Yili recorded an impressive 24% increase in brand value to US$7.7 billion, from US$6.1 billion in 2018.
Nestle and Danone took the top two global spots, valued at US$19 billion and US$8 billion respectively.
"Our success is not only due to the 'Smart Dairy' strategy, which helped boost Yili's brand value, but also the co-construction of the 'Global Health Ecosystem' with our international partners, which has enabled us to deliver stable growth," said Yipeng Zhang, vice president of Yili Group.
Yili is dominant in the Chinese market but is aiming to expand into non-dairy categories and internationally as it takes advantage of the Belt and Road initiative to bolster growth abroad.
They recently acquired New Zealand’s second largest dairy producer, Westland Cooperative Dairy Company, and Chomthana, Thailand's largest ice cream and frozen food distributor.
"Yili has always been open and cooperative in the process of internationalisation. Yili is hoping to drive the global dairy industry further with our innovative capability and global resources," Zhang added.
They plan to target two billion consumers in China and abroad by 2020.
South East Asia goals
A spokesperson for Yili said, “The rapid economic development in South East Asia has indicated great potential for consumption of healthy food.”
“So far Yili's factory in Indonesia is under construction. With the further development of industry in the region, we will strengthen cooperation with local milk source providers, distributors and suppliers.”
“In Thailand, we are currently aiding Chomthana to increase production and operational efficiency and further foster market channels. In the future, we will continue to introduce products to meet local consumer needs, such as liquid milk, yogurt, and cold drinks.”
Recently, the company launched a Mocha Coffee Ice Cream in Jakarta, Indonesia under its Joyday brand, marking a significant milestone in the establishment of what Yili called the ‘dairy silk road’.
They found consumers in Indonesia generally preferred strong-flavoured, small-portioned and affordable products, so the mocha ice cream was specially created with a stronger aroma and sweetness.
In contrast to current product lines in the local market, the ice-cream products focus on unique packaging and 11 different flavours, including mint, blueberry and sweet-corn, with durian and mango flavours to be introduced soon.
"We are delighted to see the successful launch of our products in Southeast Asia markets," said Zhang.
Yili said it also wants to contribute to the development of the entire industrial chain in the South East Asian dairy industry.
They found that the supply of yoghurt in Southeast Asia is constrained by the high cost of cold chain logistics and raw milk supply issues.
To combat supply chain issues, Yili used a unique lactic acid bacteria species developed by the Agricultural University of Athens in combination with their own packing technology for their yoghurt, Ambrosial to produce the first PET-bottled room temperature yoghurt.
In addition, the protein content is 35% higher than average yoghurt products, according to Yili Innovation Centre.
Talent development is another area the company is focused on in the region.
In early July this year, Yili launched its Chomthana training program in China for its Thai employees. The program was aimed at cultural merging and operational training.
“We believe with what we have observed and gained through this tour, we are ready to level up our overall management protocols at Chomthana and provide more high quality products and service in Indonesia along with Yili Group," said Thanapol, Chomthana’s production manager.
Yili had also been adhering to its talent localisation strategy. More than 85% of the employees of the Group's subsidiaries in Thailand and Indonesia are local nationals. At Chomthana, over 800 jobs have been created, including many for the disabled.
Asia’s cash cow
At present, the global dairy industry shows great trend of adopting larger extend of industrial intelligent manufacturing to meet more diversified consumptive needs.
“We saw increasing health awareness in global wide, and the demands for dairy and healthy foods is also gaining especially among these emerging markets,” Yili’s spokesperson added.
“Unfortunately, worldwide dairy resources distribution and the industrial developing level are uneven. Huge demands for dairy products have not been met yet.”
“We are going to make greater efforts to organise and integrate with global premiere R&D resources and dairy resources, to ensure each one of our customers can enjoy the nutrition from the healthy dairy products.”
The report by Brand Finance stated the Chinese market is the most dynamic in the world, and set to overtake the US as the largest market for dairy products by 2022.
“This phenomenon is due to rising affluence and improved accessibility of products in China’s lower tier cities,” the report mentioned.
“As Chinese consumers increasingly prefer dairy products which are more premium, with health benefits and innovative flavours, leading brands such as Yili focus on the changing demand and product innovation.”
Fellow Chinese dairy giant Mengniu also entered the top 10 ranking for the first time, ranked sixth, up from the 13th spot last year. It recorded a 45% increase in brand value at US$5 billion.
According to David Haigh, CEO of Brand Finance: “With producers and analysts used to the lack of change among the food and drink industry leaders, performance of emerging market brands is likely to cause a stir. We are already starting to see this from brands like Yili. The value of China’s largest dairy brand jumped ahead of international leaders such as Kellogg’s, Kraft, and Heinz.”