Mengniu veterans set out to be the 'Muji of yoghurt'

Japanese consumers, on the other hand, buy yoghurt with a problem-solving attitude. They look for products that have specific nutritional functionalities or bacterial cultures, and communications is very direct. "It's back to basics because they already know what they want, whether it's lactobacillus bulgaricus and streptococcus thermophilus," he explained.

Liu and his team returned to Guangzhou with 10 samples from Japan, compared to almost 50 from South Korea, and formulated their own brand using those as a starting point. "In the past, the Chinese yoghurt market was too much about 'taste' and the feeling you get after 'tasting' something good, but not about what it can do for your body," said Liu. 

Case in point, manufacturers involved in the 2008 scandal had been using melamine as a low-cost way of adulterating their products with seemingly better taste as well as higher protein count.

The value that Honest Dairy wanted to bring, with the company name as a daily, stark reminder, is a different proposition. With design agency VK35 (永加35), social-media agency Social Touch (时趣互动), and shopper-marketing agency Grey DPI, the team took over factory premises that used to belong to one of the suppliers in Mengniu's chain and fitted the facility with new production machinery—and even cows flown in from the Netherlands.

 

 

Although the herringbone milking parlour may not look as modern as would be ideal, Liu assured Campaign that older milking facilities do not affect the final product quality, and what is more important is that the investment in new production machinery that takes care of pasteurisation, homogenisation, fermentation, dispensing and packaging.

 

The result: a new product range called Simple Love (简爱) with stripped-down blue-and-white packaging design and also a simpler marketing strategy.

"The heart motif symbolises a conscience, the thumbprint pattern indicates a pledge or promise, and the colours mean the content is pure and natural," Liu said. The simplicity of the design is an indirect critique of the dairy industry in China at large, a residual effect from the team's days in Mengniu, of its "bad practices, insufficient information, distorted facts", he added.

"We are aiming to become the 'Muji of yoghurt'," Liu asserted. 

Functional yoghurt, especially the pro/prebiotic varieties, is growing in popularity in China due to its purported ability to improve functions of the immune and digestive systems and even help protect consumers from harmful pathogens.

According to Euromonitor research, manufacturers in China have been seeking to emphasise that such claims are supported by certified scientific studies rather than being based purely on product positioning or advertising.

While Bright Dairy & Food, Mengniu and Yili benefited from bouncing back since 2008 and taking advantage on an overall premiumisation trend, Honest Dairy is evidently expecting to be the next brand to reshape the development of yoghurt in the mainland.

The soft launch of Simple Love in May 2015 put the unadorned products on the shelves of hypermarkets and supermarkets in Shenzhen, Foshan, Guangzhou, Jiangmen, and in September expanded to convenience stores with suitable refrigeration facilities.

An official WeChat platform for direct-to-consumer e-commerce via a 'cold logistics' partnership with SF Express to ensure that a cooling mechanism during actual delivery kept the temperature between two and six degree celsius. "Other delivery firms just put chilled products in ice boxes," said Liu.

Sublety underlined the main strategy for Simple Love in the way the brand communicated just four ingredients, highlighting LGG (lactobacilus rhamnosus GG strain) "and nothing else". A presentation slide obtained by Campaign comparing Simple Love with similar competitors Yakult and Class reflects this (see below, fourth row in table listing number of ingredients).

While it is a matter of self-disclosure, Liu pointed out that "when other yoghurt brands claim to contain no additives, the subtext is actually no (poisonous or lethal) additives".

In terms of advertising, ATL was too expensive with little ROI, so Liu's team picked channels that are as direct as possible: in-store POS and in-person promoters.

Promoters proved useful in helping the brand new brand to refine its target audience. Targeting initially just trendier, younger ladies who turned out to be more fickle in product choice and cavalier about their health, Liu changed the target to well-educated, mother-types.

"Brand stickiness and conversion rates for this group have been higher, as they care about their whole family's health and show more stability in their yoghurt and sour milk choices," added Liu.

"We are intent on building a respectable dairy company and to be upright in our conduct," stated Liu, with some enthusiasm. The company has set an annual sales target of 300 million yuan in 2016 and 1 billion yuan by 2019 for themselves—however as a privately held company, let's see if integrity can buy the brand love.

"The role of marketing is 'value reframing' and we subscribe to that in our strategy," concluded Liu.