INDUSTRY PREVIEW

Vietnam Dairy Market 2017

Prepared by StoxPlus
December, 2017

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Vietnam Dairy Market Preview

Part Content Page

1 Executive Summary 2

2 Sector Structure & Description 4

3 Market Size & Potential 5-6

4 Market Segmentation 7

5 Key Players 8-12

6 About StoxPlus 13-23

2
Vietnam Dairy Market Preview | Market structure

Dairy market has 04 main sectors: (i) Drinking milk, (ii) Powdered milk, (iii) Yogurt and (iv)
Condensed milk
Figure 1: Dairy market structure in Vietnam

UHT Milk

Drinking milk Pasteurized Milk

Flavored Milk

Normal
Powdered milk
DAIRY MARKET

Specialty

Drinking
Yogurt
Traditional

Condensed milk

Soy Milk

Milk Alternatives
Other Milk Alternatives

3
Vietnam Dairy Market Preview | Market Size & Potential

Vietnam witnessed a gradual growth of the dairy consumption of approximately 12% for
the last 03 years
Figure 2: Value Size (US$ mn) of Dairy Market in Vietnam, 2014- Figure 3: Value Breakdown of Dairy Market by Segmentation, 2016
2016
3,340 4,098 4,181 Condensed
Milk Soy Milk
7% 6%

Yogurt
67% 12%
78% 80%
Powdered
Milk
43%

Drinking
Milk
Products
33%
22% 32%
20%

2014 2015 2016

Import Production
Source: StoxPlus Source: StoxPlus

• Generally, Vietnam has witnessed a gradual growth of dairy consumption of 12% in the last 03 years. The industry is
expected to grow by 9% per year, or 27-28 liters/person/year by 2020. In 2016, dairy value has reached over US$ 4,181mn.
In recent 03 years, dairy products supply from domestic source has increased continuously by nearly 50%, making its dairy
production proportion increase by 13%.

• It is noted that in dairy segmentation, total drinking milk and powdered milk value accounted for over 70% of total market.

4
Vietnam Dairy Market Preview | Production

Vietnam Dairy Market reached US$4,181 mn in 2016 and is mostly contributed by

powdered milk and drinking milk products
Figure 4: Production Volume and Growth of Powdered Milk and
Drinking Milk, 2012-2016
• The two most important segments deciding the
Powdered Milk
110,800 growth of dairy industry in Vietnam are drinking milk
99,300
87,000 90,200 11.6% (liquid milk) and powdered milk. Total value of these
81,200
10.1%
two components has occupied almost 3/4 of the
7.1%
market value. In 2016, drinking milk reached over 1
3.7% billion liters; while powdered milk reached 110.8
thousand tonnes.
2012 2013 2014 2015 2016

Volume (Tonnes) Growth Rate (%) • In terms of growth, powdered milk has experienced a
gradual growth after dropping significantly in 2014,
Drinking Milk
while liquid milk followed the opposite trend of
1,105.5
1,027.9 continuously growing for 02 years, falling sharply
21.4%
846.5 afterward in 2016.
760.7
701.3

11.3%
8.5% 7.5%

2012 2013 2014 2015 2016

Volume (Million Litre) Growth Rate (%)

Source: StoxPlus from GSO

5
Vietnam Dairy Market Preview | Import

Vietnam spent around US$850 million per year to import milk and dairy product

Figure 5: Breakdown Import value of milk and dairy product by • Supply from domestic milk enterprises has been increasing.
country, 2012-2016
However, Vietnam still relies much on imported milk and dairy
100%
products since the milk material supply remains short.

80%  There are about 179,769 milk cows being bred at domestic
farms, which can only satisfy less than 50 percent of the
60%
fresh milk material demand. The remaining of demand must
40% be taken by imports, mostly milk powder.

20%  Small number of milk cows in Vietnam and low effectiveness

in feeding cow are main reasons for the shortage situation.
0%
2012 2013 2014 2015 2016 • New Zealand remains the biggest milk provider for Vietnam.
New Zealand US Singapore France Germany However its proportion in total import value decreased from
Holland Thailand Australia Other
Source: StoxPlus from Custom 26% in 2012 to 22% in 2016. Import value of products from US,
France, Germany, Holland are also in the decreasing trend.
Vietnamese customers are getting interested in milk products
from Singapore, Thailand and Australia.

