As the second generation born in the 1990s takes over, can Li Ziyuan stop being “sweet”?

Zebra Consumption Chen Xiaojing

Recently, Li Ziyuan, known as the “No. 1 sweet milk stock”, handed over a third quarter report for 2026 that was lower than market expectations. However, what attracted more attention than the performance was a major personnel change – the 34-year-old second-generation company Li Boxheng officially took over as the company’s chairman.

However, what faced this “post-90s” generation was a long-standing question: the revenue from milk-containing beverages, the company’s basic base, has been at a trough for many years, and the second curve has not yet matured.

For Li Ziyuan, sweet milk cannot be given up in the short term. Li Boxheng’s takeover this time is destined to complete a mild iteration of the product structure on the premise of maintaining the fundamentals of Sweet Milk, in order to lead the company out of the growth dilemma.

Sweet milk, not easy to sell

Whether youth is sweet or not, drink a bottle of Plum Garden – this national advertising slogan was once well-known to every household, but after all, it cannot conceal the current operating pain of this old dairy company.

In the first three quarters of 2026, Li Ziyuan (605337.SH) achieved operating income of 940 million yuan and net profit attributable to the parent company of 100 million yuan, a year-on-year decrease of 3.45% and 32.39% respectively.

What drags down the company’s overall revenue is the main business of milk-containing beverages, represented by sweet milk products – this basic base that has supported the brand for more than 30 years is now in a continuous shrinking situation.

In the first three quarters of this year, revenue from the milk beverage business reached 765 million yuan, a year-on-year decrease of 13.75%. From 2022 to 2025, the company’s milk beverage business revenue will be 1.359 billion yuan, 1.381 billion yuan, 1.354 billion yuan and 1.166 billion yuan respectively, showing an overall downward trend.

Sweet milk, the core product of Liziyuan, was the childhood memory of the 80s and 90s generations in Jiangsu, Zhejiang and Shanghai. It tastes sweet and has a light milky taste. In an era when normal temperature milk and low temperature milk were not yet fully popularized, it was a veritable market darling.

When the post-2000 generation became the main consumer group, the “attitude” towards sweet milk has changed significantly. On the one hand, there are more diversified beverage choices on the market, and on the other hand, sugar reduction and sugar control trends are sweeping across the country, making sugary drinks a category that young people actively avoid.

According to public information, the market for Liziyuan’s sweet milk is mainly focused on Jiangsu, Zhejiang and Shanghai, and the product formula has hardly changed. It was not until recent years that the company began to optimize and upgrade its brand image, rejuvenating the brand through celebrity endorsements and online and offline promotions, in an attempt to fit in with the new generation of consumer groups.

The efforts put into branding and promotion are not reflected in the operating data.

In addition to the milk beverage business, Liziyuan is fully committed to cultivating the second curve. In the first three quarters of this year, other product revenue was 170 million yuan, a year-on-year increase of 107.83%, but it only accounted for 18.96% of the company’s total revenue, which was difficult to support the basic market.

The weak performance of milk-containing products in the market has also affected dealers’ enthusiasm for sales.

In the first three quarters of 2026, the company’s distribution revenue reached 871 million yuan, a year-on-year decrease of 3.32%. Central China, Southwest China, North China, and Northwest China all declined, with revenue in Central China declining by nearly 30% year-on-year.

During the reporting period, the number of dealers increased by 558 and decreased by 683. At the end of the period, the number of dealers totaled 2,117.

The second generation takes over in advance

On the same day as the third quarterly report was disclosed, a major personnel change was implemented simultaneously.

On October 30, Li Ziyuan announced that founder Li Guoping resigned from a series of positions including chairman, retaining only the position of director. His original term was set to expire on October 12, 2028.

At the same time, the board of directors unanimously elected Li Guoping’s son, current director and general manager Li Bosheng, to take over as chairman. Since then, the second-generation succession of this long-established dairy company has been implemented ahead of schedule.

At the crossroads of business operations, Li Guoping chose to help his son get on the horse and send him off for another ride. Obviously, he wanted to use intergenerational handover to help the company get out of the growth dilemma.

Li Boxheng, 34, completed his master’s degree overseas in his early years and worked in the investment department of Zhongda Group. He only joined Li Ziyuan in January 2021, starting from the grassroots level, and later served as the executive director of supply chain, responsible for the supply chain and e-commerce business layout. At the end of 2024, he was officially appointed as the general manager of the company.

According to public information, Li Boxheng participated in the company’s internal changes earlier. According to the research report of Soochow Securities, he will lead the brand renewal in 2023; after becoming the general manager, he will optimize and adjust products, channels, organization and other aspects.

Channel adjustment will be launched in 2024. On the one hand, the e-commerce channels will be integrated and built, and on the other hand, the online price system will be sorted out. In 2025, he will lead the team to develop channels such as breakfast, catering, and snacks.

On the product side, in 2025, he will lead the launch of a series of whole grain drinks such as functional drinks vitamin water and Wuhong/Wuhei. The outside world generally regards this series of actions as Li Ziyuan’s cultivation of new growth points in addition to sweet milk.

The rejuvenation of the brand is also advancing simultaneously. In 2024, Cheng Yi was successfully signed as a spokesperson. With the influence of the spokesperson, it can accurately reach the new generation of consumer groups born after 95 and 00.

The company has implemented a series of intensive adjustments one after another, giving the outside world the impression that this long-established beverage company is trying its best to “make up for the mistakes”.

At present, initial results can be seen from these changes, but the overall effect still needs time and market testing.

In the final analysis, the core pain point of Liziyuan is still on the product side. So far, there has not yet been a second major single product with sales potential. This also shows that in the context of the current overall contraction of the milk-containing beverage market, the difficulty of creating hit products has further increased, and the future breakthrough point may lie beyond milk-containing products.