October 15, 2008 / 8:17 AM / 11 years ago

China milk consumers hunt for alternatives: study

BEIJING (Reuters) - Chinese dairy brands at the center of the country’s latest food safety scandal face big hurdles luring back alarmed consumers seeking alternatives, according to a study released on Wednesday.

The telephone survey of 900 Chinese milk consumers found most will keep drinking the stuff but “have had their confidence in milk brands deeply shaken,” according to All Media Count, a Beijing-based company that conducted the study.

Four children have died and many thousands have been made badly sick from melamine, a cheap compound that was added to milk to cheat quality checks.

Like protein, melamine is rich in nitrogen and was used by traders to disguise diluted or substandard milk.

The survey, completed in late September in Beijing, Shanghai and other parts of the country, found Sanlu Dairy, the producer of the tainted infant milk formula that set off the industry-wide scandal, was worst-hit by consumer anger.

“Half of Sanlu’s former loyalists claim they will avoid the brand in future,” said a summary of the study sent by e-mail.

“This is likely to be an unsurmountable loss of trust ...”

The study indicated that Inner Mongolia Yili Industrial Group and Mengniu Dairy, two big dairy companies also found to have products tainted with melamine, now face angry consumers looking for other brands.

“Although only about one quarter of their loyal customers say they will avoid these brands in the future, many more of their customers say they are open to alternative milk brands,” said the report.

Two-thirds of respondents who said they were previously loyal to Mengniu were “looking for alternatives,” it said.

Michael Underhill, managing director at All Media Count, said Chinese consumers did not appear to have given up on dairy products and could return to some scandal-hit brands once their “sense of betrayal” abated.

But many appeared more open to competing brands not at the center of the scare, and would probably be less likely to switch once they have again settled on one, he added.

“There’s this sense that the brand we cared about most is now the one that betrayed us most,” said Underhill.

China has waged a campaign to ease public alarm over the scandal, vowing a clean-up of the industry.

Executives from Yili, Mengniu and Bright Dairy Group apologized on television. And the government ordered all dairy products made before September 14, around when the melamine scandal broke, to be taken off shop shelves and tested.

But a constant stream of recalls and bans by export markets has served to keep consumers wary.

In the latest move, Taiwan stopped sales of frozen octopus products from China and a brand of imported crackers over fears of melamine contamination, officials said on Wednesday.

Taiwan’s Department of Health ordered an importer to halt sales of “octopus balls” — popular round dumplings — from Shandong province in eastern China after almost 900 boxes were sold for use for take-out lunches in central Taiwan.

“This is a precautionary measure,” Department of Health spokesman Wang Je-chau said.

Taiwan decided to check the octopus shipment because Japanese authorities checked a similar shipment from China, Wang said.

Taipei also ordered that Julie’s Crackers imported from Malaysia be taken off shelves after a random check found that melamine levels exceeded the local standard.

It was not clear if melamine in the crackers came from China or elsewhere, a city health official said.

Reporting by Chris Buckley in Beijing and Ralph Jennings in Taipei; Editing by Nick Macfie and Paul Tait

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