VOL. XCIV, NO. 247
★ WIDE MOAT STOCKS & COMPETITIVE ADVANTAGES ★
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Tuesday, December 30, 2025
Inner Mongolia Yili Industrial Group Co., Ltd.
600887 · Shanghai Stock Exchange
Weighted average of segment moat scores, combining moat strength, durability, confidence, market structure, pricing power, and market share.
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Overview
Inner Mongolia Yili Industrial Group is one of China's largest dairy companies, with revenue concentrated in liquid milk and additional scale in milk powder/value-added dairy and ice cream. Its primary demand-side moat is brand trust reinforced by broad distribution reach across offline retail and major e-commerce platforms. Supply-side advantages come mainly from scale and capability investments, but category competition and pricing pressure remain key risks.
Primary segment
Liquid Milk
Market structure
Oligopoly
Market share
—
HHI: —
Coverage
4 segments · 5 tags
Updated 2025-12-30
Segments
Liquid Milk
China branded liquid dairy (ambient and chilled milk, yogurt, dairy beverages)
Revenue
65.7%
Structure
Oligopoly
Pricing
moderate
Share
—
Peers
Milk Powder and Dairy Products
China milk powder and value-added dairy (infant formula, adult nutrition, cheese and dairy ingredients)
Revenue
26%
Structure
Oligopoly
Pricing
moderate
Share
17%-18% (reported)
Peers
Cold Drinks (Ice Cream)
China packaged ice cream and frozen desserts
Revenue
7.6%
Structure
Competitive
Pricing
weak
Share
—
Peers
Other Products
China packaged beverages and other ancillary products (including bottled water and health drinks)
Revenue
0.6%
Structure
Competitive
Pricing
weak
Share
—
Peers
Moat Claims
Liquid Milk
China branded liquid dairy (ambient and chilled milk, yogurt, dairy beverages)
Financial segment reflects company-reported 'liquid milk' main business revenue.
Brand Trust
Demand
Brand Trust
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 2 evidence
Brand leadership supported by repeated number-one dairy brand rankings; helps sustain preference in low switching-cost FMCG.
Erosion risks
- Food safety incident or quality scandal
- Consumer downtrading and private label pressure
- Brand dilution from heavy discounting
Leading indicators
- Brand value and strength rankings (Brand Finance, Kantar BrandZ)
- Retail market share trends in liquid dairy across channels
- Segment gross margin trend
Counterarguments
- Switching costs are low; consumers can substitute competing brands quickly
- Competitors can match promotions and shelf placement, weakening brand premium
Distribution Control
Supply
Distribution Control
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 2 evidence
Broad multi-channel coverage (modern trade, traditional, e-commerce, O2O) and strong platform presence supports shelf and traffic access.
Erosion risks
- Retailer and platform bargaining power increases (fees, promotions)
- E-commerce price wars compress margins
- Channel conflict between online and offline partners
Leading indicators
- Online platform rankings and share statements (JD, Tmall, Pinduoduo, Douyin)
- Distributor inventory levels and days in channel
- Sell-through growth vs peers
Counterarguments
- Platforms can promote competing brands and private label equivalents
- Marketing CAC inflation can offset distribution reach advantages
Scale Economies Unit Cost
Supply
Scale Economies Unit Cost
Strength: 4/5 · Durability: medium · Confidence: 4/5 · 1 evidence
Liquid milk is about 66% of main business revenue, supporting ad spend efficiency, procurement leverage, and manufacturing utilization.
Erosion risks
- Demand decline reduces utilization, weakening unit cost advantage
- Raw milk and input cost volatility offsets scale benefits
- Competitors expand capacity or improve efficiency
Leading indicators
- Liquid milk revenue and volume growth vs industry
- Segment gross margin and cost per unit trends
- Capacity additions and closures
Counterarguments
- Scale advantages can be competed away during price wars
- Regional players can be cost-competitive within local distribution footprints
Milk Powder and Dairy Products
China milk powder and value-added dairy (infant formula, adult nutrition, cheese and dairy ingredients)
Annual report summary also mentions adult milk powder retail share (24.0%) and cheese retail share (18.8%) for 2024.
Brand Trust
Demand
Brand Trust
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 1 evidence
Infant formula and adult nutrition rely heavily on perceived safety and quality; company reports meaningful retail share in infant formula.
Erosion risks
- Regulatory or quality incident damages trust disproportionately in infant formula
- Imported brands and premium players intensify competition
- Channel promotions erode brand premium
Leading indicators
- Infant formula retail value share trend
- Repeat purchase and membership metrics in key brands
- Segment gross margin trend
Counterarguments
- Consumers can switch brands; perceived quality differences can narrow
- Foreign brands may regain share if sentiment shifts
Capex Knowhow Scale
Supply
Capex Knowhow Scale
Strength: 3/5 · Durability: medium · Confidence: 3/5 · 1 evidence
Investment in deep processing and high-value ingredients (for example, cheese curd, lactoferrin) can create a capability gap vs smaller peers.
