Investment

Liquid milk brings lucrative profits to dairy producers    The turnover from liquid milk products in 2012 reached VND15.5 trillion, which was 10 times higher than the revenue from powder milk.   According to Tetra Park, the leading company in the world in processing and packaging food, the consumption of dairy products has been increasing sharply in Vietnam. About 580 million liters of milk were consumed in Vietnam in 2004, while the figure is expected to reach 2 billion liters in 2013. The playing field gets bustling Truong Van Toan, Legal and Public Relation Director of Friesland Campina, said prior to 1995, when Friesland Campina was still outside the Vietnamese market, the consumption per Vietnamese head was less than 3 liters per annum. However, the figure rose rapidly to 10 liters in the next years and has reached 15 liters. However, Toan noted that the consumption level is still low if compared with other regional countries. The demand for dairy products in Vietnam is on the rise, which means a promising lucrative market for manufacturers. According to Dr. Tong Xuan Chinh from the Ministry of Agriculture and Rural Development (MARD), Vinamilk has been leading the market with 40 percent of the market share, followed by Dutch Lady with 25 percent and Moc Chau 10 percent. Meanwhile, IDP now holds 5 percent of the market share, Hanoimilk 5 percent and the other companies 15 percent. A report of Euromonitor, a market survey firm, showed that the revenue from liquid milk products in 2012 grew sharply by 21 percent over the year before. Meanwhile, the report of Kantar Worldpanel, also a market survey firm, showed that in the first three months of 2013, the sales of dairy products in the rural market increased by 18 percent in comparison with the same period of 2012. The liquid dairy product market has been dominated by domestic brands, despite the presence of some foreign manufacturers. In other words, unlike the other industries, domestic manufacturers do not bear the hard pressure from foreign rivals, but they are the main rivals for each other. Only 30 percent is fresh milk According to the General Statistics Office, by the end of 2013, Vietnam had had 170,000 milk cows. In 2012, Vietnam made 381,740 tons of milk materials, an increase of 10.5 percent over 2011, but it just could meet 22 percent of the total demand. This means that the other 70 percent of dairy products need to be fed with imports. Market analysts have noted that the liquid milk war has begun more violent over the last two years, especially when some new brands such as TH True Milk and Ba Vi, jumped into the market. TH True Milk has become a redoubtable rival in the market with its commitments to provide 100 percent fresh milk products, not the products made of powder milk like the products of some other manufacturers. Meanwhile, according to MARD, only 30 percent of products in the home market are fresh milk, while the other 70 percent is made of powder milk. The problem lies in the lack of domestic materials, because of which manufacturers have to import powder milk to make liquid milk domestically. The lack of materials has triggered a new war among dairy producers to scramble for materials from farmers. Big dairy producers have spent big money to develop milk cow farms of their own. Vinamilk, for example, has spent VND700 to build five cow farms. TH True Milk has spent $350 million to build a farm in Nghe An province. Source: NLD