his own limitations, so he frequently held meetings with other members of the management team to discuss how to grow Hero Dairy.

Now, Li Xinhua took Ma Qianyang’s suggestion to heart. He began preparing a report for the parent company, requesting funds to be allocated to the Gannan Base and Luling Base for the construction of cheese processing facilities.

Just as Li Xinhua and Ma Qianyang were discussing how to plan their venture into the cheese industry, a call came in from Jiang Miao.

"Hello, Boss!"

"Old Li, I need you to find some time to make a trip out to the Monan Branch."

Li Xinhua understood instantly. "The Monan Branch? Is the company planning to build a dairy farm and a dairy processing plant in Monan?"