Key Topics Covered in the Report
- Detailed profile of Vietnam’s Dairy Industry
- Value and volume analysis of Vietnam’s Dairy Industry
- Historic and forecast price movement in the Vietnamese Dairy industry
- Major players in the Vietnamese Dairy Industry
- Future Prospects of the Dairy Industry in Vietnam
Ken Research announced its latest publication on, “Vietnam Dairy Report Q22016”, offering insights on dairy industry in Vietnam. The publication provides a detailed analysis of the economic situation of Vietnam in general and the industry in particular. It also provides information about the movement of the price as well as the forecast for the upcoming future, covering all domains, including liquid milk, powdered milk, condensed milk as well as yogurt, butter and cheese. Analysis of big players in the industry is also elaborated by providing detailed financial analysis, applied technology, market share, etc. herein to help companies position and define the competiveness in the market.
Economic Environment of Vietnam
Vietnam is perhaps one of the fastest growing economies in the ASEAN region. A large number of factors have and are still contributing to this persistent growth of the economy. Adoption of liberalization along with the initiation of “DoiMoi” reforms which included partial privatization of state-owned enterprises, liberalization of the trade and investment regimes, and modernization of the financial sector is transforming the economy into a market oriented one and also expanding its integration with the global economy.
Vietnam was expanding at the fastest pace in the ASEAN region since 2007, because of huge domestic demand and exports; however, the country was not able to maintain this positive momentum for long since it was hard hit by a drought in Q1 2016. The drought led to a fall in agricultural production and hence, caused a deceleration in the economic growth. Although the drought has affected the agricultural productivity, particularly the production of rice and coffee, the extreme weather has not affected any other macroeconomic parameters and they continue to boom.
Looking at the global economic snapshot of Vietnam, Vietnam is the home to 90.6 million people with a GDP (PPP) of $510.7 billion and a per capita income of $5365. The economy’s GDP is growing at a rate of 6%, with a 5 year compounded annual growth rate of 5.9%. Vietnam has an unemployment rate of 2.3% and an inflation (CPI) of 4.1%.
Coming to the social outcomes, the socio-economic situation of Vietnam has improved dramatically. There has been a tremendous fall in the proportion of people living in extreme poverty from more than 50 percent in the early 1990s to 3 percent today. With higher incomes, the Vietnamese population also has now access to better education and health care services, leading to a higher life expectancy than most countries with a similar per capita income. The maternal mortality ratio and under five mortality rate has also dropped, close to the upper-middle-income country average. Access to basic infrastructure has also improved substantially.
Brief Overview of the Dairy Market in Vietnam
Dairy industry is perhaps one of the vital industry of any economy as the dairy products provides nutrients essential for human existence. Dairy industry is common to almost every economy in the world as it is related to livestock production and livestock and milk collection takes place in every country of the world. The world dairy industry employs almost 1 million people. Dairy sector also helps in the sustenance of the rural areas of many developing economies of the world. The global demand for dairy products is rising which is leading to the globalization of the dairy sector and hence increasing the scope and intensity of the global dairy trade. However, global dairy industry is short in supply as the dairy industry is produced in some developed economies such as America and New Zealand and exported to the developing nations which are huge in number.
In Vietnam, the dairy industry is one of the emerging and dynamic industry, displaying consistent growth since a decade. The activity of cow raising is not conventional to Vietnam, it only emerged in Vietnam since the early of the 20th century. As a result of this, cows are raised by small scale producers who lack knowledge and skill of raising cows and preventing them from diseases. This leads to lower dairy productivity in Vietnam along with high production cost and unstable milk quality.
However, the initiation of the DoiMoi reforms along with the privatization of production sector accelerated the development of the Vietnamese Dairy industry. The implementation of the National Dairy Development Plan led to an enormous increase in the total dairy cattle herd population as well as the domestic milk production. The milk production in Vietnam went up from 12000 tonnes in 1990 to 215900 tonnes in 2006. However, despite of these achievements, the domestic milk consumption in Vietnam has not been successful in meeting domestic demand. More specifically, only about 22% of domestic dairy demand is met by domestic production. A major proportion of the domestic demand is met by imports of dairy products, mainly in the form of skim and whole milk powder.
Major Players in Dairy Industry in Vietnam
Huge potential in Vietnam’s dairy industry is attracting both foreign and domestic investors, as a result of which there is fierce competition in this sector. Some of the well-known producers in Vietnam areVinaMilk, TH True Milk, Nutrifood, Hanoi milk, IDP, 3A nutrition.
Vietnam Dairy Products Joint Stock Company , also known as Vinamilk dominates the drinking milk category in Vietnam. The company’s policy of investing heavily in research and development as well as marketing and promotional campaigns helps it to enjoy a strong reputation among consumers and also to expand its range of products to meet the domestic demand. Vinamilk also dominates yoghurt and sour milk segment. Besides focusing on the development of new products, the company also focused on structuring up a strong distribution system which includes both traditional and modern channels.
Dairy Industry in Vietnam- Prospects
Even with the increasing number of cattle and rising milk production, the domestic milk production in Vietnam is not able to meet even half of the domestic demand. In order to increase its productivity, the sector is initiating modernization of the dairy farms at a tremendous rate and also planning to increase the number of milk cows to 240,000 by 2015. With this initiative, Vietnam plans to meet 60% of domestic demand for fresh milk for the country’s projected population of approximately 113 million by 2045.
However, despite of the above mentioned challenges, Vietnam’s dairy sector has huge potential attracting both domestic and foreign investors. A number of factors are also contributing to boost the sector which includes rising domestic demand, increasing fondness of Western Cuisine, heavy investments and one of the lowest per capita milk consumption despite of the rising demand in the region.
Companies Covered:
Vietnam Dairy Products Joint Stock Company (VNM)
TH True Milk Joint Stock Company
Dong Tam Nutrition Food Joint Stock Company
Hanoi Milk Joint Stock Company (Hanoimilk)
International Dairy Joint Stock Company (IDP)
3A Nutrition (Vietnam) Company Limited
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Ankur Gupta, Head Marketing & Communications
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