|
‘Awareness about the quality of the products made by Maeil Dairies is high.’ - analyst
October 09, 2009
|
||||
On the positive side, the incident had the effect of raising public awareness about food safety issues, which has in turn prompted food and beverage industries to raise their safety standards. Chung Jong-hun, CEO of Maeil Dairies, a major Korean dairy producer, said the increased awareness has had the added effect of boosting Maeil’s business. The company has long incorporated food safety measures in its production processes. In the local liquid milk market, Maeil has long trailed Seoul Milk, which holds a 40 percent share. The company has also been in close competition with Namyang Dairy Products for a 15 percent to 22 percent share of the market. But in an interview with the JoongAng Daily on Wednesday, Chung noted that Maeil has put a greater priority on producing healthy foods through sanitary processes than its rivals, and says these efforts are increasingly gaining recognition from the public. Some market watchers are also backing the claim, he said. “Consumer awareness about the quality of the products made by Maeil Dairies is high,” said Lee Hwan-young, an analyst at IBK Investment and Securities, “because the company has long used the ESL production system.” ESL, an acronym for Extended-Shelf-Life, is an up-to-date sterilization process that extends the shelf life of milk from five days to 14 days. Maeil has used the process since 2001 and says it is still the only local milk maker that has fully integrated the system into all aspects of production. Maeil says it is meeting consumer demand for healthy foods through a more diverse selection of health food products than its rivals, Lee said. During the interview, Chung also talked about the company’s global market strategies, which it hopes to use to take the lead in food production. According to Chung, Maeil is already the biggest dairy products exporter in Korea, with exports estimated to reach $23 million to $25 million this year. Here are some of the questions and answers exchanged during the interview with Chung. Q. How do you persuade customers to buy Maeil products over the dairy products of your rivals? A. The biggest strength of Maeil Dairies is that the company produces fresh milk through the ESL system. Dairy powerhouses such as the U.S., western Europe and Japan have been producing a great deal of milk through the same system for a long time. We introduced the ESL system at a cost of 30 billion won ($25.7 million) and have expanded it to include all aspects of production. We are also continuing our efforts to increase our facility investment to reduce the amount of potential pollutants in the production process. Each year, we spend 20 billion won to 50 billion won on that aspect of production. In addition, we conduct 105 safety tests on our products. Our company has also pioneered healthier dairy products [in Korea] such as low fat and organic milk. Through products such as Maeil Sangha Farm, the company has attained a 50 percent market share of the 17-billion-won local organic milk market. Efforts to make healthy milk are being recognized not only here but also overseas. Since the melamine crisis in China last year, our annual exports of powdered milk for babies have risen sharply from $800,000 to around $3.5 million. What are some of your other strategies for growth? We are focusing more on global markets than our rivals and we have been doing business overseas since 1986. Vietnam, China, Russia, the United States and South American countries are the key regions to which we are increasing our exports or will soon start building factories in. Given the limited size of the local market, we believe the future lies in our readiness for overseas business. Maeil Dairy’s vision is to be a comprehensive food producer, not just milk maker. To that end, we have set a goal to increase dairy product sales to 1.6 trillion won, make our products No.1 and we have resolved to be a top 10 food company in Korea by 2012. The low birth rate is becoming a serious issue in Korea. That’s a challenge for dairy companies, given that young people are the main consumers of dairy products. What is your strategy for dealing with the low birth era? The low birth rate does affect the local infant food market, but it is also increasing demand for safer infant food. Therefore, we believe it is important to earn the trust of our consumers and we will continue our efforts to improve the safety of our products. Maeil Dairies fact file *Founded: Feb. 14, 1969 *Capital: 6.7 billion won ($5.7 million) *Sales: 933.8 billion won as of 2008 *Main business areas: infant foods, white milk, processed milk, fermented milk, juice, soybean milk, cheese, restaurants *Number of employees: Around 2,500 By Moon Gwang-lip [joe@joongang.co.kr] |
|
