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In recent years, dairy has become one of the fastest growing sectors in the food industry of Vietnam. The average
growth rate during 2005-2009 reached 18% (EMI, 2009). For a developing country with fast pace of urbanization and
population expansion like Vietnam, dairy demand will continue to increase in the coming years. It is necessary to have
an overview of the world dairy industry to understand Vietnam dairy industry as 70% of the sector’s input is imported.
World dairy industry
Table 1: World dairy market
2008 2009P 2010F 2010/09
Total production output (million tons) 691.7 700.9 713.6 1.8%
Total trade volume (million tons) 40.5 38.6 40.6 5.2%
Demand of developing countries (kg/ person/year) 65.6 65.7 67.2 2.2%
Demand of developed countries (kg/ person/year) 246 248 247.6 -0.2%

(Source: FAO 2009)

Total production output of the world in 2009 was estimated at 701 million tons, up by 1% over the previous year. The
production growth rate is higher at developing countries than that at developed country. The gap is becoming wider in
2010 with the forecast that the rate will be 4% for developing countries while it remains largely the same for developed
nations. Total production output of 2010 will increase by around 2% to 714 million tons (Table 1).
Total trade volume declined by 4.6% in 2009 against 2008, mainly due to the economic crisis. However, it is forecast
that in 2010, the volume may reach the level of 2008 of around 40.6 million (Table 1). The rapidly increasing demand of
dairy products in developing countries is the key driver for the growth of world trade volume in the coming year as the
demand in developed countries has saturated.
Supply – demand and price of milk powder
Inputs of the milk processing industry are fresh milk and milk powder with the latter accounts for the major percentage in
cross-country trade volume. Material powder milk includes skim and whole cream powder which have been wildly
fluctuating since 2007 (Graph 1).

Graph 1: Price of material milk exported from Though initially regarded as short-term, the recovery of
Australia since 2007 world milk price was confirmed as milk price has well
remained at above USD 3,000/ton FOB (ex Australian
Unit: FOB (USD/ton)
ports) since mid-2009. The upward trend in powder milk price
is forecast to continue in 2010 for rising demand while GDP
6,000.00
growth rates of developed countries and developing countries
5,000.00
is expected to reach 1.7% and 5.5% in 2010, respectively.
4,000.00 GDP of the main importer, China may grow at 9.3%.
3,000.00

2,000.00
Supply for export is foreseen to be limited. Apart from
higher demand of milk materials in the recovering global
1,000.00
economy, export supplies are forecasted to be limited as the
0.00
domestic milk outputs of the US and Europe may fall in 2010.
Meanwhile, the figure of Australia’s output is yet a clear one
(USDA, 2009). Therefore, milk price in 2010 will be higher than
Sữa bột gầy Sữa bột nguyên bơ in 2009. As forecasted by USDA, the average price of milk
products in 2010 is around 3,600-3,700 USD/ ton, a growth
(Source: FAO 2010) rate of around 20% over the figure of 2009 (Dairyvietnam,
2010).

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VIETNAM DAIRY INDUSTRY

Graph 2: Vietnam’s dairy revenue
Along with the common trend of developing
Unit: billion VND countries, Vietnam’s dairy demand as a crucial
supplementary nutrition source is increasing.
20,000 18,503  The trend is reflected in rising dairy revenue of
18,000 16,214  Vietnamese producers at a steady growth rate over
the years. Total revenue reached VND 18,500 billion
16,000 14,101  VND In 2009, up by over 14% over 2008 (Graph 2).
14,000 Evidently, the recent economic crisis had no effect
10,549  11,176 
12,000 on dairy consumption in Vietnam.
9,084 
10,000
Currently, consumption of dairy products is
8,000 mostly in large cities, as 10% of the national
6,000 population in Hanoi and HCM city consumes 78% of
4,000 milk products (Somers, 2009). The average annual
2,000 consumption is 9 liter/person/year, lower than other
0
countries in the region such as Thailand (23
liter//person/year) or China (25 liter//person/year).
2004 2005 2006 2007 2008 2009
Consequently, Vietnam’s consumption will increase
along with GDP growth, following the trend in
(Source: EMI 2009) regional countries (VINAMILK, 2010). With higher
demand, many domestic and foreign dairy producers
are participating in the dairy market of Vietnam,
inducing a variety of products.