6
Vietnam Dairy Market Preview | Segmentation

Vinamilk has taken the leading positions in most sectors

Figure 6: Vietnam Local Dairy Segmentation Analysis, 2016

• Drinking milk segment is mainly

dominated by domestics company, of • Soy milk is considered the most
which Vinamilk accounted for more popular type of milk alternatives,
than 50% of this sector, followed by of which Quang Ngai Sugar with
FrieslandCampina (25%) and TH True famous brand name Vinasoy has
Milk (8%). taken 84% of total market share.

• Vinamilk brand name “Ong Tho”

• Yogurt segmentation is considered a has a firm reputation in Vietnam
potential one, especially when condensed milk market with
Vietnamese consumers are heading to approximately 80% market share.
healthier lifestyle. Currently, Vinamilk FrieslandCampina is the runner-up
dominates yogurt market with 67% with 17.1%, followed by Nestle
market share, while FrieslandCampina Vietnam with 2% market share
and IDP accounted for 13% and 8.5% recorded in 2016.
respectively of total market share.

• The market is fragmented with around 300 competitors, of

which domestic production accounted for around 65% of total
volume. Abbot is leading the market with 30% market share,
followed by Vinamilk (nearly 25%). Currently, this segment is
becoming more competitive with the increasing popularity of
Japanese brand name such as Meiji, Morinaga or Glico
Source: StoxPlus

7
Vietnam Dairy Market Preview | Key Players

Vietnam dairy market is mostly dominated by top 08 players, accounting for 90% market
share
Figure 7: Dairy Market Competition Landscape, 2016 Figure 8: Top 08 Dairy Companies Net Sales, 2016

Vinamilk
10% Vinamilk
Nestle Vietnam
2% Nestle Vietnam
2%
4% Nutifood Binh Duong Nutifood Binh Duong
4% Frieslandcampina Frieslandcampina
49% Quang Ngai Sugar
8% Quang Ngai Sugar
TH Milk
Moc Chau Milk TH Milk
8%
IDP Moc Chau Milk
12% Others
IDP

- 500 1,000 1,500 2,000 2,500

US$ mn

Source: StoxPlus Source: StoxPlus

NOTE: NET SALES COVER ALL BUSINESS LINE

• Top 08 players in Dairy market occupied 90% of total market share, of which Vinamilk constitutes nearly 50% with net sales
over US$2,000 mn, followed by Nestle Vietnam (12%) and Nutifood Binh Duong (8%).

• Currently, Vinamilk has introduced new product – 100% organic liquid milk under European standards, which is considered to
sharpen Vinamilk competitive advantages against long-standing and reputable foreign firms such as Nestle or
FrieslandCampina.

8
Vietnam Dairy Market Preview| Key Players

Vietnam Dairy Products JSC., (Vinamilk)

Company Profiling Key business line

• Registered name: Vietnam Dairy Products Joint Stock Company • Producing and trading canned milk, powdered milk, nutrient
flavor, cakes, fresh milk, soya milk, beverages and products from
• Head office: No. 10, Tan Trao Road, Tan Phu Ward, District 7,
milk;
HCMC
• Producing and trading wine, beer, food and many types of coffee;
• Establishment Year: 1976
• Raising dairy cows, providing dairy breeds and breeding
• Charter capital: US$638.8 mn
techniques;
• Principal businesses: Vinamilk is the biggest milk company in
• Other under business license.
Vietnam, accounting over 50% in the milk industry. Vinamilk now
has 13 dairy factories manufacturing up to 1.6 million
tonnes/year. Vinamilk has a wide distribution network with more
than 220,000 retailers nationwide. Domestic market accounts for
86% of the company's revenue while the foreign markets account
for 14%. Vinamilk's products are exported mainly to ASEAN, Middle
East, Africa market.
Financial Performance Market Share of Vinamilk in Vietnam Diary
Figure 8: Vinamilk’s Net Sales and Growth, 2012-2016
2,500
2,060
2,000 24.1% 1,785
1,640
1,468
1,500 1,276
US$ mn

