Despite China’s dairy market being hit by spiralling sales, international dairy brands reaped the benefits from the melamine scandal, according to the latest figures from market analysts TNS Worldpanel.

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The research data showed that in a quest to buy safer milk, many Chinese consumers switched from standard to premium products and from local to international brands, especially when buying infant milk products, and most noticeably in the lower tier cities.


For the international brands, this led to market share gains, even though dairy prices were hiked up by an average of 26%, and 33% for infant milk.


Dumex, a widely distributed international infant milk brand with factories in China saw its market share in lower tier cities increase from 9.8% to 20.1%.


Another winner of the scandal was local manufacturer Ausnutria (Aoyou), whose market share shot up from 2.6% in 2007 to 6.8% in the same four week period in 2008, indicating that consumers appreciate that Aoyou sources its raw materials from Australia and emphasises this in its marketing.

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Comparing consumer reactions to local brands in recent interviews with over 1,600 Chinese consumers, TNS Worldpanel found that consumers are more confident that larger players like Mengniu and Yili will recover from the incident, while smaller brands still lack consumer confidence.


“Obviously this incident represents a huge opportunity for international brands with premium products who should now step up with aggressive marketing strategies,” said Jason Yu, general manager TNS Worldpanel China.


“But we also know that large local brands can benefit from the trust that consumers have shown in them. If they can prove to consumers that they are making all efforts to recover from this crisis, local brands will be able to fight back for their market shares successfully.”