1. Milk products in Vietnam

Figure 1: Milk products in Viet Nam Powder milk is the most profitable
segment.
Competition within the milk industry is
fiercest for the powder milk segment
Milk Drinking Other Milk Products: (including milk formula and others) as
Formula Milk Yoghurt, Condensed this segment, especially high-end
Milk… products is producers’ competitive
target as profit margin is very high of
40%. This is also the segment
contributing the large proportion of
Liquid Milk Other Powder Milk (*) Soya Milk revenue for producers. Competition is
strong with the participation of both
(*) Other powder milk: powder milk products except for milk formula local and overseas players.

(Source: EMI 2009, VINAMILK 2010)

1.1. Milk formula

Table 2:
Market share of milk formula producers (as per revenue %) Table 3: Prices of milk for 6-12 month old
children (*)
Dairy firms 2004 2005 2006 2007 2008
Abbott Vietnam Co.Ltd 23.1 23.8 23.4 23 23.1 Brand Firm Price/box (VND)
Vinamilk 11.2 14.4 15.6 16.4 17 Dielac Alpha step 2 Vinamilk 72,100
Mead Johnson Nutrition 14.3 13.9 14.9 15.1 14.7 Dutch Lady step 2 Friesland 70,500
Gain Kid IQ Abbott 154,700
Dutch Lady Vietnam 10.8 12 12.4 13.2 13.8
Enfagrow A+ Mead Johnson 160,000
Nestlé Vietnam 8.9 10.1 9.3 8.6 8.5
Dupro Gold step 2 Royal Numico NV 164,000
Meiji Dairies Corp. 2.9 2.1 1.8 1.6 1.5
(Source: VINAMILK website and agencies
Others 28.8 23.7 22.6 22.1 21.4
Totoal 100 100 100 100 100 (*)Before 3/2010

(Source: EMI 2009a)

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Milk formula is powder milk product for children, blended according to a particular formula to replace breast milk or to
supplement certain nutrition elements for special categories of users, normally less than 3 year-old children.
This is the fastest growing segments in the packaged food industry with the compound annual growth rate of
20.8% in 2004-2009. In 2009, total revenue of milk formula exceeded 6,590 billion VND, accounting for 35.6% of the
dairy industry revenue with strong increases in demand and supplies of product ranges (EMI 2009). Improving socio-
economic conditions and higher living standards encourage Vietnamese parents to wish for best products for their
children while allow them to afford better products. Especially in large cities, as mothers have less time for taking care of
the children, powder milk for children is increasingly used for the convenience and being good source of nutrition.
Quality is the most important criteria for this product. Parents are becoming more vigilant of those products with
possibility of melamine contamination or protein deficiency.
Milk formula products are categorized according to children’s age groups, most popularly, of 0-6 months, 6-12 months,
1-2-3 years, and over 3 years. Milk formula products are also distinctively divided as high end products and lower.
High-end market is largely dominated by foreign producers with imported products. Most popular brands are
Gain of Abbott, Friso of FrieslandCampina - Dutch Lady Vietnam, and Enfa of Mead Johnson, etc. Prices of these
brands normally double the prices of lower end products as can been seen in the example in Table 3. However, prices
do not significantly affect the market shares of foreign firms who account for over 70% of the total milk formula market
annually. Abbott holds the largest market share with the brand Gain despite its market share has shrunk by 0.1%-0.2%
in recent years. Consumers place higher trust in foreign producers who are considered as reliable and producing higher
quality thanks to stricter conditions for quality control.
Lower-end market is controlled by FrieslandCampina Viet Nam - Dutch Lady (locally produced products) and
VINAMILK. These two players have competitive advantage for price which enables them to expand their markets in
rural areas. Market shares of these producers have been increasing steadily over the years thanks to extensive
distribution networks, advertising campaigns and promotion of brands (Table 2). VINAMILK has conducted one of large
advertising campaigns in 2009 for Dielac brand in the efforts to regain its market share from foreign rivals. VINAMILK
wished to send the message that Dielac was produced to particularly cater for Vietnamese children’ nutrition needs with
the quality that is at least equivalent to imported products.

1.2. Drinking milk

Drinking milk products include: liquid milk, other powder milk (excluding milk formula for children) and soya milk.

