A digital dairy breakthrough

As well as collecting four million litres of milk per year, Mengniu Dairy also collects more operational and consumer data than its analysts can currently compute on their own.
The company is on a mission to bring the centuries-old – and often unattractive – dairy industry up to date, even partnering with Alibaba to use artificial intelligence (AI) to better understand ever-changing Chinese consumption habits.
In addition to selling 12 billion packets of milk and yoghurt products annually, the company has access to 20 million consumers who share their product preferences and lifestyle habits through e-commerce and social channels. Mengniu is using the massive amount of consumer data garnered from these consumer interactions to understand how its customers eat, drink, move around, and entertain themselves.
By tapping into consumer trends that extend beyond their immediate products, the company hopes to make dairy products more appealing among younger, savvier Chinese consumers. The company has created a continuous digital dialogue that allows them to follow, and act on, changing trends, behaviours, and tastes.
As well as expanding its digital footprint, Mengniu Dairy plans to extend its physical footprint beyond China’s borders and into Southeast Asia to capitalise on the government’s Belt and Road Initiative. Gaining a foothold in the Thai market may well prove straightforward, as demand for dairy products has accelerated rapidly in recent years and currently exceeds local supply.
While the Thai dairy industry has been growing steadily since dairy cows were gifted by the King of Denmark in 1960, Thai consumption of ready-to-drink milk totaled 1.05 million tonnes in 2016, indicating that Thais drink only approximately 18 litres of milk each a year. Milk products are also on the government’s price control list, which means there is limited flexibility in growing the industry.
The long-held perception of lactose intolerance among Asians has also held back dairy consumption, although this is changing.
Chinese dairy consumption now seems to be catching up with research findings that 80 per cent of Chinese people can drink 200 millilitres of milk with a meal without an undesirable reaction. Locally, the Thai School Milk Programme – which makes up an enormous 40 per cent of the total liquid milk market in Thailand – is encouraging children to develop healthy, lifelong habits of dairy consumption. This also supports the Thai dairy industry, and will no doubt encourage its further progress as is happening in China.

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