Classy Kiss, known as the 'Hermès of yogurt,' sells its products at prices significantly higher than competitors—twice the price of similar products from Mengniu and Yili, and even more expensive than Jane's. However, it was found to have yeast levels 60 times above the standard, leading consumers to exclaim that the brand has 'collapsed.'

Recently, the issue of Classy Kiss yogurt exceeding yeast limits by 60 times has sparked heated discussion.

The exposure came from a notice by the Shanghai Municipal Market Supervision Administration, which found that the 'One Hour After Meal' product under Classy Kiss was unqualified, with yeast content detected at 60 times the standard. The administration has required relevant district market supervision bureaus to investigate and handle the unqualified food and its producers/operators in a timely manner, and to record the situation in the food safety credit files of the food producers/operators.

(Image source: Visual China)

The Shanghai Municipal Market Supervision Administration stated that yeast count is an indicative indicator for evaluating food hygiene quality. The main reasons for excessive yeast could be contamination of raw materials used in processing or improper control of product storage and transportation conditions.

After the incident, Classy Kiss did not issue an official statement in response. Instead, it only stated in an interview with the media that the excessive yeast might be due to substandard storage and transportation after leaving the factory or terminal temperature issues, and emphasized that the retained samples of this batch had been tested by a third party and met national standards.

But how to regain consumer trust has become a major challenge for Classy Kiss yogurt.

Classy Kiss Yogurt Has Collapsed

The term 'collapsed' is no longer exclusive to the entertainment industry. When the beloved Classy Kiss yogurt faces quality issues, it seems to convey the complex emotions of young people more effectively.

On the evening of April 6, the official WeChat account of the Shanghai Municipal Market Supervision Administration showed that during a random inspection, the 'One Hour After Meal' product of Classy Kiss yogurt had a total bacterial colony count of 6,000 per gram of sample, exceeding the standard value of 100 CFU/g by 60 times. The inspection location was the Yongxinfang store of Uni-President Supermarket (Shanghai) Convenience Store Co., Ltd.

A customer service representative from Classy Kiss told the 'Financial World' weekly that 'this batch of yogurt will no longer be sold.' Currently, the related products have been removed from shelves.

As soon as the news came out, within two days, multiple topics related to Classy Kiss yogurt appeared on the hot search list, with one topic about a product exceeding yeast limits by 60 times gaining millions of views.

Consumers expressed their anger online: 'I'm going to vomit. I just bought 12 bottles for over 100 yuan.' 'How can such expensive yogurt have such unreliable quality control?' 'I'm a loyal fan, but after seeing the news, I immediately switched to other brands.'

Beyond the shock, those who have already purchased are most concerned about the potential harm of excessive yeast.

In response, dairy analyst Song Liang analyzed that excessive yeast mainly causes changes in yogurt quality and taste, and does not cause significant harm to the body.

However, Dr. Wei Wei, medical director of Dingxiang Doctor, reminded that 'excessive yeast itself has no clear harm, but exceeding the standard by so much means there may be problems with production line quality control or transportation, and there may be other contamination risks.' He further explained that the so-called contamination risk refers to the possibility of unwanted substances being mixed in, which could allow yeast colonies to proliferate. This is only a preliminary inspection, and the existence and type of contamination cannot be confirmed.

In response to this issue, Classy Kiss told the 'Financial World' weekly that after the inspection results were released, the regulatory authorities at the Suzhou factory re-inspected the production line, processing process, and products, and third-party authoritative institutions also tested the production line microorganisms and retained samples, all of which were qualified.

'Our production and processing process meets national quality requirements,' Classy Kiss said. It claimed that the rapid microbial growth was due to substandard temperatures during transportation and sales, or other uncertain factors.

In other words, Classy Kiss shifted the blame to the cold chain transportation and terminal sales links. The 'Financial World' weekly attempted to contact Uni-President Supermarket, but the phone call was not answered. It is worth noting that as early as 2015, Classy Kiss stated that it had already built its own cold chain logistics.

In 2021, Classy Kiss founder Wang Weijia emphasized in an interview that 'Classy Kiss has established a professional cold chain logistics company since its inception, and every vehicle is a professional refrigerated truck with a refrigeration unit.'

Despite having built its own cold chain logistics, excessive yeast is not the first occurrence. According to a 2015 report from Red Net Changsha, the Guangdong Provincial Food and Drug Administration found during an inspection that Classy Kiss Fresh Cheese Yogurt (corn fruit granules) had excessive yeast counts.

At that time, Classy Kiss made a similar response as today, stating that internal investigations and third-party tests showed the product was qualified. Classy Kiss also said it had unconditionally stopped production on the production line involved in that batch and conducted a thorough investigation and analysis of all aspects of the production line and the corn fruit supplier.

Seven years later, the problem recurred. But compared to 2015, Classy Kiss today may face more severe development challenges.

