China Daily (Hong Kong) - - FRONT PAGE - By YAN YIQI in Hangzhou yany­iqi@chi­

Scan­dal-rid­den milk brand Sanlu seeks a fit­ting re­birth

Sanlu, the dairy brand that nearly dis­ap­peared from the pub­lic eye af­ter its tainted milk killed at least six in­fants in 2008, has made its way back into the mar­ket, this time in Zhejiang prov­ince.

The brand, now owned by Zhejiang Sanlu In­dus­trial Co, no longer makes dairy prod­ucts and in­stead pro­duces or­ganic prod­ucts such as buck­wheat and corn noo­dles.

Jiang Xin­hua, gen­eral man­ager of Zhejiang Sanlu, said the com­pany hopes to use the tra­di­tional Sanlu name to cre­ate pop­u­lar­ity in its new prod­ucts.

Sanlu Group, a Sta­te­owned dairy prod­ucts com­pany based in Shi­ji­azhuang, cap­i­tal of He­bei prov­ince was the orig­i­nal owner of the brand. At the time, Sanlu was one of the old­est and more pop­u­lar brands of in­fant for­mula in China.

But in 2008, au­thor­i­ties found that melamine, a chem­i­cal that cre­ates kid­ney stones, was added into in­fant milk pow­der to make it seem richer in pro­tein dur­ing food safety tests.

The tainted milk pow­der claimed the lives of six in­fants and sick­ened tens of thou­sands of chil­dren. The scan­dal forced Sanlu Group into bank­ruptcy.

The “Sanlu” trade­mark pack­age, in­clud­ing its lo­gos and de­signs, was auc­tioned off in May 2009. Jiang bought it for 7.3 mil­lion yuan ($1.2 mil­lion).

“Sanlu is a tra­di­tional Chi­nese brand that was es­tab­lished more than 50 years ago. It would be a pity to see it fall,” Jiang said. “We are us­ing the al­ready fa­mous brand to sell our prod­ucts.”

More than four years af­ter the scan­dal, Jiang said the com­pany is ready to launch a new Sanlu brand in the high-end or­ganic food mar­ket with or­ganic cer­ti­fi­ca­tions from China, Ja­pan, the Euro­pean Union and the United States.

“Our mar­ket po­si­tion is to­tally dif­fer­ent from the past, which had fo­cused on ru­ral mar­kets. Or­ganic food rep­re­sents the high­end food mar­ket and we are de­ter­mined to be­come the top or­ganic food pro­ducer in China,” she said.

The com­pany’s prod­ucts are al­ready avail­able

Sanlu is a tra­di­tional Chi­nese brand that was es­tab­lished more than 50 years ago. It would be a pity to see it fall.” JIANG XIN­HUA GEN­ERAL MAN­AGER OF ZHEJIANG SANLU IN­DUS­TRIAL CO

in do­mes­tic su­per­mar­kets such as Shang­hai- based Cen­tury Mart. Jiang said the com­pany is also ap­proach­ing multi­na­tional su­per­mar­kets such as Wal-Mart to dis­cuss co­op­er­a­tive deals.

But skep­ti­cism in the brand re­mains. An­a­lysts say it was a highly risky move to pur­chase the trade­mark and then re- use it in the food mar­ket.

Zhang Ling at Bei­jing­based He­jun Con­sult­ing said al­though Zhejiang Sanlu is a dif­fer­ent com­pany, the im­age from 2008 has taken root in cus­tomers’ minds.

“The Sanlu brand was valu­able when the for­mer dairy pro­ducer was at its peak, but now, I would say it is worth­less,” he said.

Be­fore the 2008 milk pow­der scan­dal, Sanlu had as­sets of more than 15 bil­lion yuan, Zhang said.

“The ini­tial im­age of a brand is very im­por­tant. The poi­son milk pow­der scan­dal had al­ready dam­aged the brand im­age, which will take maybe dozens of years for cus­tomers to ac­cept again,” he said.

Zhang said it would be ex­tremely costly for Zhejiang Sanlu to cre­ate a new cus­tomer mind­set.

“Most cus­tomers won’t even be aware that to­day’s Sanlu is a dif­fer­ent com­pany be­cause the logo has barely changed,” he said.

Jiang ad­mit­ted the com­pany is not sure how cus­tomers will re­act to the new Sanlu.

“This is our only con­cern about the fu­ture. Our prod­ucts and man­age­ment are ex­cel­lent,” Jiang said.

Liang Xi­uqin, 58, said even if Sanlu be­longs to a new com­pany, she wouldn’t risk buy­ing its new prod­ucts be­cause sim­i­lar prod­ucts from other brands exit with bet­ter rep­u­ta­tions.

“Af­ter all, they are not daily ne­ces­si­ties,” she said.

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