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Fresh milk market still attractive despite big rivals

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Vinamilk is leading the domestic fresh milk market, but is now being challenged by newcomers.

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Highway 51 that links with Ba Ria – Vung Tau province is considered the ‘home market’ for Lothamilk. There are numerous souvenir and Lothamilk shops. 

Consumers have confidence in Lothamilk products made of materials from the local milk-cow farming area. However, Lothamilk is only strong in this area and has not become popular in other localities. 

The same thing is occurring with Moc Chau and Ba Vi brands in the north. IDP plans to develop Ba Vi into green and clean milk products, but success remains modest.

IDP’s CEO Tran Bao Minh said that with the existence of dozens of brands, including the ‘big guy’ Vinamilk, the fresh milk market is a fierce battle. 

IDP is following its own way to conquer the hearts of children, the targeted clients. It has allocated a huge budget for marketing campaigns with ads on all TV channels for children. 

An analyst commented that IDP is a wise move targeting children for its marketing campaigns. They are direct beneficiaries of products and have influence on parents’ spending decisions.

According to the Ministry of Industry and Trade (MOIT), dairy product consumption level in Vietnam is 24 kilograms per head, much lower than other markets. Therefore, dairy producers still have opportunities to boost sales. 

Meanwhile, domestic fresh milk materials just meet 35 percent of market demand. In general, the market is still attractive and large enough for ‘rookies’.

Fujiyama from Daiwa PI Partners said that though big players are dominating the market, there is still room left for others. Vietnamese dairy product consumption is just equal to half of Japanese. 

Vietnam has high economic growth rate, a young population and increasing income.

According to Euromonitor, the average production cost to make 100 kilos of fresh milk is $42-52 in Vietnam, higher than the $35 figure in Australia and New Zealand and $41.4 in the US. This is attributed to weather conditions, cow breeders, animal feed and land. 

However, the fresh milk market is still dominated by Vietnamese companies which have advantages over foreign companies, which face barriers in preservation and in distribution networks. 

Vinamilk remains the nation’s leading fresh milk producer and is now making organic fresh milk. 

however, TH Milk stated it would account for 50 percent of market share by 2017, challenging the leader Vinamilk.

 

Source: VietNamNet

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