Kim Sun-hee, Vice Chairman of Maeil Dairies, "Small dairy companies selling only milk will all disappear in 2 years"

Lecture at Korea Chamber of Commerce Jeju Forum
"Milk demand is decreasing but dairy farmers keep supplying"
"Imported milk is cheap, domestic prices doubled"
"Attention needed on dairy industry crisis"
Generating profits through portfolio diversification

Kim Sun-hee, Vice Chairman (CEO) of Maeil Dairies, emphasized on the 17th that "small and medium-sized enterprises that only sell milk will all disappear after 2026," stressing the need to diversify their business.

Kim Sun-hee, Vice Chairman of Maeil Dairies, is giving a lecture at the 'KCCI Jeju Forum' held at Shilla Hotel Jeju on the 18th. Photo by KCCI

At the 'KCCI Jeju Forum' held at the Shilla Hotel in Jeju on the same day, Vice Chairman Kim predicted this, stating that Maeil Dairies has been working to change its milk-centered product portfolio for the past 10 years.

He said, "Milk demand is decreasing, but dairy farmers continue to supply milk," adding, "From the perspective of dairy farmers, the costs involved in milk production keep rising, and if they cannot create products that customers want with added value to cover these rising costs, the business will fail." He continued, "About 20 years ago, under the Free Trade Agreement (FTA), dairy product tariffs were set at 100% for protection but have been reduced by 5% annually, reaching 0% in 2026," and added, "Meanwhile, the price of milk from overseas dairy farmers has become even cheaper, while domestic milk prices have doubled."

Vice Chairman Kim noted that cheap milk is beginning to flood in from overseas, saying, "This situation will occur within 1 to 2 years, so I hope there will be interest in the crisis facing the milk industry."

Maeil Dairies has maintained solid performance by diversifying its portfolio to suit the low birthrate era while generating profits from infant formula. When Vice Chairman Kim joined the company in 2009 as a finance officer, Maeil Dairies’ sales were just under 1 trillion won, but growth continued, reaching about 1.8 trillion won last year.

According to Vice Chairman Kim, Maeil Dairies is engaged in value-added businesses that can be made from milk, such as adult nutrition products, medical food, ice cream, coffee, bread, and experiential farms. He explained, "In 1969, when Maeil Dairies started its business, 1.04 million newborns were born, and the most profitable product at that time was infant formula," adding, "It is a product made by purchasing powder from overseas, adding nutrients, dissolving it in water, and drying it, so the margin structure is good."

However, he said, "In 2023, only 230,000 newborns were born, and the number is rapidly decreasing," adding, "The issue we face is how domestic dairy processing companies focused on the domestic market can create a sustainable portfolio to overcome the crisis." He continued, "As a strategy to diversify the product portfolio concentrated on infants and young children, we developed products focused on those aged 65 and older, whose population is increasing, and plant-based milk to appeal to younger generations seeking milk alternatives."