Most Chinese don’t know where the state of Kentucky is located, but they do recognize the iconic image of Colonel Sanders at KFC restaurants. KFC is now found in 656 cities across China.

“When you have a brand that people love, you have an amazing opportunity to penetrate the market,” according to Joaquin Pelaez, senior vice president and chief support officer for the China Division of Yum! Brands, Inc., which operates KFC, Pizza Hut and other restaurants worldwide.

The key word here is “brand.” It allows a company or product to create a positive image that draws customers.

It is an amazing privilege when consumers come to you because they trust you, Pelaez told those attending the Alltech “Bounce Back 2010” Symposium last week in Lexington, Ky.

The dairy industry already enjoys the trust of consumers, but it could learn a thing or two about taking it to the next level with branding.

Think of it: There are two beverages. One is full of sugar, rots teeth, can rust nails, causes obesity and has zero nutritional value. The other is full of calcium, full of protein, and is nature’s perfect food. The first one sells for $4.39 per gallon; nature’s perfect food for $2.69 per gallon.

“Why is it we allowed this to happen?” Alltech President Pearse Lyons asked those at the Symposium. The first beverage, Coca-Cola, even has the audacity to call itself the “real thing.” Coke has done a tremendous job of marketing itself to consumers and creating a brand image.

Milk hasn’t.

“Guys, we have to brand our industry, we have to brand our products,” Lyons said.

He is right. Whenever I go to the grocery store, I am greeted with a boring array of plastic one-gallon jugs in the dairy case. I am not looking for anything fancy, but honestly I can’t remember what the label says or whose name is on it — OK, now I remember.

Where is the imagination on the part of the dairy product people?

Lyons, known for his imagination and entrepreneurial spirit, says we could brand milk for different age groups. One type of milk could be marketed for children, one for teenagers, one for young adults, and one for older people, depending on their different needs. Milk for teenagers could tout the value of calcium for developing bones.

Why not market milk as a product with relevance and benefit? Why not drive that home with branding? Let’s come up with brand images that are as iconic as Col. Sanders or Pizza Hut.

In serving the Chinese market, Yum! Brands not only has built upon its core brands and offerings, but has added menu items that are flavored specifically for the tastes of the local population. Here is a YouTube video where Joaquin Pelaez explains this further.

Other innovative companies are doing the same. See how Coca-Cola is being innovative in the Chinese market. Note the video about Minute Maid pulpy milk drink.