15.0% 15.4%
1,000 11.8% 84.7% 79.7%
8.8% 54.4%
500 40.6% 33.9%

0
2012 2013 2014 2015 2016 Drinking Milk Babies-Powdered Drinking Yogurt Plain Yogurt Condensed Milk
Milk
Net Sales Sales Growth Vinamilk Others
Source: StoxPlus

9
Vietnam Dairy Market Preview| Key Players

Quang Ngai Sugar JSC.,

Company Profiling Key Business Lines

• Registered name: Quang Ngai Sugar Joint Stock Company • Producing and processing sugar, honey, foods and drinks;
• Head office: No. 2 Nguyen Chi Thanh Street, Quang Phu Ward, • Producing and trading mineral water;
Quang Ngai City, Quang Ngai Province, Vietnam
• Producing and trading sugarcane;
• Establishment Year: 1996
• Commercial trade and import export.
• Charter capital: US$107.3 mn
• Principal businesses: QNS is the leading soya milk manufacturer
with the market share of 82.7%. QNS can produce more than 1
million tonnes of soya milk products yearly. Vinasoy factories have
a capacity of 90 million liter/year/factory. QNS distributes
products not only in the domestic market but also in the overseas
market for candy, mineral water and beer as well.

Financial Performance Dairy Facilities

Figure 8: QNS’s Net Sales and Growth, 2012-2016 Production

No. Factory Location Established Year
169
Capacity
180 162 1 VINASOY Factory Quang Ngai 1997 125
147
150 57% 2 VINASOY Bac Ninh Factory Bac Ninh 2013 180
46% 3 VINASOY Binh Duong Factory Binh Duong 2016 90
120
101
90
US$ mn

90

60 15%
12%  In Dec 2016, VINASOY Binh Duong Factory phase I (Capacity of 90
30 million litres p.a) was complete & launched commercial operation
-4% (QNS's Annual Report 2016). In Phase II, production capacity is
0 expected to increase to 180 million litres p.a.
2012 2013 2014 2015 2016

Source: StoxPlus Net Sales Sales Growth

10
Vietnam Dairy Market Preview| Key Players

TH Food Chain JSC.,

Company Profiling Key Business Lines

• Registered name: TH Food Chain Joint Stock Company
• Head office: No. 166 Nguyen Thai Hoc, Quang Trung Ward, Vinh
City, Nghe An Province
• Establishment Year: 2009
• Principal businesses: The main activity of the company is
manufacturing and trading milk and yogurt. TH True Milk farm is
the biggest hi-tech cow rising facility in Asia. The large size of the
cow herd and the application of technologies provided by Israel,
the US and Europe in raising cows and managing the farm giving TH
True Milk a very big advantage. TH Milk owns 45,000 cows, of
which more than 22,000 are lactating at 30-40 liters per cow every
day.
• Manufacturing and trading milk and yogurt are TH Milk key
business lines
• Long-term goals:
 TH Milk aims to raise 203,000 cows in 2020.
 TH Milk intends to manufacture 500 million liters/year by 2017.
 TH Milk aims to achieve VND23,000 billion in revenue (equivalent
US$1 billion) and account for over 50% of total fresh milk market
share by 2020.
 TH Milk is conducting research to establish similar farm models in
Thanh Hoa province, Central Highlands, Lam Dong, Dak Lak.

Financial Performance Dairy Facilities

Figure 8: Th Milk’s Net Sales and Growth, 2012-2016 Production

No. Factory Location Established Year
Capacity
210
1 TH Milk Farm Nghe An 2010 200 million liter
178
180 57%
148
150 44%
124
 The year of 2013 witnessed the opening ceremony of TH Milk Farm
120 106
US$ mn

in Nghe An phase 1 (total area: 8,100 hectare) with initial

17% production capacity of 200 million liter/year. In phase 02,
90
67
production capacity is expected to increase to 500 million
60
liter/year.
30 -17%

0
2012 2013 2014 2015 2016

Source: StoxPlus Net Sales Sales Growth

11
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