Erosion risks
- Overcapacity or weak demand reduces ROI on new processing assets
- Competitors replicate technology and capabilities
- Input cost volatility impacts ingredient economics
Leading indicators
- Value-added dairy and ingredients revenue growth
- New product cadence and mix shift to higher ASP products
- Gross margin expansion sustainability
Counterarguments
- Scale in processing is less valuable if end markets remain commoditized
- Specialty ingredient advantages can be competed away if supply expands
Distribution Control
Supply
Distribution Control
Strength: 3/5 · Durability: medium · Confidence: 3/5 · 1 evidence
Strong online execution supports share gains as formula purchasing shifts to e-commerce and omnichannel.
Erosion risks
- Platform algorithm or traffic changes raise CAC
- Regulation on infant formula marketing limits growth tactics
- Price competition online compresses margins
Leading indicators
- E-commerce sell-through and rankings for key brands
- CAC and promotion intensity on platforms
- Online vs offline revenue mix
Counterarguments
- Platform dominance reduces supplier leverage; visibility can be bought by rivals
- High growth online may be promotion-driven and not durable
Cold Drinks (Ice Cream)
China packaged ice cream and frozen desserts
Financial segment reflects company-reported 'cold drink products' main business revenue.
Brand Trust
Demand
Brand Trust
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 2 evidence
Long-standing leadership position and strong consumer brand recognition in ice cream supports shelf presence and repeat purchase.
Erosion risks
- Premium ice cream price sensitivity and downtrading
- Weather volatility and seasonality
- Fast-moving consumer taste trends
Leading indicators
- Share and ranking statements for ice cream across channels
- Seasonal sell-through and inventory levels
- New product launch hit rate
Counterarguments
- Category is crowded with frequent promotional cycles
- New brands can win attention quickly with novelty products
Distribution Control
Supply
Distribution Control
Strength: 3/5 · Durability: medium · Confidence: 3/5 · 1 evidence
Broad distribution system supports availability for a seasonal, impulse category; advantage is meaningful but can be rented via promotions.
Erosion risks
- Retail freezer space competition
- Platform and retailer promotion fees increase
- Logistics disruptions in peak seasons
Leading indicators
- Distribution coverage metrics (doors, freezers, points of sale, if disclosed)
- Ice cream revenue growth vs peers
- Promotion intensity and gross margin
Counterarguments
- Retailers can reallocate limited freezer space to higher-paying brands
- Distribution reach is less defensible if competitors pay for placement
Other Products
China packaged beverages and other ancillary products (including bottled water and health drinks)
Company reports other products as about 0.6% of main business revenue in 2024.
Distribution Control
Supply
Distribution Control
Strength: 2/5 · Durability: fragile · Confidence: 3/5 · 1 evidence
Small revenue base; any advantage likely comes from leveraging existing channels rather than unique positioning.
Erosion risks
- Strong incumbents in beverages dominate shelf space
- Low differentiation leads to price competition
- Limited scale reduces marketing efficiency
Leading indicators
- Revenue growth of other products line
- SKU count and distribution expansion in adjacent categories
- Gross margin trend for other products
Counterarguments
- Incumbents in bottled water and RTD have stronger brand and category focus
- Channel access alone is not sufficient to win in beverages
Evidence
Worlds most valuable dairy brand for the fifth consecutive year.
Independent brand valuation supports brand-based demand moat.
Brand Finance ranking: Yili has remained number one for five consecutive years.
Translated from Chinese; company highlights third-party brand rankings reinforcing consumer trust.
Formed an omni-channel management system covering supermarkets, e-commerce, and O2O.
Translated from Chinese; describes the companys channel coverage model.
Liquid milk holds the number-one share across JD, Tmall, Pinduoduo, and Douyin channels.
Translated from Chinese; company claims top share on key online platforms, consistent with distribution advantage.
Liquid milk revenue 75,003 (RMB million), representing 65.7% of main business revenue.
Scale indicated by segment revenue and revenue share.
Showing 5 of 10 sources.
Risks & Indicators
Erosion risks
- Food safety incident or quality scandal
- Consumer downtrading and private label pressure
- Brand dilution from heavy discounting
- Retailer and platform bargaining power increases (fees, promotions)
- E-commerce price wars compress margins
- Channel conflict between online and offline partners
Leading indicators
- Brand value and strength rankings (Brand Finance, Kantar BrandZ)
- Retail market share trends in liquid dairy across channels
- Segment gross margin trend
- Online platform rankings and share statements (JD, Tmall, Pinduoduo, Douyin)
- Distributor inventory levels and days in channel
- Sell-through growth vs peers
Curation & Accuracy
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