Feihe Dairy: Creating Value for Chinese Mothers and Infants

Heilongjiang Feihe Dairy Co., Ltd. (Feihe) was located in Qiqihar City, a medium-sized city in Heilongjiang Province, northeastern China. Situated in the golden milk source zone at 47 degrees north latitude, the city had been producing powdered milk products and sold them to domestic consumers for 58 years. However, the 2008 melamine incident (MLM) almost wiped out local brands in the domestic infant formula market and left a vacancy for foreign brands to fill. In a further blow to domestic brands, a fierce price war started as Chinese companies all attempted to regain market share. MLM nearly destroyed consumer confidence in domestic brands across-the-board. In 2015, Feihe realized it needed to create a new brand image that resonated with Chinese mothers if it was going to emerge from the mire. In 2015, Feihe redirected its strategy towards building a domestic infant formula brand that most suited the nutritional needs of Chinese babies. By upgrading its technology and production capability and adjusting its promotional tactics, Feihe was able to grow into an industry leader. In 2020, Feihe's chairperson Leng Youbin was thinking of Feihe's future. Feihe's past win reassured him that Feihe should continue its mission of creating more value for customers. However, there were several paths to that goal. He asked himself whether he should customize the production of infant formula to cater to the needs of each individual baby and reach for higher premium, or, should he choose the low-hanging fruit of adding more product lines so that Feihe could leverage its current reputation to realize higher market growth?

• Branding
• Strategic positioning
• Marketing
• Innovation
• Strategy