Economy

Markets

Industries

Insights

Reports

Events

Profits of yak milk business

By Liu Jie (China Daily)
Updated: 2008-08-04 15:49

Living between 3,000-5,000 meters high on the Qinghai-Tibetan Plateau, grazing on pastureland and drinking glacier water, yaks are revered as a life source for Tibetan people.

As the bison was for American Indians, in Tibet for centuries the hardy pack animals have produced milk, butter, wool, meat and dung for fuel. Now some resourceful Tibetans are literally milking it as a cash cow.

Tibet Treasure of Plateau Yak Milk Co Ltd, the only modern milk processing enterprise in the Tibet autonomous region, unveiled its Feifan brand high-end yak milk product line nationwide on July 18. It's the first time that fresh, pasteurized yak milk has been sold outside of Tibet.

According to Wang Shiquan, chairman of the Lhasa-based Treasure of Plateau, the dairy can process 30 tons of fresh milk a day from two yak farms in Tibet and Ruo'ergai in neighboring Qinghai province.

It's only two hours from udder to the Tetra Pak processing and packaging line for the guaranteed fresh Feifan - which means "unique" or "uncommonly good" in Chinese, says Wang.

Yak milk business

Yak milk - higher in fat and protein than cow milk - is a daily drink for people on the Qinghai-Tibet Plateau and also churned into butter or cultured as a sour-milk cheese that is something of an acquired taste.

"We believe yak is a gift offered by nature to the Tibetan people," says Wang.

He adds that Tibet's tourists inspired the business opportunities for yak milk.

"They asked us, 'Why don't you take the rare, natural yak milk to the market? It might be a good way to make money and along with diary farming it will help protect the plateau,'" recalls Wang.

With government support, Treasure of Plateau was set up in 2005 with registered capital of 35.57 million yuan. The company started to buy raw yak milk from herders at 4 yuan per kilogram, a relatively high price in the area.

But there were literally some bugs to work out. Wang remembers that yak milk sent to the factory had some too-natural ingredients in it - insects and yak hair among them.

"I told them if you don't clean it up, you will be forbidden to send milk to us," he says. New stainless-steel pails were given to yak herders, along with instructions on how to keep the milk clean.

Before going to market, a series of food safety examinations are required, but initially the company also failed due to outdated processing technology and equipment.

"Thanks to the help from government and (Swedish-based) Tetra Pak, new processing lines were introduced, and experts sent by the government and the Sweden company offered suggestions and provided training for not only company staff but also local herders," says Wang.

Now the Treasure of Plateau's plant is as modern and sanitary as any other Chinese dairy enterprise.

Wang, who was born and raised in Tibet, is also excited about the opening of the Qinghai-Tibet railway and its potential to streamline the dairy's transportation needs.

"It helps us greatly reduce transportation costs and increase our efficiency, which helps us promote our products to the other parts of China," he notes.

The company has expanded steadily with total assets currently exceeding 70 million yuan.

The diary's success along with more modern yak husbandry techniques have also led to other, smaller yak dairy operations on the Qinghai-Tibetan Plateau.

They are mainly engaged in yak cheese processing. The products are easy to transport and also slowly becoming overseas gourmet specialties such as Tibetan Ragya Yak Cheese which has been irregularly imported to New York by Slow Food USA, a not-for-profit organization.

Tibet Nagqu's yak herders are also trying to break into distant markets through a government-funded dairy cooperative. The local government offers low-interest loans and networking information for herders with practical business proposals.

In Langdu, a Qinghai county bordering Tibet, villagers have set up a collective factory to producing local yak cheese.

"We have been living on yaks, now, we want to live better on those sacred bulls who always bring luck to us," says Sang Ji Zhuo Ma, a community leader.

They were also able to obtain aid from a group of volunteers from a Boston-based non-profit organization Ventures in Development, who are helping local herders upgrade their cheese factory, export their products and bring money into a community that relies on subsistence farming.

"We wouldn't be doing this if there was no profit. It needs to be sustainable, and it's only sustainable if the business can run and renew on its own," says Esther Hsu, chief marketing officer of the project.

Sales challenge

Sources from China Nutrition Society, a Ministry of Health-backed research institute, say that yak milk contains 18 kinds of amino acids, including eight essential ones that people cannot synthesize. The amino acids, calcium, and vitamin A in yak milk are 15 percent, 15 percent and 6 percent higher than in cow milk respectively.

Yak milk improves immunity and bone density, controls diabetes, and plays an important role in muscle tissue, the nutrition society claims.

Despite its touted health benefits, yak milk remains a tough sell outside of Tibet, Wang says.

"So far, the real challenge for us is how to sell it throughout China," says Wang.

So, Treasure of Plateau has budgeted 100 million yuan from 2008 to 2010 to explore the domestic and international markets.

It also hired Shenzhen-based China Winwin Consulting to be its branding and marketing agency to make "Feifan" the name to know when it comes to fresh yak milk products.

Three core sales offices have been set up in Beijing, Shanghai and Guangzhou. The company is also making efforts to branch into second-tier cities.

Liquid milk consumption in China reached 17.5 billion liters last year, 1.7 billion liters more than 2006, according to Tetra Pak's latest survey. However, the average per capita milk consumption in China is just half of the level in Asia and one-fourth of the world, which implies huge potential in China.

The suggested retail price for a 250-ml box of Feifan yak milk is 24 yuan, quite high compared to China's two leading brands, Mengniu's Deluxe and Yili's Classic at around 7 yuan.

Yet Wang is confident at targeting the high-end milk-drinking Chinese consumer. "With our unique product, clear market direction and a highly efficient sales network we can achieve success," he says.

Hsu of Ventures in Development says Langdu faces a similar challenge with its yak cheese in China where cheese in general is seen as an "exotic" import or foreign fad that many Chinese find simply distasteful.

In 2003, China's cheese market was worth just $30 million. The same year, France consumed cheese valued at $7 billion.

At present, Langdu people are marketing the cheese at tourist destinations in Yunnan where locally made products with a Tibetan theme can fetch a premium. Zhongdian, the nearest town, was renamed "Shangri-la" in 2001 after the imaginary Himalayan paradise in the 1930s novel Lost Horizon and Langdu presents its products in some stores there.