Seoul Milk’s survival strategy to overcome the white milk crisis with ‘Jersey Milk’ and ‘Global’ > News

The biggest realistic challenge facing Seoul Milk is the gradual decline of the white milk market, which is its main business. According to data from the Dairy Promotion Association, per capita white milk consumption has plummeted by nearly 10% in the past year, showing a long-term downward trend. This is the result of a decline in consumption due to the economic downturn, as well as a change in consumer trends to enjoy milk in processed forms such as cheese, fermented milk, and desserts rather than drinking it as is. In particular, due to the special structure of a cooperative, this change in consumption patterns is a huge burden on management for Seoul Milk, which must somehow process the raw milk produced every day by dairy farms and secure sales channels. Due to rising raw material prices and exchange rate volatility, profitability has deteriorated significantly compared to the past, and we have now reached a point where ‘qualitative transformation’ rather than ‘quantitative growth’ is urgently needed.

The card that Seoul Milk has used to overcome these difficulties is a premium strategy led by ‘Jersey Milk’. Jersey milk has a much higher protein and calcium content than typical Holstein breed milk, and is rich in milk fat, giving it a rich and creamy flavor. Since Seoul Milk introduced Jersey milk for the first time in Korea in 2018, it has recently been aggressively expanding its product line encompassing B2B and B2C, including ice cream, pudding, and soft mixes for cafes. This is not simply an increase in the number of products, but a strategic move to maximize the added value of milk by targeting the dessert tastes of the MZ generation who prefer luxurious taste and texture. In particular, Jersey cattle have the environmental advantage of low carbon emissions, which is in line with modern consumption trends that concern sustainable growth.

Another key driving force to overcome the saturation of the domestic market is ‘global market development’ and ‘B2B solution’. Seoul Milk is accelerating the overseas expansion of domestic crude oil by expanding its export channels to 17 countries around the world, including China and the United States, as well as the Southeast Asian market, including Cambodia. This is our intention to go beyond the limitations of white milk, where maintaining freshness is key, and diversify our global revenue sources with a focus on high value-added items such as processed milk and powdered milk. In addition, just as competitors such as Namyang Dairy Products are adopting a ‘solution-type supply’ method in which they cooperate with franchises and participate from the menu development stage, Seoul Milk is also maximizing the utilization of dairy products by supplying customized raw materials to the cafe and bakery industry. This is a proactive response to protect market share through partnerships beyond simple raw material delivery and to take the lead in the changing restaurant culture.

The external environment is also causing tension in the dairy industry. As the tariff-free policy for European milk is implemented from the second half of this year, the offensive of imported sterilized milk with price competitiveness is expected to intensify. In particular, if domestic milk is replaced by imported milk in B2B markets such as cafes and restaurants, the domestic dairy industry will inevitably take a hit. In response to this threat, the Milk Subsidy Management Committee and major dairy companies are raising consumer awareness by emphasizing the ‘freshness and safety of domestic milk’ through discount promotions for domestic cheese. In the end, the success or failure of the dairy industry in the future will depend on how to deeply imprint the premium value that only domestic raw milk can have on consumers' tables and dessert culture, beyond price competition with imported products.