Namyang Dairy sales plunge after scandal

2013-06-10 20:10

Namyang Dairy Products’ sales plummeted upon consumer boycotts and strong sales promotions by rivals after the company came under fire for forcing its sales agents to buy more products than needed.

An audio clip revealing a Namyang employee’s verbal abuse against a distributor last month ignited nationwide controversy over abusive business practices between companies.

In some large discount store chains, Namyang’s sales were halved in May, causing the dairy giant’s market share to tumble.

One of the discount chains said Namyang’s sales of milk and coffee plunged 52 percent and 48 percent, respectively, according to news reports.

Namyang’s market share shrank from 14 percent in April to around 10 percent in May. Seoul Milk’s market share rose from 31 percent to 35 percent and Maeil Dairy from 14 percent to 16 percent in the same period.

In three-in-one coffee mix products, Namyang’s market share dropped from 23.7 percent to 12.5 percent, while Dongsuh Food’s surged from 73.7 percent to 84.1 percent.

Namyang, however, retained its dominant position in powdered milk, which is not easily replaceable with other products. The disgraced company continued to command about half of powdered milk sales.

“Namyang’s milk sales more than halved and its coffee sales also nosedived with price hikes in April,” said an official at the discount chain. “Namyang maintained high consumer loyalty, however, for powdered milk.”

In addition to the boycotts, Namyang did not run any sales promotions while its competitors did, he added.

At another major discount chain, Namyang’s overall sales fell 15.8 percent ― coffee by 18.6 percent, milk products by 13.7 percent and powdered milk by 11.9 percent.

The fall in revenue was evident at convenience stores as well, in contrast to rising sales of rival firms due to earlier-than-usual hot weather.

Namyang’s sales at one of the convenience store chains between May 5 and June 3 dropped 9.1 percent from a month ago. Meanwhile, sales of Seoul Milk and Maeil Dairy gained 25.8 percent and 3 percent, respectively.

Another convenience store chain also said Namyang’s sales of milk, refrigerated coffee, processed milk, yogurt, soy milk and tea between May 4 and June 3 shed 8.1 percent on-month.

Sales of Maeil Dairy grew 9.9 percent in the same period.

By Kim So-hyun (
print close