TOKYO/DALIAN, China -- China produces more milk than the nation's consumers want, pushing dairy companies to try new approaches to the market or, in at least one case, pull out.

Japan's Meiji Holdings will unload three Chinese units that sell milk, yogurt and other products, transferring them to Shanghai AustAsia Food in December.

Meiji had tried to turn its China business around with such steps as last year's release of premium brand but it still struggled, booking a 19.4 billion yen ($123 million) impairment loss in March.

Chinese dairy companies are having a tough time as well. Inner Mongolia Yili Industrial Group, the country's largest dairy producer, logged increases in both revenue and profit last year, but sales of fluid milk products sank at second-ranked China Mengniu Dairy. Revenue and profit fell at 13 out of 29 publicly traded dairy companies in 2025, local media report.

With support from the Chinese government, the country's annual milk production has roughly doubled in 20 years to about 40 million metric tons. But recent years have seen a supply glut that has dragged down raw milk prices by nearly 40% from five years ago.

"The industry has focused too much on price competition in existing markets, and hasn't considered ways to broaden demand," Mengniu CEO Gao Fei said in an earnings call. "We need to think about how to make the pie bigger," not just how it is divided, he said.

China's rapidly aging population is a factor in the oversupply. While annual births topping 15 million were not uncommon in the 2010s, fewer than 8 million babies were born last year, according to government data.

In April 2025, Yili launched a 1.6 billion yuan ($240 million) support program for families expecting children, paying households 1,600 yuan each in a bid to boost demand for milk. Dairy companies are now looking to older consumers.

Yili's Xinhuo brand of powdered milk, developed in partnership with Beijing Tong Ren Tang Chinese Medicine, contains 19 nutrients including iron, according to Yili. The company says the drink can help maintain muscle mass and reduce tiredness from daily activities.

Mengniu is emphasizing science for its competing Yourui brand. It has had a university professor discuss clinical trial results at a product announcement event and included links to foreign academic papers on product websites. Yili advertises its Xinhuo powdered milk for seniors in this video.

This change in tack has helped sustain growth at Yili and Mengniu, which booked first-half revenue gains of 4% and 8%, respectively.

Despite more than two decades of government efforts to promote dairy consumption, per capita consumption averages around 40 kilograms a year. The agriculture ministry said in summer 2025 that this is far below the recommended range of 110 to 183 kg, and less than the 80 to 90 kg consumed in Japan and South Korea.

Yet a government agriculture outlook report forecasts consumption of milk and dairy products growing 37% between 2024 and 2034, even as pork and beef decline 5% and 2%, respectively.

"They may have set a high target with consumption levels in Japan and South Korea in mind," said Yoshiharu Shimizuike, an associate professor of agricultural policy at Hokkaido University.

Naotaka Sonoda, senior economist at PwC Consulting, said: "It's hard to see consumption rising as long as demand for dairy products besides milk, such as cheese and yogurt, fails to grow." Some observers see physical and historical factors limiting the market's growth potential. Lactose intolerance is widespread, and soy milk is well established as a breakfast drink.

"I get a stomachache when I drink [dairy] milk," said a man in his 30s in Dalian. "When I eat bread, I drink coffee or soy milk with it."