The Second Growth Curve of Feihe Is Yet to Come: When the Demographic Dividend Ebbs Away

Feihe rose during the period of rebuilding trust in domestic substitution and succeeded in the leap to the high - end price range. However, when the demographic dividend turns into a demographic liability, when high - end positioning encounters consumption downgrading, and when domestic substitution turns into a melee between domestic and foreign capital, all of Feihe's past success formulas have failed simultaneously.

In the Chinese consumer circle, Feihe is an extremely special existence.

It is a benchmark for the counter - attack of domestic brands and is the leading domestic milk powder brand that has snatched the high - end market from Wyeth and Mead Johnson. The slogan "More suitable for the constitution of Chinese babies" has shattered the decades - long superstition about imported milk powder, enabling this traditional dairy enterprise from the black soil of Northeast China to reach the peak of a HK$200 billion market value on the Hong Kong Stock Exchange.

In the circle of mothers - to - be and in the sinking mother - and - baby channels, no domestic brand has been able to completely replace Feihe's dominance so far. Its self - owned milk sources, the ability to turn milk into powder within 2 hours, in - depth offline services, and hundreds of millions of private - domain users are all real moats built by Feihe.

However, when we enter the real industry arena, strip away all the glory and marketing narratives, and examine the financial reports of the past three years, what is the real situation of Feihe?

The Obsession of an Elderly Man from Northeast China

Leng Youbin is 62 years old this year. This man from Kedong County, Heilongjiang Province, has spent more than thirty years transforming Feihe from a local dairy factory into a synonym for Chinese milk powder. In 2021, Feihe's market value exceeded HK$200 billion, its net profit was approaching 7 billion yuan, and its gross profit margin exceeded 70% - more profitable than Maotai. At that time, the industry called Feihe the "Moutai of milk powder", and Leng Youbin himself became a benchmark for Northeast Chinese businessmen. This is a successful entrepreneurship story.

However, in 2022, the story began to change. This was also the beginning of the disappearance of China's demographic dividend.

On March 26, 2025, Feihe released a financial report that silenced the capital market: its annual revenue was 18.113 billion yuan, a year - on - year decline of 12.7%; its net profit was 1.939 billion yuan, a year - on - year plunge of 46.9%. This was the worst report card since Feihe's listing. In just four years, Feihe's net profit had evaporated by nearly 72%.

It seems that all entrepreneurs in trouble will eventually talk about "long - termism". Leng Youbin said at the performance press conference: "Feihe will continue to adhere to independent innovation of milk protein as the core engine and nutrition for the entire life cycle as the strategic main line."

But the numbers don't lie. In 2025, Feihe's sales expenses reached 7.162 billion yuan, almost the same as 7.165 billion yuan in 2024.

The revenue decreased by 2.6 billion yuan, but the marketing investment remained unchanged. What does this mean? Feihe spent the same amount of money but couldn't sell its products. The sales expense ratio soared from 29.5% in 2021 to 39.5%. It means that for every 100 yuan of milk powder sold, nearly 40 yuan was spent on channels and advertising.

What's even more eye - catching are the data for the first half of 2025: the revenue was 9.15 billion yuan, a year - on - year decrease of 9.4%; the net profit was 1.03 billion yuan, a year - on - year halving of 46%. The gross profit margin dropped to 61.6%, the lowest in recent years. The capital market voted with its feet - Feihe's stock price dropped by about 80% from its peak in early 2021, and its market value evaporated by about HK$170 billion.

The Moat Is Being Filled

Almost every Chinese mother has heard Feihe's story about "Chinese babies".

In 2008, after the melamine incident, domestic milk powder brands collapsed collectively. Foreign brands advanced rapidly, and Wyeth, Mead Johnson, and Abbott occupied the high - end market. Leng Youbin made a decision that was later proven to be extremely correct: he invested heavily in building his own pastures and adopted the "full - industry chain" approach. Then, with the slogan "More suitable for the constitution of Chinese babies", he turned the trust crisis of domestic milk powder into an opportunity.

This strategy worked for many years. Data from Frost & Sullivan shows that Feihe has ranked first in the sales volume of infant formula milk powder in China for six consecutive years and first globally for four consecutive years. Xingfeifan has become a product with annual sales of over 10 billion yuan, and in 2024, the ultra - high - end product line contributed 75% of the revenue.

However, no matter how deep a moat is, it's still vulnerable to opponents bypassing it.

