Customers demand Binggrae dump Namyang Dairy
Binggrae headquarters in Seoul / Courtesy of Binggrae
By Kim Jae-heun
Angered young customers are rising against Binggrae in online communities demanding the company break business ties with Namyang Dairy Products.
Binggrae is currently outsourcing its original equipment manufacturing (OEM) for milk products in the nation's southeastern Gyeongsang provinces to Namyang Dairy Products.
However, because the dairy manufacturer has been embroiled in unsavory incidents, young customers are demanding Binggrae join the boycott of its business partner.
In 2013, Namyang Dairy was found to have abused its power against suppliers, forcing its dealership stores to purchase products that are unpopular or close to the expiration date.
Last month, the Seoul Jongno Police Station summoned Namyang Dairy Chairman Hong Won-sik for questioning over the case, in which the dairy firm allegedly paid professional trolls to disparage a rival company online in 2019.
Binggrae reacted instantly by revealing its plans to change its business partner for manufacturing dairy products in the region or building an additional factory to produce milk in Gimhae, South Gyeongsang Province.
Binggrae owns a production facility in Gimhae but currently it doesn't make milk products there. Therefore, the confectionery giant selected Namyang Dairy Products to outsource its milk production starting in March this year.
It has three more factories in Namyangju and Gwangju, Gyeonggi Province, and Nonsan in South Chungcheong Province.
“We have no production line in the southern part of the Gyeongsang region, so we have temporarily outsourced OEM to Namyang. We will come up with a replacement as soon as possible. We are reviewing several options including building a new production facility in Gimhae or securing another dairy product manufacturer there,” a Binggrae official said.
Finding a new business partner is the more practical option.
Binggrae is the No.4 player in the milk market here with a market share of 7 percent to 8 percent. Seoul Dairy Cooperative Milk, Namyang Dairy Products and Maeil Dairies are dominating the market and it is not economically feasible to build a new production line just for one province.
Rapper Zico in Binggrae's ad / Courtesy of Binggrae
Young customers are important to Binggrae as its sales have increased after successfully capturing their hearts with turned-on marketing.
Since 2016, it has been introducing collaborative products for its popular milk and ice cream items with healthcare and fashion firms, which have been going viral among young consumers.
This year, it created animated characters to promote its snack and dairy products on social media while hiring popular rapper Zico to promote its steady-selling red crab snack.
Such efforts have elevated its brand reputation up to third rank in the white milk market although its business performance is one position under that.
An industry source said there is “no need” for Binggrae to work with a company that is boycotted by young people; the confectionery giant's main customers.