According to some, lackluster sales this summer were the result of a hotly debated issue: pasteurization. Local dairies argued fiercely and publicly over the relative worth of their pasteurization processes, with some advocating the High-Temperature-Short-Time Treatment to kill pathogenic bacteria, and others insisting that the Low-Temperature-Long-Time Treatment was the way to go.
Although the end result of either of these processes is virtually indistinguishable from the other, at least to the naked eye, consumers in Taiwan are slowly becoming more sophisticated in their dairy purchases, and making better-informed decisions. As a result, producers are busy marketing their products in sometimes surprising ways, hoping to differentiate themselves from the competition by announcing that they massage their cows, for example, or play them classical music to yield better milk.
Another reason sales dipped was that the retail price of beverages went up this year, reflecting a similar rise in upstream costs, such as for sugar and packaging. According to the Council of Agriculture, about 75 percent of the local manufacturers of dairy products get their milk directly from contract dairies, with the remainder running their own company-owned dairies. The privately owned farms usually sign a one-year contract with the food producers to supply unpasteurized milk at a fixed price set by the National Animal Industry Foundation, Taiwan Regional Association of Dairy Processors and other stakeholders.
Most milk sold in Taiwan is 2 percent, skim or half-skim, and has been pasteurized at 72 degrees. It is bottled within 48 hours, during which period ROC law requires only one thermal treatment of five days, although that often lasts up to seven.
When Taiwanese food manufacturers talk about "high-quality" milk on their packaging, they are referring to full-fat, or 3.7-percent, milk that arrives at the pasteurization facility directly from farms and is subjected to a single pasteurization process. There must also be a clear illustration of where the raw milk is from and how old it is. This way, problems can be traced back to individual farms.
Most manufacturers of dairy products help their contracted dairy farms to comply with government regulations. The island's two largest food conglomerates, Uni-President Enterprises Corp. and Wei Chuan Foods Corp., both provide personnel to familiarize their dairy farmers with government rules, help them breed their cows and provide quality control.
"The safety of our products is always a top priority," said Ewing Lin, marketing manager at Kuang Chuan Dairy, the second-largest Taiwanese milk producer. He said that Kuang Chuan will only do business with dairy farmers who have been awarded the Magic Farmer Award, the highest prize given to outstanding farmers by the Council of Agriculture.
The milk is then pasteurized using the High-Temperature-Short-Time Treatment before delivery to distributors using low temperature transportation. Kuang Chuan operates a chain of convenience stores called Hi-Life. With 1,159 stores nationwide, it is the island's third-largest, and it operates as a tightly intersecting network to distribute Kuang Chuan products throughout Taiwan.
Uni-President CEO Jason Lin recently told the media that, to help the company's dairies improve the quality of their milk, they play easy-listening and classical music to the cows. Lin believes that this leads directly to better milk.
Uni-President works with Shin Kong Chao Feng Ranch and Resort. Every morning before milking, while the speakers are blaring out Bach, the well-trained cows line up as if on cue to be milked. According to Lin, this not only improves the quality of the milk, it also makes the ranch something of a tourist attraction. The company operates Taiwan's 4,300 7-Eleven convenience stores, making an ideal distribution chain for its milk and other products. Last year, the company had a 20-percent share of the local fresh milk market, up from 17 percent in 2000.
After acquiring fresh milk from dairies, manufacturers have to treat it using a pasteurization process. Different companies use different techniques and temperatures, thus producing milk with different flavors. Consumers are largely unaware of this procedure, so manufacturers have to find other ways to let consumers distinguish between their products, such as through packaging which can vary from paper packs to Tetra Pak to glass bottles.
Wei Chuan launched its high-quality, high-priced milk under the brand name Lin Feng Ying in 1997, successfully outperforming its competitors to become a leader in the domestic market. Last year, the company claimed a 31-percent market share, up from 26 percent in 2000. Other companies followed Wei Chuan's example, with Uni-President launching lines of high-end milk products like Rueisuei and Dr. Milker brands. Kuang Chuan likewise manufactured several popular high-quality milk products, earning a market share of 23 percent last year.
Local consumer habits have changed in response to having better quality milk on the shelves. Buyers are willing to pay more money for pasteurized milk. According to a recent news report, last year high-quality milk generated US$190.9 million in revenues, representing 58.3 percent of the entire domestic milk market. The percentage of high-quality milk rose from 28.6 percent in 2000 to an expected 59.1 percent this year, according to the Economic Daily News.
Even though the demand for milk is relatively stable compared to other beverages, Taiwanese people still consume less of it than most countries. According to a recent survey conducted by the Taiwanese Dairy Association, the average person in Taiwan consumes 15 liters of milk per year: much lower than Europe's 100 liters, Japan's 39 liters and Thailand's 30 liters. The world No. 1 milk consumers are Swedes, who drink 156 liters per year, on average. There is ample speculation on the reasons for this, with some suggesting that Asian people are more susceptible to lactose intolerance. Others point out that milk has never been a very big part of the Chinese diet.
Milk producers complain that their product is harder to market as flexibly as other beverages, and it takes longer to bring new product varieties to market. Nevertheless, as the Taiwanese milk market matures, the next task is to explore within that niche.
"We plan to target certain potential consumers to make the milk market bigger," said Kuang Chuan's Lin, explaining that Taiwan's population is getting older, kids are getting fatter, and a significant number of people on the island are lactose intolerant. Kuang Chuan's plan is to come up with customized dairy products for senior citizens, who need more calcium and less fat, and for children, who need a balanced diet. "Milk is good for our bodies and can keep us healthy," said Lin.