Vietnam milk market is growing very fast in recent years with an astounding growth rate of 17% in the period of 2011 – 2015. The trend is expected to continue as to the Vietnam dairy industry development plan which outlines strategy to 2020, coupled with the view towards 2025, domestic milk production will reach 660 million tons, satisfying 35% of demand in 2015, 1 billion litres( satisfying 38% of demand in 2020), and 1.4 billion litres (40% of demand in 2025).
According to the General Statistics Office of Vietnam, the nation saw a record high of milk production with 97,300 tonnes of liquid milk and 1.1 million liters of fresh milk.
There’s still a large room to grow in Vietnam’s milk consumption, the Euromonitor International said, as this sector is expected to see a growth rate of 9% per year, or 27-28 litter/person/year by 2020.
Vietnam is considered a potential market for milk producers thanks to the following driving factors:
1) High in population as well as population growth rates: Vietnam’s population reached 91 million in 2015; average growth rate stood at approximately 1.2% per year;
2) High GDP growth rate: 14.8% per year in the period of 2008 – 2014, increase in average income per capita at 14.2%/ year.
3) Improving life standards: coupled with rising income, people’s life standard is also lifting very fast, represented in steady growth in expenditure per capita.
These factors, coupled with concern about health keep demand for milk and dairy goods always at high level in the country.
“…Euromonitor International said that revenue of the dairy industry in 2014 was 75.000 billion VND, increasing by 20% as compared to 2013. In detail, the revenue growth mainly came from powdered and liquid milk, accounting for 74% of the market share collectively.
One notable gap in the Vietnam dairy industry is the lack of input materials in which domestic supply has only met 30% of the demand. Meanwhile, the quality is low and inconsistent because the input mainly comes from small, low-productive producers.
According to the Vietnam dairy industry development plan which outlines strategy to 2020, coupled with the view towards 2025, domestic milk production will reach 660 million tons, satisfying 35% of demand in 2015, 1 billion liters ( satisfying 38% of demand in 2020), and 1.4 billion liters (40% of demand in 2025).
In fact, about 70% of liquid milk produced in Vietnam is reconstituted milk; meanwhile, demand for sterilized and pasteurized is rising due to the change in consumption habit. Realizing the potentials in Vietnam, many companies have been joining the Vietnam dairy industry.
Specially, most of the companies are; nowadays, focusing on developing their own material supply to address the biggest gap in Vietnam- the lack of input materials.
Most of the cows in Vietnam are raised separately in small-scale farms by low level techniques and inferior technologies, resulting in low productivity and high price of materials.
According to Vietnam Industry Research and Consultant (VIRAC), West Europe has the cost from 45-55 USD. While America has the cost at about 35-60 USD, depending on the development of the area. Countries like Argentina have suitable weather and big farming land, helping reducing the average cost.
Cost of production in Australasia is 36.6 USD, while it is 30 -35 USD in Australia and 41-42 USD in New Zealand. The discrepancy comes from food price, land price and the revaluation of NZD recently. NZ used to have the most competitive price in around the year 2000(12USD/ 100kg) but the revaluation of the currency and rising inputs price trebled the price.
In general, the cost of production did not fluctuate strongly throughout the period. Vietnam has the average cost of production because diluted raising and scale, does not achieve the economics of scale, low productivity (12-15 liters/day) and high cost of food and veterinary.” [Source: http://viracresearch.com/]
Research report explores the assessment of Vietnam’s dairy sector 2016
Vietnam’s dairy sector has immense potential for development and is currently being eyed by both local and foreign investors. Factors such as rising domestic demand, increasing affinity for Western cuisine, heavy investments and one of the lowest per capita milk consumption in the region are boosting the sector.
The domestic milk production in Vietnam is not being able to keep up with the rising local demand. The milk production of 456.400 tonnes in 2013 was able to meet only 28% of the domestic demand.
While the milk production in the country has grown by 26.6% annually in the period 2001-2014 and reached 5,49,500 tones in 2014, it is still insufficient to meet the domestic demand.
With low cattle numbers and domestic production, Vietnam is heavily reliant on milk imports. In 2013, milk and milk products imports were valued at USD 1.1 billion, a rise of 130% compared to the previous year.
This figure is expected to reach USD 3.6 billion by 2045. Vietnam currently exports dairy products to more than 29 foreign markets.
The sector is stepping up modernization of the dairy farms at a rapid rate and is planning to increase the number of milk cows to 240,000 by 2015.Vietnam plans to meet 60% of domestic demand for fresh milk for the country’s projected population of approximately 113 million by 2045. To meet this target, the country needs to develop a herd capable of producing 5.65 million tonnes of milk annually