Yak Milk: Niche or Nightmare?
I am the Consultant hired by the person to take the key decision of the case.
Lack of acceptance of milk and milk-based products among the Chinese population due to high degree of lactose intolerance among the population, low yield of milk and diary production and traditional unpopularity of cheese and other dairy-based products. (2) Raw materials availability i.e. milk is a problem as a normal Yak can give just 2 to 3 liters of milk which is a fraction of what an average dairy cow gives which is 20 to 30 liters of milk daily. Future upscaling of production of milk-based products is bound to face serious hurdles if the basic raw material -milk supplies are limited (3) Seasonal factor of milk availability due to severe cold climatic conditions. (4) Trade-off between dairy farming and conducting agricultural practices in China. Nutritional return for dairy farming compared to standard crops is comparatively lower, thereby allowing the utilization of such valuable land for animal husbandry less feasible. In other words it is more profitable to grow vegetables or grain, than to raise animals for dairy farming. (Case Study analysis)
List of alternatives:
1) Enter aggressively in the powered milk business of China in a big way as this has been over the years the most vital dairy product and the nation faces severe competition in this sphere. (2) Market cheese and butter with different product variant especially to the yuppie consumers who are culturally aligned to the Western world. (3) Start production of Ice cream and yogurt which represent the bulk of the dairy market value. (Case Study analysis)
Analysis of the alternatives:
1) in China, as foreign brands are being perceived to be of superior quality, this new project holds promise as it is of foreign origin. New production facility can also enter Chinese milk powder industry since there are specially formulated products catering to specific segments such as old aged, nursing and pregnant mothers as also children of various age groups. (Case Study analysis)
2) Since cheese and butter do not find favor among the senior citizens of the Chinese population, it does not pose any problem as they do not constitute our target market. Whatever volumes comes from them is welcome, but it is heartening to note that young, urban citizens are increasingly finding cheese and butter suitable to their palate, thanks to globalization and changing mindset. Since this situation will prevail for the forthcoming five years, greater value will be generated from this. An interesting fact is that butter substitutes such as margarine sell twice as more than butter. The pointer to this fact might be that since margarine tastes better than butter, it sells more. However the most promising thing has been the changing Chinese palate that has started to consume bread during breakfast for which butter is an absolute must. The company will have to cash on this changing habit which will go a long way in increasing the fortunes of the company. (Case Study analysis)
3) Production of Ice cream and yogurt will greatly benefit the company as these products represent 90% of the diary market value. It has been witnessed that ice-cream is fast finding favor among the Chinese population leading to formation of Chinese joint venture brands entering the market. Since yogurt is comparatively a new concept in the Chinese market, this emerging opportunity can be cashed on to the full. Besides, Yoghurt is regarded as a healthier compared to ice cream and helps in tiding over lactose intolerance which an important consideration in case of the Chinese market. On the ingredient level, Yak milk contains higher proportion of fats, proteins, amino acids and calcium content compared to cow’s milk. These outcomes in richer products contain a special favor and some seemingly marketable health benefits. (Case Study analysis)
I) in the first place, it is important to convey the scientific facts behind the nutritive richness of Yak milk. This can be done through advertisement, promotion by the Chinese Diary Development Centers through releasing advertisement where the message strategy will focus highly on the high nutrition value inherent in Yak’s milk. This is important from the generic point-of-view because Chinese’s per capita milk consumption is among the lowest in the world at just around 7 kg annually. Through generation of awareness it is expected that demand will rise after people get to know about the unique health benefits of Yak milk. (Case Study analysis)
Yak milk is traditionally processed into fermented milk and thereafter churned out to yield local yak butter and buttermilk. Traditional and indigenous technologies are available to generate milk products having long shelf life where the Yaks are raised in China. A need is there to upgrade the existing indigenous technology to generate safe and hygienic yak milk products on a business scale. Therefore human resource development and training facilities, Yak milk processing industry association and marketing constitute the important issues to be dealt with in order to promote trade in Yak. Therefore diversification is very vital in order to generate sustainable income. (Thapa, n. d.)
Although a cow gives more milk in terms of volume, yak milk is qualitatively superior and is regarded as having the highest quality among all milk. Since Yaks feed in fresh, bio-diverse grasses and forbes, breathing perfectly clean air and drinking pure, unpolluted water, lab tests have discovered it to be more superior compared to Western microbiological and sanitary standards. Although the Yak milk composition varies from season to season, albeit averages 6.7 & milkfat and about 11% solids-not-fat thereby making it twice than cow’s milk in terms of richness. (“Helping Tibetan nomadic yak herders to attain self-reliance,” 2002)
II) Secondly, Yak milk is regarded as green product and younger generation are slowly developing strong affinity towards anything green. Cashing on this unique attribute at the ingredient level will help the company in launching cheese and butter. Since there is a growing youth market who love cheese and butter, building a strong brand with unique product attributes will help the company in reaping benefits. However, cheese and butter consumption can rise even further when bread consumption as a complementary product rises. It is heartening to note that diary market has also grown considerably within the total full market from a mere 1.7% in 1995 to 2.8% in 2000. A typical advantage that works to the advantage of this company has been that in China, foreign milk brand are regarded as possessing superior quality and the domestic brands occupying the mid and lower end of market. Besides, there are segments which can be catered to such as children, pregnant women, lactating mothers and old aged. When the market is segmented with such a distinctly natural segmentation, it works to the advantage of the company. Hence, it could spend more on awareness build up regarding the benefits of yak milk consumption among the masses. (Case Study analysis)
III) the most advantageous aspect which will be the cash cow for the company will be entering into the ice cream and yogurt segment since according to the figures stated in the Case Study, the two product category account for close to 90% of the dairy market value. Since ice cream as a product category is quickly assuming a preferred category status, a number of Chinese JVs are skimming the market. This category can be developed through intensive brand building and carefully looking after the production and distribution aspects of the business. Building a strong brand will help in reaping the product benefits over an extended period of time. This is important as the Chinese are brand conscious and make informed purchasing decisions. Because of traditional cultural background, the Chinese value recommendations from family and friends compared to advertisements. (Case Study analysis)
However as younger consumers are more influenced by advertisement, increasing ad spends on products targeted to the younger segments such as ice cream and yogurts can work well with the company. As Yogurt and ice cream as a product category are pure milk-based products, the richness and superior quality of Yak milk will definitely make a highly successful brand. Product proliferation and also its extension into rural markets through repeated does of reminder ads will also help in cornering greater market share as a whole. On the other hand, shopping malls, city kiosks and supermarkets could be the point of sales in the urban markets where it could serve as good impulse purchase. Since the product i.e. ice cream and yogurt is in the initial stages of product life cycle, a good headway could be to launch a competition among the customers for generating brand awareness. The competition could highlight on the unique attributes of the product to be given by the consumers and also the consumers will be asked to give a slogan for the product that can be used by the company for its marketing campaigns thereafter. (Case Study analysis)
N.A. (2002, Jan 30) “Helping Tibetan nomadic yak herders to attain self-reliance” Yak
Cheese Tasting Notes. Retrieved 8 August, 2007 at http://www.cowsoutside.com/yak_tasting.html
Thapa, T.B. (n. d.) “Diversification in processing and marketing or Yak milk-based products.” DSP/National Dairy Development Board. Retrieved 8 August, 2007 at http://www.ilri.org/InfoServ/Webpub/Fulldocs/Yakpro/SessionG2.htm
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