It was almost too sudden: The brand leapt out far ahead of the product. Mengniu (which literally means “Mongolian cow”; the chairman’s surname also happens to mean “cow”) had profitably confirmed the founders’ instincts that Chinese consumers would pay more for a name brand and specialty products, including popular premium Breakfast Milk for the white-collar market, the Sour Sour Milk Beverage, which was introduced to young Super Girl viewers, and Whatever ice cream for children.
Some of these niche products have at least 35% net profit margins. But Mengniu didn’t own the supply chain for these cash cows. In fact, it didn’t even own cows. Its chief asset was the brand itself.
“They’re the Nike ( NKE – news – people ) of milk,” says Saatchi’s Sampson. “This is a masterful bit of branding, really. … For the first few years they didn’t own a single cow.”