Milk war: Hollandia Evaporated Milk as Peak Milk’s undertaker

Milk war: Hollandia Evaporated Milk as Peak Milk’s undertaker
United Bank for Africa

In every aspect of life, competition rules. In the corporate world, rivalries also happen. In show business, rivalries can be brutal. This is why the saying that “you’re no one in this town unless someone wants you dead” is commonplace in the entertainment industry. But in business, corporate governance rules are a formidable barrier to making the competition disappear completely.

So, the received wisdom has always been to accept the challenge from the competition and build a stronger business in the process.

Nonetheless, understanding when to cooperate and when to compete can be a tricky affair. Importantly, a business that is fighting for market share in a highly competitive environment should know how it can use rivalry to boost performance and how to avoid getting dragged down by it into despair. The ability to design and implement a winning strategy may depend on knowing the difference between a smart tactic and one that is just plain stupid.

Keen observers of the Nigerian economy are well aware that sales of beverages and dairy products usually peak in the Ramadan period. Consequently, brands in both sectors traditionally target the period for intense marketing activities. Although this year has seen no alteration to this approach, rivalry in the dairy sector among milk producers battling for market share is getting to fever pitch. A dispute over an alleged mimicry of a Peak Milk advert by Hollandia Evaporated Milk has raised more questions than answers.Milk war: Hollandia Evaporated Milk as Peak Milk’s undertaker

By the time the dust settles, it is obvious that the consumer will be the ultimate winner in the ongoing marketing spat between Hollandia Evap and Peak Milk on whether quantity or quality is desirable in a brand. But, to be sure, one of the two brands will also suffer a collateral damage. And this is where the crux of the matter lies. Undoubtedly, a major fallout of the dispute will be the everlasting erosion of the notion that Peak Milk is the undisputed market leader in the sector.

Peak Milk, produced by Friesland Campina WAMCO, has been in the market for 60 years. During the period, it earned a reputation for quality. It was positioned as a premium brand and always carried the highest price tag in the market. And so, affordability has never been one of its selling points. Peak Milk made a costly mistake in releasing an advert copy in which it tried to convince the audience that it was better in quality than a rival brand which was obviously Hollandia Evap, marketed by Chi Limited. The giveaway was the advert’s reference to quantity, one of the selling points of Hollandia Evap.

Without realizing it, the ad copy represents a tacit admission by Friesland Campina WAMCO that Hollandia Evap Milk is getting under its skin. In plain terms, it means that Hollandia Evap Milk is gaining considerable market share and Peak Milk is worried. The choice of motor mechanics for the Peak Milk advert also means that the brand is in a panic mode and going for broke in its effort to appeal to the mass market. By climbing down from its Olympian height to appeal to ‘motor mechanics,’ Peak Milk has put its hard-earned pedigree at stake. If it does not go the extra mile of adding more volume to its content as well as reducing its prices, it would soon find itself at the bottom rung of the ladder in market share.

Bashing the competition is often considered taboo in marketing because of the risk of backlash that may flow from the competitor and its consumers. Although it gives a comparison point, the rivalry it creates can rally consumers into pitching tent with the other side. Besides, existing and prospective consumers may feel insulted. Meanwhile, the other brand can retaliate and point out misleading statements and/or product weaknesses more effectively than the campaign did. In the light of the flurry of stories that have been written on the marketing spat between Hollandia Evap and Peak Milk, it is worth remembering that Goliath usually stomps David in marketplace street fights.

Properly situated, Peak Milk is in a perilous situation in the unfolding fight for market share. If care is not taken, Hollandia Evap may turn out to be the brand that would deal the final blow on Peak Milk which never fully recovered from its encounter with Cowbell. Coincidentally, Cowbell entered the market during a period of economic downturn like the country is passing through once again. During its encounter with Cowbell, rather than innovate to meet the market halfway, Peak Milk stuck to its ways and suffered greatly. Although it recovered part of the lost market, it is clear that the brand did not learn the needed lesson.

Today, Peak Milk faces a formidable competitor in Hollandia Evap Milk produced by Chi Limited, a company that has always represented a universe of setting trends. Although Peak Milk was able to regain some of its lost market share following the entry of Cowbell by introducing its own milk in sachets, its advert has made it clear that it will not increase the volume of its content. Yet, at the low end of the market where it wants to play, volume is of utmost importance while affordability is equally paramount. Somehow Hollandia Evap has been able to marry the two while also giving quality. In terms of quantity, Hollandia Evap 215g pack offers 25% more than Peak Regular while the 65g offers 15g more than Peak Regular at the same price.

What is more, Hollandia Evap has been consistent in its innovativeness. In 2005, the brand introduced its “Pop Pour Throw pack” and opened a new frontier in sachet type packs thereby making it possible for consumers in the low end of the market to enroll into the category at an affordable price point. In the same tradition of setting trends, the brand also introduced the “Pour Cap Keep pack” (215g) in 2007. The pack was a game-changer as it is convenient to use and “re-sealable” after being opened.

Today, Hollandia Evap is considered to be the benchmark of modernity, innovation and quality.  It is credited with better overall quality perception when compared with other brands in the evaporated milk category. The A C Nielsen Retail Audit data indicate that nationally, Hollandia Evap has consistently gained market share while Peak is consistently losing. The data also revealed that in the last 12 quarters, Hollandia Evap Milk increased by 7.4 MS points while Peak Regular has dropped by 7.9 MS Points. A C Nielsen Retail Audit data also reveals that, in Lagos, Hollandia Evap at 33.9% has more than doubled the market share of Peak Regular 14.3%.

Given the taste and quality of Hollandia Evap, it comes as no surprise that the brand dominates the consumer’s mind ahead of the competition.