III.

MARKET SUPPLY OF LIQUID MILK IN VIETNAM IN

RECENT YEARS
In the recent years, with the developing in economic and life quality, more and more
people focus on improving their health which has resulted in the gradually increased
in the amount of nutrious products, especially fresh milk. The fresh milk market has
been expanded for many types of customers from little kids (for growth in body,
intelligence ...) to the elderly people (nutritional supplements due to loss of appetite,
osteoporosis, disease ...) or even diet milk.
For the period from 2010 - 2015, fresh milk production capacity increased by an
average of 16% per annum from 520,6 million litres in 2010 to 1.093 million litres in
2015. According to the statistics from the General Statistics Office, the amount of
fresh milk supply in 2019 reached more than 1 million liters. There was a rise of 8.32
% compared to 2018.
1. Market segmentation
Cow's milk
Sterilized milk: 84%
Pasteurized milk: 4%
Other Milk Substances (Soy Milk, Nut Milk): 12%
According to the market research firm Kantar World Panel, fresh milk is less
competitive than powdered milk. Because domestic firms have an advantage in
supply.
In June 2016, fresh milk production capacity was estimated at 99.1 million litres,
increasing by 1.3% compared to the previous month. In general, for the first 6 months
of 2016, fresh milk production capacity was estimated at 553.1 million litres
increasing by 4% over the same period in 2015. In the first half of 2016, production
capacity of these two dairy products was also higher than the same period last year,
signaling a continued year of output growth.
 2. The domestic market of liquid milk
According to Babuki research on the liquid market. In domestic market of liquid milk
(the main product of the dairy sector), Vietnamese companies are temporarily
dominating with Vinamilk accounting for nearly 50% of market share. In addition,
advantages in terms of cost and preservation time are also helping Vietnamese
companies dominate the market in many other dairy related products such as
pasteurized milk, sterilized millk and other liquid milk products such as soy milk, nut
milk with a series of domestic brands such as Vinamilk, TH True Milk, Moc Chau, Ba
Vi, Dalatmilk, Lothamilk, Vixumilk and Nutifood.
 VINAMILK
This company currently has 12 farms across the country, including two that conform
to European organic standards and 10 that follow Global Gap standards.
Take the lead is Vinamilk which is accounted for more the 55% of market share.
However, with the potential forecasts of liquid milk market, especially fresh milk
which only meet 35%, the rest depends on imports, causing other businesses to find
ways to penetrate this segment.
 TH Group
Right from the date of in incorporation, TH True Milk has set a target of accounting
for 50% of the fresh milk market by 2020. The group has withdrawn its “pocket
money” about 1.2 billions USD as well as many employee to build a cow farm
project. Its aim is to create the Asia’s largest dairy factory and Southeast Asia’s
largest dairy factory.
Focusing on the new product line TH true milk helps to take steps to develop. With
only 5 years after the launch of the first product, by 2015, TH true Milk is the
enterprise that owns the largest dairy herd in of 45,000 on a farm of 8,100 ha
concentrated in Nghe An.
  NUTIFOOD
Beside of focusing on the powed milk segment, following consmer trends along the
brand base, Nutifood aslo set a target to develop the liquid milk segment with bold
plans, including cooperation with Hoang Anh Gia Lai Group, bulids fresh milk
material areas with nearly 120,00 dairy cows, capable of supplying 1.2 millions liters
of milk/day.
However, up to now, the cooperation project is not successful as expected, so the
Nutifood’s fresh milk sales are quite limited, because the company’s cow raising area
is only a few thousand cows, lower than other companies.
In addition, in each region in Vietnam, there are aslo different brands of fresh milk
serving local people – such as Moc Chau and Long Thanh, if positioned well, these
companies will aslo have a great competitive advantage. And not to be left out Nestle
Vietnam opened the second phrase of its Bong Sen plant extension in the northern
province of Hung Yen late last year - its six factory in Vietnam.
3. The role of government in influencing the market supply.
 Policies on development and dairy farming.
After the Prime Minister's Decision 167/2001/ GD-TTg dated October 26, 2001, on a
number of measures and policies to develop dairy cows in Vietnam in the 2001-2010
period, localities in the country had actively implemented the Government's livestock
and development policies. Therefore, the dairy herd continued to increase in the
period 2001-2006. However, in 2005-2009, the herd growth rate was low and even in
2007 the number of dairy cows decreased due to the price crisis. However, since
2014, the Ministry of Agriculture and Rural Development has issued Decision No.
458 / QD - BNN - CN on the policy to encourage and support the development of
dairy farming until 2020, with a vision to 2030. Also in 2014, the Ministry of
Agriculture and Development issued Decision No. 984 / QD/-BNN-CN approving the
project "Restructuring the livestock industry towards increasing added value and
sustainable development" , n "Restructuring the livestock industry in the direction of
increasing added value and developing sustainably", in which the criteria for striving
to exit the dairy industry in Vietnam until 2020. Accordingly, by 2020, the total dairy
cow will reach 300,000 cows, the total output of milk will reach more than 0.9 million
tons, 100% of the dairy cows are raised in the direction of farms and industrial farms,
in order to develop dairy farming in tradition area where can be invested with high
technology capacity. Group of policies on the development of the dairy processing
industry on June 28, 2010, the Ministry of Industry and Trade issued Decision No.
3399 / QD-BTC approving the Development Plan for each Vietnamese dairy industry
until 2020, vision to 2025.
 Policies on the mik price management.
Since 2014, the government has implemented Decision No. 1097 / QD-BTC dated
20/5/2014 on the application of measures to stabilize prices according to regulations
for products for children under 6 years old. In addition, milk prices for children under
6 years old continue to be implemented by the Ministry of Finance to stabilize prices
according to regulations. In November 30, 2015, 787 milk products for children under
6 years of age have been announced their maximum prices, registration prices, and
declared prices on the Portal for the Ministry of Finance and the Department of
Finance of localities.