Maeil Dairies faced a crisis of suspension of operations at its plant due to the accidental mixing of cleaning water in its sterilized milk products, but its stock price has remained stable, drawing interest in the industry. Maeil Dairies' stock price has been steadily declining since its listing in 2017. It is interpreted that small shareholders believe this is the bottom and are buying stocks. The securities industry also viewed that, given the already low stock price, the reaction to the cleaning water mixing issue has been minimal.
On the 18th, Maeil Dairies' stock closed at 35,600 won, a 2.3% (800 won) increase from the previous day's closing price (34,800 won). Despite the crisis of potential suspension of some factories, the stock price slightly rose instead. On the 12th, at the Namyang Research Institute of Hyundai Motor Company, Maeil Original Sterilized 200㎖ product was served in a company cafeteria, and some employees complained of stomach pain after consuming the milk, leading to a report to the Ministry of Food and Drug Safety. The next day, Maeil Dairies posted on its website that it would recall the affected product, and on the 16th, CEO Kim Sun-hee published an apology.
The Ministry of Food and Drug Safety conducted a field investigation on the 16th and announced the results late in the afternoon of the 17th. The investigation confirmed that on September 19 at 3:38 a.m., a valve in the sterilizer was open for about one second, causing cleaning water (2.8% sodium hydroxide) to mix into the product filling line. Sodium hydroxide is a component used in CIP (cleaning without dismantling pipes or equipment) cleaning agents. It is a strong alkaline substance, commonly referred to as lye. An industry insider noted, 'In the workplace, sodium hydroxide is usually handled while wearing protective masks and goggles.'
The Ministry of Food and Drug Safety stated that it has requested the relevant authorities in Gwangju to impose an administrative disposition of one month suspension of operations and the disposal of the affected products on Maeil Dairies' Gwangju plant, where cleaning water mixed during the sterilized milk manufacturing process. A ministry official said, 'We confirmed that there were no anomalies in the production history and temperature graph outside the specified date and time,' adding, 'Although the sterilizer and product filling lines are separated, during cleaning operations in the sterilizer, the valve was opened due to an operator's mistake, allowing the cleaning water to flow into the product. Considering the equipment's capacity, it likely affected around 50 products.'
◇ 'The already low stock price causes minimal reaction to the cleaning water mixing issue'
During the course of the incident, Maeil Dairies' stock price (based on the closing price) remained largely stable at 34,650 won on the 12th, 35,250 won on the 13th, 34,950 won on the 16th, and 34,800 won on the 17th. When the Ministry of Food and Drug Safety requested a one-month suspension of operations to Gwangju, the stock price actually saw a slight rebound.
The lack of significant changes in stock price despite concerns about the cleaning water mixing is interpreted as a result of Maeil Dairies' stock having been in a downward trend for some time. Small shareholders have reacted in stock forums, stating things like, 'It’s too low, which actually prevented a crash,' 'The stock price is so miserable that it has no capacity to reflect bad news,' '(This stock has) been falling for 6 years since going public, so it has no impact,' and 'Anyone who wanted to sell has already sold.'
Maeil Dairies was first listed on the KOSDAQ market in 1999. In June 2017, it transitioned to a holding company structure, splitting into Maeil Holdings and the newly established Maeil Dairies. Since listing at 94,000 won, Maeil Dairies' stock has consistently declined. The stock price has only exceeded 94,000 won a few times, including in July 2018 and October 2019.
One reason Maeil Dairies has been neglected by shareholders is its stinginess in providing proactive information about the company or implementing shareholder-friendly policies. Since 2017, Maeil Dairies has conducted investor relations (IR) events only twice, in June 2018 and April 2020. This was also the case prior to the split. According to data from the Korea Exchange in 2016, Maeil Dairies did not hold any IR events for ten years from 2006.
The deepening of low birth rates, leading to uncertain long-term growth, has also negatively impacted the company. According to data from the Korea Dairy Promotion Association, domestic milk consumption decreased from 4,448,459 tons in 2021 to 4,410,490 tons in 2022 and 4,308,350 tons in 2023, indicating a shrinking consumer base for milk. An industry official stated, 'When tariffs on U.S. and European dairy products are abolished starting in 2026, the domestic dairy industry will face more difficulties.'
As the prices of raw milk increase and the burden of expenses such as labor costs, logistics, and raw materials rises, Maeil Dairies' performance has deteriorated. Maeil Dairies' consolidated revenue rose from 1.4631 trillion won in 2020 to 1.783 trillion won in 2023, while operating profit decreased from 86.5 billion won to 72.2 billion won over the same period.
In August of last year, Maeil Dairies also implemented a voluntary retirement program for employees over 50. At that time, Maeil Dairies stated, 'This measure reflects the difficult reality of the dairy industry and aims to transition to an efficient and dynamic organization for sustainable growth.'
Kim Jung-wook, a researcher at Meritz Securities, said, 'Having nearly withdrawn from the Chinese market years ago has rendered its overseas business virtually ineffective,' adding, 'In the long term, it has not found solutions to the low birth rate issue. In a situation where performance is stagnant, there is no clear growth momentum.'
Kim added, 'Even when similar incidents occurred in the food industry before, the impact was only temporary, and cases leading to boycotts were almost nonexistent,' noting, 'Given that the stock price is already low, it seems there is little reaction to the cleaning water mixing issue.'