Once Compared Itself to 'Hermès of Yogurt'

'Expensive' has always been a label for Classy Kiss yogurt.

The Hema APP shows that the controversial 'One Hour After Meal' product is sold in a pack of 250g*3, priced at 41.5 yuan per pack. Looking at other Classy Kiss products, Original Cheese Yogurt, Fresh Cheese Yogurt, Sugar-Free Diary, and 007 Family Pack are priced at 29.6 yuan, 19.9 yuan, 36.8 yuan, and 35.8 yuan, respectively.

Such prices are not low.

On the Dingdong Maicai platform, the unit price of One Hour After Meal (250g per bottle) is 13.8 yuan, while Junlebao Chunxiang (300g) is 9.8 yuan, and Yili Changqing and Mengniu Guanyiru (two bottles of the same specification) are 13.8 yuan and 11.8 yuan, respectively. Classy Kiss's best-selling 0-added plain yogurt (1kg) is also expensive among similar products, selling at 33.5 yuan per bottle, which is more expensive than Jane's plain yogurt (1.08kg) at 32.8 yuan, while Sanyuan plain yogurt (1.8kg) is 19.9 yuan, and Yili's customized yogurt with Dingdong (1.05kg) is only 10.9 yuan.

Song Liang believes that for the yogurt category, 25 to 30 yuan per kilogram can be considered high-end. Based on the standard 250g specification, the price is roughly divided by 6 or 8 yuan.

If 250g is used as the measurement standard, Classy Kiss's 'Original Cheese Yogurt,' 'Sugar-Free Diary,' and 'One Hour After Meal' are far ahead in the industry, at approximately 19.7 yuan, 17.6 yuan, and 13.8 yuan, respectively. The '007' Family Pack and 'Fresh Cheese Yogurt' also approach the 10-yuan line at 8.95 yuan and 8.29 yuan.

People are not unaware of this. As early as 2014, there was a question on Zhihu asking 'Why is Classy Kiss yogurt so expensive?' Until 2021, new answers were still being added under this question. Although commenters have mixed opinions, Classy Kiss does not shy away from this label. According to media reports, in July 2021, it compared itself to 'Hermès of yogurt' in its marketing copy.

In fact, behind the higher product pricing is its ambition and desire for the high-end market represented by the middle class.

Founded in 1999, Classy Kiss was determined from the beginning to enter the high-end market. To this end, founder Wang Weijia avoided Guangdong, which had a strong 'old fire soup' culture, and chose high-end restaurants and nightclubs in Shenzhen as sales channels. After making its 'first shot' there, Classy Kiss gradually expanded to other parts of Guangdong.

(Image source: Visual China)

This approach worked surprisingly well. According to previous reports, Classy Kiss became synonymous with Guangdong's meal-time milk: its market share in the local catering market reached 80%. 'People drink Classy Kiss before meals and after meals, which gave us great confidence to expand to other sales channels,' Wang Weijia said.

In 2003, Wang Weijia shifted channels to supermarkets. In 2015, he stated in an interview that supermarket channels accounted for 50% and had become the most important channel. In the future, he would also cultivate e-commerce channels at the right time.

In the following years, Classy Kiss not only appeared in major regional supermarkets but also occupied prominent shelf positions in convenience stores, small shops, and stores around schools.

In addition, unlike other players in the low-temperature track, Wang Weijia early on claimed to have 'invested heavily in building a full cold chain,' covering logistics and refrigeration processes. He said that Classy Kiss yogurt must be stored at temperatures between 2°C and 6°C. Therefore, during transportation, each vehicle is equipped with a temperature control black box and GPS positioning to achieve real-time monitoring and recording of the compartment temperature, as well as tracking of the vehicle's driving route and driver's working status, ensuring product freshness.

As for the core product itself, Wang Weijia claimed to 'use the best raw materials to make the world's best yogurt.' In interviews in recent years, he repeatedly expressed similar themes. In 2015, he revealed that 'not only in Guangdong, but even nationwide, Classy Kiss purchases fresh milk at the highest price.' China Food Industry Analyst Zhu Danpeng confirmed this. He said that compared to the purchase price of about 4.2 yuan per jin in the northern region, fresh milk in Guangdong costs 6 to 7 yuan per jin, but Classy Kiss can afford it.

Through various measures, Classy Kiss attempted to shape its high-end image and harvest middle-class consumers.

It must be said that Classy Kiss's business approach has been very effective. Data shows that in 2021, Classy Kiss yogurt sales exceeded 3.2 billion yuan, with growth of 25%. Zhu Danpeng believes that Classy Kiss has been deeply cultivating for many years, with substantial profits, and its profitability 'definitely exceeds 1 billion yuan.'

But now, the repeated yeast exceeding incidents have caused great damage to its image in the minds of consumers. The more middle-class, the more they care about product quality. More seriously, in the low-temperature yogurt track, there are many competitors vying for market share.

