Mark Tanner
6 July 2022 0 Comments

If you consume dairy products, there’s a good chance that you haven’t given much thought to the millennia of innovation that has made them more functional, safer and tastier. Around 7,000 years ago in Mesopotamia, yoghurt is believed to have first appeared – the likely result of milk naturally souring in warm temperatures. Records of cheese have been found adorning Egyptian tombs built 4,000 years ago, but its invention is thought to be even earlier, after 8,000 year-old pottery shards were found in Switzerland, hypothesized to be cheese-strainers.

In the early 1850s, American Gail Borden invented canned condensed milk. The long-lasting, nutritious and safe dairy format overcame prior challenges with fresh milk that spoiled over long supply chains. It was the technology that provided the foundation for mass commercialisation of dairy and which Swiss food and drink giant Nestle was built upon. Innovations such as pasteurisation, refrigeration, milking machines, homogenization, spray drying to make powder and Ultra-high temperature processing (UHT), have all made milk more accessible to the masses and easier to export.

The next major dairy innovation may come from China. Last month, Chinese dairy giant Yili and its subsidiary Ausnutria topped the tally, taking six awards in the innovation category at the 15th Global Dairy Congress in Laval, France. The company scooped awards for its packaging design, infant nutrition, intolerance-friendly dairy products, ice cream, cheese and dairy snacks.

The judges noted that, “Yili have their finger on the pulse when it comes to identifying gaps in the market and creating brilliant innovative products that both taste and look great while simultaneously serving a purpose.”

Like many Chinese companies, Yili runs its operations akin to a future-focused tech company. In fact, the company plans to build a “Dairy Silicon Valley” in its headquarter city, Hohhot, Inner Mongolia.

Yili innovates right across its end-to-end processes. It has developed a “smart farm” system for more targeted and scientific cow raising and health management. The brand upgraded its “smart factories” to be equipped with an end-to-end product traceability system. Both are not uncommon for dairy companies globally.

What saw Yili receive these innovation awards was its consumer-focused initiatives, largely driven by its consumer digital platform, enabling more efficient and accurate insights into consumer needs. This has a similar theme to China Skinny’s Dairy and other Trackers. Over the years, Yili has also delivered some innovative and resonant marketing initiatives as we highlighted in our Dairy Whitepaper. Yili isn’t just innovating for China, it has 15 innovation centres based in Asia, Europe, Oceania and the Americas.

Yili provides valuable lessons for brands in the FMCG sectors, and also the wider market. It has had its share of scandals in China, but swift crisis management, longer-term initiatives to address issues, and strong innovation appear to have focused consumers’ attention on the positives. Last month, Yili also retained its title as the most valuable FMCG brand in China in the annual Kantar BrandZ index.

For foreign brands, the key takeaway from Yili is to learn from their innovations and marketing initiatives, and apply them to complement what makes you special as a foreign brand.

The ability to understand your competitors in China doesn’t just help you compete with them in the China market. It is increasingly relevant for other developing ASEAN, south and central Asia markets where Chinese brands are particularly focused. But it is even relevant in markets as contested and mature as the US, which fashion brands have discovered, and car brands are increasingly finding. Chinese businesses are more frequently registering their trade marks countries such as Australia and NZ.

For our Australian-based readers, China Skinny’s Mark Tanner will be in Sydney on July 18 to help better understand China and how its rising brands are operating. He will talk about the current state of the China market, how things have changed since Australians could travel to China, and the best strategic approaches for Australian brands.

The must-see event is hosted by Investment NSW and Austrade, with support from Alibaba and AsiaLink. With China’s improving quarantine situation for inbound travellers and gradual thawing of Australia-China relations continuing, it is timely. To learn more about the event and sign up, click/tap here. Mark will also be in Melbourne later that week and would welcome the opportunity to meet up. If you are in town, let us know.

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