Vietnamese buy 24 kilograms of dairy products each year

The fresh milk market is being dominated by Vietnamese producers because they can develop material areas in Vietnam which saves transportation costs. Most foreign dairy companies don’t have a liquid milk factory in Vietnam, but they have to import finished products with high transportation costs.

Tran Quang Trung, chair of the Vietnam Milk Association, said the domestic fresh milk output reached 1,333.4 million liters in 2017, an increase of 6.6 percent over 2016.

Purely fresh milk output currently can satisfy half of the market demand. Meanwhile, the demand is expected to soar in the future, because the current consumption level is still low, 17 liters per head per annum.

Fujiyama from Daiwa PI Partners said that Vietnamese milk consumption level is just equal to half of Japanese. 

Meanwhile, the demand will be increasing because of the young population structure, increased income, and high awareness of using nutritious food.

Under Vietnam’s national dairy production development plan by 2020, the domestic output would be 1 billion liters, high enough to satisfy 38 percent of demand by 2020, and 1.4 billion liters, meeting 40 percent of demand by 2025.

In fact, up to 70 percent of liquid milk made in Vietnam is reconstituted milk. Meanwhile, the demand for pasteurized and sterilized milk is increasing as consumers have changed their taste and requirement on dairy products.

Izzi, a fresh milk brand belonging to Hanoi Milk, was once well known thanks to the continued ad campaigns appearing in ‘golden hours’, and to Izzi, a lovely character attractive to children.

However, Hanoi Milk’s business performance is getting worse. In 2017, Hanoi Milk reported a loss of VND18 billion. In the second quarter of 2018, it once again reported a loss.

Receiving big capital from investment funds, including VinaCapital where Tran Bao Minh, dubbed as ‘marketing expert’ is CEO, IDP is making every effort to develop its brand.

IDP spent big money to popularize fresh milk in all TV channels. Minh was ‘clever’ to target children. However, IDP still cannot reap success as expected.

Nutifood, which has conquered consumers’ hearts with formula powder milk, has also been targeting the fresh milk market. However, as the cooperation with Hoang Anh Gia Lai, the material supplier, is not as good as expected, the volume of fresh milk it has marketed remains modest.

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