Anxiety Under Crisis

As one of the sub-sectors of the dairy industry, the low-temperature milk track has become an important part of the growth of emerging brands in recent years. Usually, this is also a market with considerable imagination.

Song Liang revealed that the gross margin of low-temperature yogurt is basically above 50%. The higher gross margin brings profits and also brings competition. Xu Xin, an investor known for consumer investment, once said that gross margins should not be too high; if they are too high, others will have the opportunity to attack you.

Indeed, the market environment for yogurt is undergoing significant changes. In the low-temperature track, there are many entrants. In 2014, Le Chun was established; in 2015, Xia Haitong, who left Mengniu's low-temperature division, founded Pucheng Dairy with four other co-founders, also targeting the high-end market and launching 'Jane's'; in 2019, Genki Forest also entered the yogurt market by establishing the brand 'Beihai Pasture.'

The newly established yogurt brands have also been favored by capital, which has provided them with 'guns and ammunition.' According to reports, Coca-Cola, ZhenFund, IDG Capital, and others injected hundreds of millions of yuan into Le Chun; Dehong Capital, QY Capital, Xingzhi Capital, Guangzhou Jinkong Fund, and Purui Capital bet on Jane's, providing C-round financing; behind Beihai Pasture stands Genki Forest, valued at $6 billion.

With many new brands, dairy giants have also turned their guns. From 2020 to 2021, established dairy companies such as Mengniu, Yili, Guangming, and New Hope launched more new low-temperature yogurt products. Like Classy Kiss, these aggressive competitors also focus on health concepts such as 'zero sugar,' 'zero additives,' and probiotics.

With strong enemies around, Classy Kiss has also accelerated its pace.

In 2012, when the price-leading big single product 'Original Cheese Yogurt' was released, Classy Kiss claimed that the R&D cycle took three years, emphasizing the founder's 'Virgo' craftsmanship. Four years later, in November 2016, another new product 'One Hour After Meal' was launched. But since then, its pace of new product launches has clearly accelerated.

In 2018, 'Double Protein' fermented milk was launched, and in June, its new flavor 'Chia Seeds' was released. In October of the same year, Classy Kiss also launched 'YO KEEP Yogurt,' targeting 'body management' needs. In 2021, Classy Kiss added 'Sugar-Free Diary' and '007' Family Pack to its product matrix.

Channels have also changed. In 2021, Wang Weijia mentioned that more new brands are starting to grow rapidly through online channels, achieving sales of several billion yuan in 3 years, and completing in 5 years what used to take 10, 20, or even 50 years.

This 'new brand' is hard not to think of 'Jane's,' which is also in Guangdong. Unlike Classy Kiss, which has been deeply cultivating traditional channels, Jane's has been laying out online and new retail channels since its establishment. In the 2021 '618' competition, Jane's announced that its GMV on Tmall, JD.com, and Hema grew 100% year-on-year, and on Metro, GMV grew 180% year-on-year.

The high-end low-temperature yogurt track is becoming crowded, and the market is starting to have oversupply.

According to AC Nielsen data, the overall sales of the low-temperature yogurt market in 2020 fell 12.5% year-on-year. As giants flood in, high-end yogurt has begun to engage in 'price wars.' Guojin Securities' grassroots research data shows that Junlebao Chunxiang's discount price is about 60% to 70% off, and Yili Changqing's promotional intensity is 50% to 75% off.

On the other hand, Classy Kiss itself faces potential risks. Song Liang said that under the epidemic, the middle- and high-income groups it targets have not been affected, but young, independent, financially capable white-collar workers or students have seen changes in consumption. Coupled with channel impacts, its '2021 was not very good,' and on a broader scale, 'the dividend period of the high-end market has ended.'

(Image source: WeChat public account 'Classy Kiss')

Classy Kiss seems to have felt the crisis. In July 2021, it announced its entry into the low-temperature fresh milk business—breaking its previous philosophy of not seeking diversified operations but focusing on professionalism and concentration, solely on fermented milk.

At the same time, its urgency to move from a regional brand to a national market has increased. At the 2022 national customer annual meeting, Classy Kiss announced 'three years to create a new Classy Kiss.' Its national sales director Lian Xueting said that the next three years will be the golden time for Classy Kiss to lead the development of low-temperature yogurt nationwide.

Developing the national market has also been a frequent topic for Classy Kiss in the past two years. 'Due to market changes and listing preparation factors, Classy Kiss needs to develop the national market. But for it, this is not a good thing,' Song Liang reminded, saying that the cost of going national may outweigh the benefits.

The strategic effect of 'going to the national market' is not yet known. But one thing is clear: Classy Kiss needs to rebuild consumer trust.

Source: AI Finance and Economics (ID: aicjnews)

Are you 'watching' me?