The first to bypass it is Yili. This liquid milk giant has been quietly making money in the milk powder market. In 2025, its retail market share of infant formula milk powder reached 18.30%, and it claimed to be the "champion in the Chinese infant formula milk powder market". Yili's strategy is simple: it uses the foundation of its liquid milk business to support its milk powder business, sharing channels and brands, and gradually eroding the market. The gap in market share between Feihe and Yili has shrunk from the previous 12.3% to 1.2%.

The second is Junlebao. This Hebei - based enterprise, which emerged from the shadow of Sanlu, has been expanding rapidly since it became independent from Mengniu in 2019. In 2024, its milk powder business revenue was 5.371 billion yuan. Although its scale is only one - quarter of Feihe's, its growth rate far exceeds the industry average. Junlebao's trump card is cost - effectiveness. The price of Feihe's Xingfeifan Zhuorui is set at 350 - 450 yuan, while Junlebao's Youcui Organic directly targets the 300 - 400 yuan price range. With the same formula, it is cheaper than Feihe.

What's even more troublesome is the counter - attack of foreign brands. Danone's revenue from its professional and special nutrition business in the China region reached 2.77 billion euros in 2025, a year - on - year increase of 13.2%; the sales of infant formula milk powder of Health and Happiness Group in the Chinese mainland increased by 28.3% year - on - year. These brands have R & D accumulations and brand premiums in the global market. Once their localization strategies are in place, Feihe's narrative of "more suitable for Chinese babies" will no longer be an exclusive weapon.

Nielsen's data shows that Feihe's market share in first - tier cities has dropped by 3.2 percentage points. What do first - tier cities mean? They are home to high - income groups, price - insensitive users, and a touchstone for brand loyalty. Feihe's loss of ground in these places indicates that its "high - end" label is fading.

What Did the 1.2 Billion Yuan Subsidy Achieve?

In March 2025, Feihe made a decision that caught the whole industry's attention: it allocated 1.2 billion yuan for a birth subsidy, giving at least 1,500 yuan to each pregnant family, mainly in the form of milk powder vouchers.

Leng Youbin had a good plan: the state was calling for child - bearing, and Feihe was responding to the policy. It could gain goodwill and attract new customers. Subsidies might result in short - term losses, but in the long run, locking in users would be worthwhile.

However, this move precisely exposed that Feihe was completely unaware of its current situation surrounded by strong competitors and lacked basic judgment ability regarding the market and competition.

Less than half a month after the subsidy was launched, Yili followed up with 1.6 billion yuan, and Junlebao also invested 1.6 billion yuan. Beingmate and Biostime also joined the fray. A subsidy war turned the milk powder industry into an "arms race".

What was the result? Feihe admitted in its announcement that the subsidy directly led to a decline in revenue.

Consumers also didn't seem to be very receptive. Some mothers complained that they could only redeem one can of subsidized milk powder per month, but a newborn needs to drink four or five cans per month, and they still had to buy the rest at the original price. There were widespread doubts about this "bait - and - switch marketing". Even worse, some subsidized milk powder ended up on Xianyu and was sold at a 40% discount, which disrupted the normal price system of the channels.

A dairy product distributor told reporters: "A large amount of subsidized milk powder has flowed into the grey market, and the sales volume in the regular channels has decreased significantly." Feihe spent 1.2 billion yuan, but instead of increasing new customers, it caused channel chaos and the collapse of the price system.

Consumer goods analyst Tao Tao's evaluation was sharp: Feihe made two fatal mistakes. One was the insufficient subsidy intensity, and the other was the loopholes in implementation. "When competitors enter the market with more favorable conditions, consumers will naturally vote with their feet."

Third - party data confirmed this: During the subsidy war, Feihe's market share in first - tier cities dropped by 3 percentage points, while Junlebao's increased by 2 percentage points.

The real problems that Feihe has to face are probably much bigger than the failure of the subsidy plan.

First, it doesn't understand its opponents at all. Its opponent Yili has an annual revenue five times that of Feihe, which is sufficient to support it in a war of attrition on any battlefield; and Junlebao is not afraid of a price war at all. This is a war that is doomed to be lost.

Second, the decision - making system has failed. I don't believe that there is no one in Feihe who can predict the opponents' next moves. But either no one dares to question after the top - level decision is made, or everyone chooses to remain silent to please. This is much more terrifying than a single decision - making mistake.

Mencius said: "If a state has no ministers who can uphold the law and give good advice at home, and no enemy states to cause trouble abroad, it will often perish. Then we know that one prospers in adversity and perishes in ease."

