The dairy market in Vietnam is at its burgeoning stage. The sales value grows at a double-digit number for years. What’s more, the growth rate is even accelerating. According to statistics from recent market survey in Vietnam, over the three-year period of 2010 to 2012, the sales growth rate kept at an evenly 13 percent annually. Starting from 2013, the growth rate expanded to 17 percent, and kept increasing to 20 percent in 2014. The strong growth rate displays the robust stage the market is currently at and large potential in the dairy market in Vietnam.
The large supply and demand gap for domestic producers
In the dairy market in Vietnam, consumers’ demand is way over than the ability of domestic producers can supply. Milk might be the most popular and most consumed product in the dairy market. However, domestic raw milk supplies are only able to serve 20 percent to 30 percent of the nationwide dairy demand. The leftover demand will only be met by importing from Australia, New Zealand and the United States. This has left the dairy market in Vietnam greatly dependent on other countries.
Vietnam’s husbandry remained undeveloped, small scaled, and only contributed for 22-24 percent of the total agricultural value. In addition, several difficulties stands in the way of developing the husbandry which affects the dairy market in Vietnam, such as lack of management experience, poor collecting system, lack of preservation and restoring equipment, inconsistent policies for the country’s dairy industry and basic dairy products. This results in the high price of dairy products. For example, the price for Vietnam’s fresh milk per litre is around $1.1, while it is only $0.5-0.9 per litre in European countries and South America. The high price will also deter consumers from buying dairy products.
Strong support from the government
A strong support is extended from the government to develop the dairy market in Vietnam. In 2005, the Ministry of Industry issued Government Decision No. 22 on “approving the master plan on development of the milk industry in Vietnam till 2010 and planning to 2020. The goal of this plan includes an increase of indigenous milk production to meet per capita consumption of 20kg in 2020. Some provincial governments also exempted taxes on agricultural land and prioritized land availability for fodder production.
Currently the dairy market in Vietnam is not facing a serious international competition. Vinamilk, the largest Vietnamese dairy company, holds 50 percent of the dairy market in Vietnam. The market in Vietnam is still raw to international firms and with the large potential lying in the market; without doubt competition from overseas will spark up. This will attract investment in the dairy market in Vietnam, and is also a opportunity to further develop the market.