Mengniu saw its brand value plummet by more than 30% in 2012, as Chinese public concern over the safety of domestically-manufactured dairy products continued to turn consumers towards ‘safer’ international brands.
The value of the Mengniu brand fell by 31% in the last year to $2.391bn, according to Millward Brown's Brandz Top 50 Most Valuable Chinese Brands 2013 report. Despite the drop in value, Mengniu still ranked at number 22 among the country’s top 50 brands.
It was, however, leapfrogged by its prosperous Chinese dairy industry rival, Yili, which ranked at 21 after its brand value increased by 13% to $2.722bn. The report attributed this to Yili’s aggressive marketing efforts in 2012 and a “return of consumer trust.”
Chinese food and dairy manufacturer Bright Foods also featured among the top 50 brands after it was valued at $713m - a 34% increase.
Safety issues blunt marketing efforts
“Yili marketed the brand aggressively in China and abroad, at the London Olympics and in a product placement initiative on US TV, in a comedy series called The Big Bang Theory,” said the Brandz report.
“Integrating traditional and online media, Yili attempted to reach consumers with an emotional message connecting the brand and dairy products with healthy living.”
The report added that despite its extensive marketing efforts, the company still suffers as a result of China’s recent stream of food safety blunders.
Yili itself was the subject of one major recall in the last year. In June 2012, Yili pulled six months’ worth of its QuanYou infant formula from shelves across China after authorities discovered elevated levels of mercury in the product.
“Although extensive exposure improved brand awareness, persistent food safety scares blunted the message in China,” said the report.
“Yili had been investing heavily in supply chain improvements and profits gain indicated a return of consumer trust. But the company needed to recall contaminated infant formula in Spring 2012.”
Safety concern hurting sales
The safety of domestically-manufactured dairy has remained a significant concern for Chinese consumers. As a result, an increasing number of consumers are turning to safer, international brands.
“Product safety remained an issue for the dairy category during 2012, with several incidents involving tainted milk and infant formula drawing a lot of media attention, eroding consumer confidence and hurting sales and brand reputations,” the report added.
In an attempt to counter this move away from domestically-manufactured dairy, processors such as Mengniu and Yili have taken significant steps to improve the quality of their products.
Mengniu invested heavily in technology to improve its processes and opened the country’s first combined pasture and factory site in Hebei province in an effort to increase its control over its milk supply.