Obviously, Feihe has not woken up from the "ease" of being the industry leader, and there are no "ministers who can uphold the law and give good advice" who dare to voice different opinions. Meanwhile, its pursuers, with alertness and hunger, are constantly looking for the leader's weaknesses.

The wisdom from two thousand years ago has been re - translated into business language in the modern Chinese milk powder market.

All Blame It on the Birth Rate

If the intensifying competition is Feihe's "external trouble", then the birth rate is the "internal disease" that the entire industry can neither cure nor avoid.

According to data from the National Bureau of Statistics, China's birth rate dropped from 8.52% in 2020 to 5.63% in 2025. The core target customer group of Feihe - children aged 0 to 3 - has decreased from 41.9 million to about 26.5 million. This means that Feihe's potential customer pool has shrunk by 37% in five years.

In 2024, there was a "Year of the Dragon effect", with 9.54 million newborns, a net increase of 520,000 compared to the previous year. Feihe took the opportunity to catch its breath, and its revenue increased by 6.2%. However, in 2025, it was back to square one. Its annual revenue was 18.1 billion yuan, 2.6 billion yuan less than in 2024.

Leng Youbin predicted in the financial report that the number of newborns would increase from 2026 to 2028. How reliable is this prediction? Looking at the number of marriage registrations might be more informative. In 2023, there were 7.68 million marriage registrations in China, the lowest since 1986. Even though there was a rebound in 2024, the long - term trend is still downward. Feihe is betting that the birth - stimulating policies can reverse the situation, but no country in the world has been particularly successful in "encouraging people to have children".

An even more serious problem is that Feihe has put all its eggs in one basket, with more than 90% of its income relying on infant milk powder. Yili's milk powder business accounts for less than 30% of its total, and Junlebao has low - temperature fresh milk as its mainstay. When the basket itself is shrinking, no matter how hard you try, you can't change the general trend.

The Gamble on "Nutrition for the Entire Life Cycle"

Faced with the ceiling of its main business, Leng Youbin's choice is to go beyond the infant market and focus on "nutrition for the entire life cycle".

At the end of 2024, he announced a comprehensive upgrade of Feihe's corporate vision, aiming to become the "most trustworthy leader in national nutrition". The product layout has been extended from 0 - 3 years old to pregnancy, children, teenagers, adults, and the elderly. Simply put, Feihe wants to cover everything from the cradle to the grave.

Does this strategy make sense? On the surface, there are more than 320 million people over 60 years old in China, and the elderly nutrition market is indeed much larger than the infant market. However, "making sense" and "being successful" are two different things.

Feihe has launched several new products: Aiben Yuandong Protein Nutrition Powder, which focuses on "muscle and bone care"; Supernova children's cheese, which won the 2025 World Dairy Innovation Award; and compound nutritional products for pregnant women. At the end of 2025, the ultra - high - end new product "Xingfeifan Zhuoyu" was launched in Shandong, with an order volume of 228,000 cans, which is regarded by the industry as the key engine for a performance reversal in 2026.

However, the question is, how large a scale can these new businesses support? In the first half of 2025, Feihe's overseas business revenue was about 110 million yuan. It sounds like a lot, but compared with the total revenue of 18.1 billion yuan, it accounts for less than 1%. The Canadian factory has obtained the first local production license for infant formula milk powder, and its products have entered 1,500 North American supermarkets, with the number of stores increasing by 270% month - on - month. However, aren't the costs of labor, compliance, and brand recognition in the North American market all money - pits?

Leng Youbin's confidence comes from technological reserves. Feihe says it has achieved 100% self - production of 11 key milk protein raw materials, built the first domestic lactoferrin production line, and developed the "fresh extraction technology of milk protein". It also seems to have caught up with the wave of AI - the breast milk intelligent computing engine, the AI intelligent pupil system, and the AI nutritionist. In 2025, it appeared at the World Artificial Intelligence Conference as one of the "world's first AI dairy enterprises".

Telling these stories to the capital market can indeed support the valuation. But will consumers recognize them? Will a grandmother who buys milk powder for her grandson buy Aiben protein powder for herself just because Feihe has AI technology? The leap in brand recognition from being an "expert in infant milk powder" to a "leader in national nutrition" is much more difficult than technological breakthroughs.

Feihe's Future

Looking back at the mid - 2026, Feihe's situation can be summarized in one sentence: It still has a solid foundation, but it's hard to find a second growth curve.

There is 6.48 billion yuan in cash on its books, no