Meiji China is navigating a “painful period,” with General Manager Katsushi Nagamori stating in an interview that while performance fluctuations were anticipated, the rapid changes in the Chinese market exceeded expectations. Due to unmet sales targets and losses, Meiji has adjusted its goals in China, aiming to achieve break-even in the 2026 fiscal year through a three-year recovery plan.

In recent years, Meiji made significant investments in China, including a stake in Ausnutria Dairy and capacity expansion, but failed to meet sales targets, resulting in consecutive losses. For the 2024 fiscal year, Meiji China’s food business is projected to achieve net sales of 25 billion yen, up 2.5% year-on-year, but an operating loss of 7.4 billion yen, higher than the previous year’s 3.7 billion yen. Nagamori noted that the dairy business faces severe challenges due to an imbalance in raw milk supply and demand. While performance declines were expected, the speed of market shifts has created significant pressure.

To drive recovery, Meiji China has adopted several strategies. In the dairy business, Meiji will focus on cost reduction, price optimization, and streamlining underperforming channels and regions. Concurrently, Meiji will actively develop new products and emphasize value-added services for catering clients, such as innovative dishes combining Meiji cream and chocolate, to build a competitive edge. Additionally, Meiji China established a product development center in Shanghai to strengthen local product innovation and respond swiftly to market trends. This center, the only overseas R&D facility of the Meiji Group, is currently enhancing its equipment and recruiting local talent.

Meiji China operates five business segments: milk and yogurt, chocolate/biscuits, ice cream, nutritional foods, and ingredients for commercial use. Moving forward, chocolate/biscuits and ice cream aim to expand their scale, while nutritional foods will focus on increasing brand awareness in first-tier cities. Nagamori emphasized that Meiji will leverage Japanese brand and technical expertise to offer high-value products tailored to Chinese consumers’ needs.

Nagamori stressed that Meiji China must approach development with greater humility, recognizing its status as a small-to-medium enterprise and a challenger with room to grow. Despite challenges, he affirmed that China remains Meiji’s top-priority overseas market, with its vast scale warranting continued investment. Meiji will persist in using Japanese brand and technical resources to deliver high-value products that meet Chinese consumer demands.

Initial results are emerging. According to Meiji Japan’s leadership, in the third quarter of the 2024 fiscal year (three quarters into the recovery plan), Meiji China’s net sales resumed growth, with a slower decline in operating profit. B2C dairy sales decreased but losses narrowed; B2B dairy net sales grew due to new client acquisitions, though rising costs led to lower operating profit; chocolate/biscuit sales and profits improved; ice cream faced declines in sales and operating profit due to unfavorable weather and new factory operational costs.

Through its recovery plan and localized innovation strategies, Meiji China is gradually addressing market challenges and striving for business growth. Nagamori’s reflections and outlook demonstrate Meiji’s long-term confidence and commitment to sustained investment in the Chinese market.

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