The answer is more or less the same one as why lactose free ice creams never seem to catch on in the U.S. Most people even with lactose intolerance can handle small quantities of milk products without symptoms and they like the taste of the real thing.
I found an article on AFP that gives a recent history of the growth of dairy in China.
The toxic milk scandal in China could never have happened under Mao Zedong or Deng Xiaoping, as dairy products only landed on Chinese dinner tables when the nation began opening up to the outside world.
Westerners visiting China 20 or 30 years ago were hard pressed to find dairy products, and were only able to drink yoghurt out of a straw from a stone pot carved with Chinese characters, still available in the country.
But in the past few years, supermarket shelves have filled up with powdered or traditional milk, yoghurts and milk drinks, in countless cartons and cans, along with all sorts of flavours.
The average Chinese person, who drank 1.2 kilogrammes (2.6 pounds) of milk a year in 1980 when Deng -- the architect of China's reforms -- was in power, guzzled 26.7 kilos last year, according to the national bureau of statistics.
This, however, is still 10 times less than what people in developed countries consume.
...
Despite a widespread lactose intolerance in China, milk sales increased by 128 percent over the past five years, and those of powdered baby milk rose 185 percent, according to Euromonitor International.
Mengniu, one of the industry's heavyweights currently under the spotlight, launched a campaign [in 2006] donating milk in rural areas with the help of government agencies.
It used the slogan: "A litre of milk a day makes the Chinese people stronger."
That's remarkably similar to a British slogan first used in 1958, "Drinka Pinta Milka Day," based on a similar target promulgated by the National Milk Publicity Council of England and Wales.
Call it western cultural colonialism, but advertising does work no matter how much you try to deny it.
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