Decades after their introduction to the market, Dutch Lady products continue to be a hit with Malaysians. Few brands are as trusted as this long-time milk product manufacturer, and it is this confidence that keeps the customers coming back time and again, generation after generation
Taken from Malaysia’s Most Valuable Brands 2007 and Dutch Lady is ranked 21st
Growing Up with the Nation
Malaysia is a nation that practically grows up on Dutch Lady. From infant formula to growing up milk to milk and fruit-based beverages for the entire family, the brand has a product suitable for anyone of any age. It is one of the most ubiquitous FMCG brands in our daily lives, and that could well be the reason why it is clearly etched as the choice of so many consumers.
The Start of an Unlikely Love Affair
Traditionally, Southeast Asians have never been heavy consumers of dairy products, while research has shown that Asians are some of the people groups most highly predisposed to lactose intolerance. Despite this, Malaysians are currently consuming sizeable quantities of milk products every day, and enjoying it too. This counter-intuitive embrace of an entire food product category speaks volumes about how well that product is marketed, and Dutch Lady takes a whopping slice of the credit for the situation in Malaysia. It all started over a simple cup of tea. Or coffee. That detail isn’t terribly important. But we do know that the forerunner to present-day Dutch Lady first arrived upon Malaysian shores as a brand of sweetened condensed milk. After World War Two, trading company Friesland (Malaya) Pte Ltd was marketing the Dutch Baby brand of sweetened condensed milk in Malaysia. Eventually, having found that the new nation was a steady market for its product, Royal Friesland Foods of the Netherlands incorporated Pacific Milk Industries (Malaya) Sdn Bhd in 1963. This new company’s sweetened condensed milk factory in Malaysia was the first ever overseas production facility of the parent company.
It soon became operational and production began in 1965. In 1968, Pacific Milk Industries (Malaya) Sdn Bhd became a public company and the first ever milk company to get listed on the Kuala Lumpur Stock Exchange Several years later, in 1975, the company changed its brand name to Dutch Baby Milk Industries (Malaya) Berhad because customers kept getting confused by the name difference between the sweetened condensed milk product and the name of its manufacturing plant. It was also in 1975 that the company began operations of its first UHT (Ultra Heat Treated) milk plant. This innovation would be the beginning of the brand’s highly popular and most ubiquitous product line. In 1979, the Dutch Baby brand diversified its product offerings beyond milk items when it introduced a range of fruit juice under the brand name of JOY. Many Malaysians will still attest to the tastiness of the product, which was for many years the official supplier of orange and mango juice to Malaysia Airlines.
Coming of Age
In 1984, the company undertook its second name change in less than a decade. For product positioning reasons, it was decided that Dutch Baby would now become Dutch Lady. Some of us may recall the television commercial that signalled the brand’s transition from Dutch Baby to Dutch Lady. Simple in conception, yet poignant and memorable, it showed an infant maturing into a lovely young woman. Beyond finding an easy visual interpretation of a name change, the television commercial effectively dramatised the brand’s coming of age. Meanwhile, Malaysians stumbled over the new brand name for a few weeks, then promptly got over it and continued to enjoy the rebranded products as if nothing had ever happened at all. Today, the feminine quality of the Dutch Lady brand name complements the company’s highly successful and relatively new range of drinking yoghurt beverages. Branded as “0% Fat”, it is a product positioned to appeal to weight watchers and other health or figure conscious consumers. Nevertheless, the line’s tasty, expanding range of flavours has made it a hit among teenagers and just about anyone else looking for a delicious, fruity pick-me-up.
Other popular brands belonging to Dutch Lady include Frisian Flag, Frisolac, Completa and Calcimex. Leading Dutch Lady products cover the categories of Infant Formula, Growing-up Milk, Powdered Milk, Condensed Milk, UHT Milk, Sterilised Milk, Pasteurised Milk, Cultured Milk, Yoghurt and Fruit Juice Drinks. Setting Standards for the Industry Dutch Lady is one of the most dynamic players in the industry. The company’s chilled plant, located at a 10-acre site in Petaling Jaya, is also one of the most modern in South East Asia. Product innovations are backed by extensive research both locally and internationally. Meanwhile, the brand’s Netherlandsbased parent company, Royal Friesland Foods, supports Dutch Lady’s local research and development with a wealth of valuable proprietary formulation and superior technical know-how. Together, Dutch Lady and Royal Friesland Foods are constantly funding efforts to improve product formulations, especially for the infant and child range. Most recently, this internationally co-development of products resulted in the brand’s growing up milk products being further fortified with TT-Ratio, an ingredient supposed to improve learning and memory retention in young children.
Very Much at Home
This year, Malaysian consumers have yet again voted Dutch Lady as their preferred brand in milk products. It is the brand’s ninth Reader’s Digest Super Brands Gold Award and the latest in Dutch Lady Milk Industries’ unbroken record since Reader’s Digest Asia first organised this annual survey in 1999. Consistently ranked among the top three dairy producers in Malaysia, Dutch Lady has always enjoyed a relationship of mutual regard and affection for its home country. While Malaysians have embraced the brand’s combination of international product quality and sensitive adaptation to local taste buds, Dutch Lady finds Malaysia highly conducive for the domestic business, as well as a strategic central location for its regional expansion. Commenting on this in 2006, former Dutch Lady managing director Cees Ruygrok said, “Malaysia’s stable Government, good infrastructure, skilled workforce and tax-friendly policies are its major attractions. In 2005, RFF based its SAP Regional Competence Centre in Cyberjaya, the heart of the Multimedia Super Corridor. This Centre provides technical, development and project support to five countries in the Asia Pacific region.”
The Dutch Lady brand also supports the Malaysian economy in other ways. It is the largest purchaser of local fresh milk from the Veterinary Services Department. Local ingredients such as palm oil and sugar are also used in sizable quantities for the production of selected Dutch Lady items. By utilising significant amounts of these local ingredients for its quality products, the brand helps establish credibility for its local suppliers. In its website profile on Dutch Lady Milk Industries, the Malaysian Industrial Development Authority (MIDA) describes the company’s initial establishment in 1963 as an expression of confidence in the young nation, Malaysia. Today, it is clear that that confidence has been repaid many times over as the brand and the nation continue to grow together.
Financial Performance
• Sales were 9% in 2006, with stable operating margins at 8% of revenues.
• Market capitalisation in 2006 was up 54% over rm762 mil. Market • Production growth rates of 5%, driven by demand for dairy products, sustained by economic growth.
• Greater provision of valueadded dairy products in place of commodities, often through the addition of healthy ingredients or more convenient formats. Stability
• Dutch Lady Milk Industries entered the Malaysian market in 1963 and was the first milk company in Malaysia to be listed on Bursa Malaysia in 1968.
• Dutch Lady has won the Reader’s Leadership
• Undisputed leader in growingup milk, sterilised milk, UHT milk and yoghurt drinks.
• Dutch Lady 123 has 35% market share in growing-up milk, 58% share in UHT milk and 69% in sterilised milk.
• The brand uses product innovation, such as the inclusion of AA, SA and DHA enhancement formulations to maintain its lead over other mainstream competitors. Support
• Ongoing promotions and creative family events based around the strong brand image.
• Substantial investment in billboard, print and television advertising as well as parenting television programme.
• In 2007 the brand plans aggressive TV promotions and retail tie-ups to promote its new formulas. Trend
• Analysts point to the con tinued success of original products, as well as the brand’s ability to carve new niches in the market place, enabling it to raise its share of consumers.
• Digest Super Brands Gold Award seven times for being the consumers’ preferred brand in milk products.