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China's Yili becomes 2nd most valuable dairy brand in world

2019-08-05 14:16 Monday


Chinese brand Yili is now the second largest dairy company in the world by dollar value, and gradually narrowing the gap on its bigger rival Danone, according to the latest report.

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As a producer of liquid milk, as well as other products such as yogurt, dairy snacks and cheese, Yili saw a strong rise in organic growth over the last year, following impressive performances in its 2 main markets, China and the U.S.

Whilst in the overall food industry Nestlé's portfolio has the highest valuation with a combined total of US$70.5bn, Danone and Yili topped the chart for the dairy markets. Overall, across the entire food and drinks sector, brand valuations were up 11 percent on the previous year.

Yili has done well in comparison with rivals in the past 12 months, after recording a 24 percent increase in brand value to $7.7bn. Meanwhile, the French giant Danone had to recover from a 10 percent loss in brand value to US$8.1bn.

Asia's most valuable dairy brand for 4 years running, Yili has committed to its global expansion program and, despite losing out to French dairy manufacturer Lactalis to acquire Danone's subsidiary Stonyfield, successfully acquired Chomthana in Thailand in a recent landmark deal.

The brand shows no signs of settling down with the recently announced purchase of New Zealand's second largest dairy producer, Westland, too. These moves are all major steps towards the brand's ambition of building a global network beyond its home market, targeting 2 billion consumers in China and abroad by 2020.

According to researchers, Yili has also held on to the highest brand potential score in the dairy market, highlighting its huge future growth opportunities for the brand.

Yili has recently established an extensive research and development network aimed at continuously promoting and integrating the use of global resources. For example, in Oceania, Yili invested RMB 4bn (US$437 million) to build the "Yili Group Oceania Production Base". It is one of the most extensive integrated dairy production base in the world, covering production, processing, R&D, and packaging.

In 2018, Yili upgraded its R&D Innovation Centre in Europe and launched a new facility in the Netherlands. Yili considers its innovation strategy to be the key power for its brand expansion in the future.

Fellow Chinese company, Mengniu, has also seen a significant increase in brand value (up 45 percent to US$5bn) and has entered the top ten in the food ranking for the first time. Both Mengniu and Yili have done well from the surge in the Chinese dairy market, which is currently on track to overtake the States as the world's largest dairy market.

The only changes to the dairy top ten sees Yakult rise two places to 6th, with Almarai dropping from 6th to 7th, and Yoplait dropping from 7th to 9th in spite of seeing its brand value rise by 6.7 percent.

New in the top 10 are Canada's Dairyland (8th) and Italian company Parmalat (10th).

In the overall food market, corporate brand Kraft was down 7 percent to US$4.5bn. Unilever also fell 5 percent to US$4.2bn, and Heinz was down 14 percent to $3.3bn. All these enterprises have suffered from a recent decline in brand value, with Unilever and Heinz falling out of the top 10 in the ranking after many years.

Following The Kraft Heinz Company's not-to-be acquisition of Unilever in 2017, Kraft has carried out aggressive cost-reduction measures, resulting in significant loss of revenue. Unilever, faring better after the takeover attempt, has faced scrutiny from stakeholders amid the now-shelved plans to move its headquarters to the Netherlands.

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