Malaysia’s miracle Milo: How Nestlé must safeguard leading market amid difficult times

“It only came every few months so there was a real buzz around school, with everyone talking about it. There was lots of haggling at the counter as they passed out free cups to us. We all wanted to get some before it all ran out.”​

Like millions of Malaysians, Lina has a vivid Milo memory dating back all the way to her primary school days. Now executive director of her family food business in Subang Jaya, on the outskirts of Kuala Lumpur, she says the Nestlé malted milk brand was a shared part of growing up in the country.

“Some nights, my parents would give me a nighttime treat of what we would call ‘Milo Dinosaur’. It’s a hot mug of Milo with lots of extra granules sprinkled on top to form a crust. It was all part of childhood​.”

This association with the drink probably explains why, last month, a seemingly mundane press release outlining Nestlé Malaysia’s plans for the brand was covered so widely by the Malaysian media.

The company said it would be investing RM100m (US$23.9m) to expand its Milo plant in Negeri Sembilan, south of KL, to make it the world’s biggest factory that produces the drink. The news was greeted with warm approval by many who consider Milo to be the national drink of Malaysia.

Milo everywhere

It is hard to stress the popularity of Milo here. Forget about sales figures, if you visit any branch of McDonald’s or KFC, it’s plainly evident: the chances are that dozens of diners will be chugging happily on cups filled with Milo ais​. Seemingly everywhere you look in KL there is branding for the drink, especially since it is a heavy sponsor of Malaysian sport.

And this week, fast food chain myBurgerLab even released a limited edition dish of chicken strips coated in Milo powder with a Kelatanese fermented fish sauce. Its stores reportedly managed to sell out more than 1,500 portions in just three hours.

But amid all the adulation, things can come crashing down pretty quickly. When the New York Times​ published a story in December headlined “In Asia’s fattest country, nutritionists take money from food giants,​” referring of course to Malaysia, which has an obesity rate of around 13%, there was deafening outcry.

The story claimed that major food companies had been financially supporting food experts. It reported that Nestlé had a written agreement with the Nutrition Society of Malaysia to read the studies it funded before they were published in peer-reviewed academic journals to “ensure that the methodology was scientifically correct”.​

“Among the published articles​ was one that concluded that children who drank malted breakfast beverages—a category dominated in Malaysia by Milo—were more likely to be physically active and spend less time in front of a computer or television,”​ the report stated.

Nestlé responded to the claims by saying it was important for the company to collaborate in efforts to improve nutrition around the globe. “We approach our research transparently and apply strict standards to ensure project integrity until the publication of the study,” it told the newspaper.

Natural sugar

The following month, Malaysian outrage reached fever pitch when a local businessman posted a viral video calling out Milo’s owner for marketing a sugary product as a health food. At one point he claimed that a whopping 40% of Milo is made up of pure sugar.

Nestlé answered the criticism by stating that over 50% of the total sugar in Milo naturally comes from milk and malt.

”We keep the amount of sugar we add to a minimum—adding only 6g of sugar for every 200ml serving, which is about one teaspoon of sugar. This is to maintain the taste that Malaysians are familiar with,”​ it said.

As the saga continued, and the blogger refused to accept Nestlé’s data, it brought with it thousands upon thousands of social media posts, countless newspaper headlines and frequent heated debate in kopitiam, or neighborhood coffee shops, over even more cups of Milo ais.

“To be honest, because we grew up perceiving Milo as a healthy brand, it did come as quite a shock, but it didn’t change my feelings towards it,​” said Barry Westerhout, a corporate consultant from Kuala Lumpur.

“Then reality kicked in, that it’s not the healthiest thing.​

“I remember the way that [Nestlé] tried to address the issue, which seemed a bit funny. They could have done that better. It seemed like they were really trying to evade the issue.”​

New initiatives

It is important to Nestlé for its consumers to believe in the healthy spin of its famous chocolate drink. As part of a continuing effort, in March it announced the launch of its latest sports initiative, “Aktif Negaraku”, meaning “active in my country”, with the aim to get five million Malaysians moving and living an active lifestyle.

“Over the past 60 years, Milo has taken the lead in developing grassroots sport for Malaysians, with exciting activities that many of us look forward to each year,”​ said Philomena Tan of the Milo business unit at the time.

The company claims that “many of our national athletes began their sports careers through one of Milo’s grassroots sports programmes.”​

As Malaysia’s putative national drink, its people take Milo very personally. Similar trucks to the ones that would visit Lina Mustafa’s school when she was a primary student in the Nineties have been around since Milo launched in Malaysia in 1950, and continue to travel the length and breadth of the country visiting communities. This means the vast majority of Malaysia’s 32m population has grown up familiar with the “Your health drink” branding—or variations of the slogan—on the side of these vehicles.

A nation divided?

To suggest to Malaysians that Milo is not actually healthy, contrary to Nestlé’s assertions, is akin to claiming that apples are not nutritious. Doing so destroys one’s longstanding belief in what is good and proper, and chisels away at a reputation that has been impeccable since even before Malaysia had become an independent nation.

There will be one side of the population that feels deeply cheated, and the another side will snub the claims of the New York Times​ and a prominent blogger as being close to heretic.

The advantage Nestlé has in this part of the world is the seemingly immutable link between the product and society’s love for it.

Now not only is Malaysia Milo’s biggest market, but it will soon be home to its biggest factory. It has managed to weave the malted chocolate milk drink into the entire fabric of a nation. The brand owner must treat this connection very carefully.