Zhongtai Securities: From nutritional supplementation to functional precision, a new engine for structural growth in the dairy industry

The Zhitong Finance App learned that Zhongtai Securities released a research report saying that as dairy companies' technology continues to iterate and mature, new functional products such as high protein and lactose-free new products emerge, and complex functional products are becoming more abundant, and functional dairy products are expected to continue to grow at a higher rate than the general market. It is recommended to focus on dairy companies such as Yili Co., Ltd. (600887.SH), Mengniu Dairy (02319), and New Dairy (002946.SZ), which can develop scenarios, expand their reach, and quality-driven repurchases.

The main views of Zhongtai Securities are as follows:

Market pattern: dominated by low temperatures, breaking through against the trend

In 2025, China's dairy market was under pressure as a whole, and the functional dairy circuit bucked the trend and became the biggest highlight of the industry. Judging from the category structure, the low-temperature circuit dominated the growth, accounting for 78%. Online sales of low-temperature milk reached 3.96 billion yuan, up 15.8% year on year, showing a sharp rise in volume and price; online sales of low temperature yogurt were 993 million yuan, up 27.1% year on year. The core driving force of functional dairy products mainly comes from rising consumer-side health awareness and supply-side product innovation resonance. On the demand side, consumers are shifting from basic nutritional supplements to the pursuit of fresh, active nutrition, and precise functionality. According to Qinze consumption research data, it is estimated that functional dairy products will maintain a compound growth rate of 15% to 20% in 2026-2029, and may exceed 140 billion dollars in 2029.

Core track analysis: The core components of functional dairy products mainly include A2β-casein, probiotics, lactoferrin, and organic ingredients

1) A2β-casein: Contains only A2 beta-casein, does not contain type A1. The molecular structure is closer to breast milk, making it easier to digest and absorb. About 25-30% of consumers report digestive discomfort associated with milk, and A2 milk is the core solution. The global A2 milk market is expected to be US$1,371 billion in 2025 and will expand to US$2.81 billion by 2034, with a CAGR of 8.3%.

2) Probiotics: Active probiotics such as bifidobacteria and lactic acid bacteria regulate intestinal flora and promote digestion and absorption. The market size of China's probiotics industry is expected to reach 117.1 billion yuan in 2025, of which the dairy category is expected to reach 84.8 billion yuan. Dairy products account for 78% of the probiotic product market, and are the most important probiotic carriers.

3) Lactoferrin: The core immune protein in breast milk, promotes iron absorption, antibacterial intestinal protection, and enhances immunity. Lactoferrin added to infant formula has become standard, and adult dairy products have begun to penetrate.

4) Organic certification: Organic certification from forage cultivation to dairy cow breeding, without antibiotics, hormones, or pesticide residues, to meet the dual demands of high-end consumers for food safety and sustainability. From the perspective of technical barriers, technical barriers to functional dairy products are mainly reflected in the three dimensions of strain development, protein isolation, and activity retention. As technologies such as flash evaporation, ultrafiltration, and ceramic membrane microfiltration become more mature, room temperature active probiotic technology breaks through and expands consumption scenarios, and the industry may continue to expand rapidly.

Risk warning: Weak macro-consumption, worsening competition, tightening of regulatory policies, risk of technological iteration, untimely updating of research information, distorted third-party data, and deviations in market size estimates.