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Namyang Dairy at center of controversy again for badmouthing rival

Once industry-leading dairy firm faces boycott after series of controversies

 
Namyang Dairy issued an apology on its website on Thursday. (Screen captured from Namyang Dairy)
Namyang Dairy issued an apology on its website on Thursday. (Screen captured from Namyang Dairy)

Namyang Dairy Products, one of South Korea’s major dairy companies, is again at the center of controversy for allegedly paying professional trolls to disparage a rival company online.

After several similar incidents over the past few years, many people have chosen to boycott the firm.

Namyang Dairy Chairman Hong Won-sik and six others, including Namyang employees and representatives of a contracted PR agency, are currently being investigated by police and potentially face charges of libel and obstruction of business, the Seoul Jongno Police Station said Thursday.

According to the police, employees of the PR agency created 50 online accounts early last year with the intention of posting malignant comments against rival company Maeil Dairies on online communities, including a moms’ community with 2.8 million members.

The comments included “Maeil Dairies milk products taste like iron,” “I am doubtful of the milk composition of Maeil Dairies” and “There is a nuclear power plant near the ranch where the milk is produced,” according to the probe.

Maeil Dairies reported Namyang Dairy to the police in April 2019.

By tracing the IP address, police said they found that the PR agency owned the 50 online accounts that were used to upload about 70 malignant comments and posts about Maeil Dairies. Namyang Dairy was found to have paid the agency.

Namyang Dairy has posted an apology on its website, but many have cast doubt on its sincerity.

“Amid an excessive marketing competition online, it became a controversy when one of our employees arbitrarily decided there is no problem (for the social media posting) working with the PR agency, as it is a fact that the Maeil Dairy’s Sangha Organic Ranch is located 4 kilometers away from a nuclear plant,” the company said in the apology on its website.

“The PR officials have been earnestly participating in the police investigation and waiting for the results. We express our deepest apology for worrying our customers over this case.”

Reflecting worsening public sentiment, some consumers said online that they would boycott the company, since this was not the first time.

In 2009, six employees from Namyang were sued for spreading rumors online that Maeil Dairies used ingredients in its baby food that were intended for animal feed.

When Namyang Dairy rolled out its first instant coffee in 2010, it advertised that its products were free of sodium caseinate. After a court decided the company had intentionally misled the public to hurt its rival Dong Suh Foods, the leading coffee producer, by suggesting sodium caseinate was harmful to human health, Namyang was fined 75 million won ($61,460) for false and exaggerated advertising.

In 2013, a Namyang Dairy solicitor tried to persuade a buyer of powdered milk to switch from Maeil Dairies to Namyang, saying a harmful substance had been found in the Maeil product. At that time, Maeil Dairies sued the solicitor for obstruction of business and libel.

A 2013 case of workplace abuse turned the company into a national disgrace. A voice recording revealed a Namyang salesperson using abusive language to pressure distributors to buy more of the company’s products. Taking flak from the public, then-Chief Executive Kim Woong issued a public apology and promised to take steps to support its distributors. But a boycott movement displaced the company from the top position in the market.

To improve relations with distributors, Namyang Dairy announced plans to share 5 percent of its operating profit with its agents -- a first in the country. The Fair Trade Commission approved the move Wednesday.

By Jo He-rim (herim@heraldcorp.com)
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