Graph 3: Market share of producers as per revenue of liquid milk (%) Dutch Lady (Friesland
Campina) and VINAMILK have
30 28,4
28,2 27,8
26,6
been dominating the market of
25,0 24,8 25,2 drinking milk in recent years.
25 23,6 23,7 23,7 In 2004-2006 VINAMILK lost part
of its market share to Dutch
20 Lady, however, recently, the
company has been able to
15
recover its share which rose to
25.2% in 2008, compared to
26.6% of Dutch Lady. Revenue
10 8,2 8,1 7,8 7,8 7,9 from drinking milk (nearly 8,000
4,7 4,9 4,9 billion in 2009) accounts for
4,0 4,2 3,5 4,0 4,0
5 3,2 3,8
2,6 2,7 3,1 around 43% of total revenue of
1,7 2,2
the industry (EMI, 2009). This
0 segment grew by 15% in 2009
2004 2005 2006 2007 2008 over 2008, mostly due to price
Dutch Lady Vinamilk Nestlé Mead Johnson Fonterra Brands Hanoimilk increases across most of
products.
(Source: EMI 2009)

• Liquid milk. Liquid milk includes pure fresh milk (100% made from fresh milk) and sterilized milk (made from
imported powder milk). Due to the shortage of domestic material source, sterilized milk products account for the
majority of liquid milk consumption. VINAMILK and Dutch Lady are the two largest players in the sub-sector of
liquid milk for children and others. Other small domestic companies such as Hanoimilk, Nutifood, Moc Chau and
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Ba Vi, etc call for modest shares. In 2009, VINAMILK made an impressive growth to control 55.4% of the
national market of liquid milk.
• Other powder milk products. These products are used for different categories of users, mainly adults, for
examples, Dielac Mama (VINAMILK), Enfamama (Abbott), Frisomum (Dutch Lady – imported directly from
Netherland), etc – targeting pregnant women; Anlene (Fonterra Brands) or Ensure (Abbott) for people with
special needs of nutrition. Specialized segments of the milk industry are normally nutrition for the elderly or
nutrition according to medical needs such as Anlene of Fonterra accounting for 80% of market share for this
specialized segment with the outstanding richness of calcium for aged people.
• Soya milk. This product enjoys the highest growth rate in recent year with CAGR of 24.2% during 2004-2009
thanks to users’ increasing awareness of its benefits and producers’ advertising campaigns. Currently, Vietnam
Vinasoy holds 70% of the market for carton packed soya milk with two main products of Fami soya milk and
black sesame soya milk. VINAMILK fills in the remaining part of the market with V-fresh brand. The company is
aiming to expand its presence in the segment.
1.3. Other milk products
• Condensed milk. Currently, market demand for this kind of product has been saturated, with 79% of market
share belonging to VINAMILK and 21% of Dutch Lady (Somers, 2009). Consumers, especially urban ones,
have begun to realize the unbeneficial effects of condensed milk on their health. Hence, this product is now
more popular among rural population.
• Yoghurt. Vietnamese consumers are increasingly interested in this product for its health benefits. At present,
most yoghurt is produced by VINAMILK, Dutch Lady, Ba Vi, Moc Chau… In 2009, total yoghurt revenue rose by
11% as compared to 2008, amounting to VND 2,000 billion. Yoghurt includes spoonable and drinking yoghurt.
VINAMILK leads the market with 60% of yoghurt revenue, mainly contributed by spoonable yoghurt; followed by
Dutch Lady with advantages in drinking yoghurt. Besides, home-made yoghurt is still favored by certain
consumers (EMI 2009). Nevertheless, according to specialists, yoghurt products are coming to the saturation
phase after 10 years of robust growth (EMI 2009).
2. Distribution channels
The distribution system is one of the determinant factors in enhancing earnings of companies in the sector. At present,
main distribution channels in the sector include:
- From authorized agents to groceries
- Through supermarkets (this channel becomes increasingly important due to changes in consuming habits)
- Through nutrition and health centers, including hospitals, pharmaceutical stores, nutrition consulting centers
(National Institute of Nutrition, Centre for nutrition consultation in Ho Chi Minh City…). Specialists and doctors in
such centers can introduce and consult on which products to be used.
Table 4: Milk formula revenue by distribution channels
Distribution channels 2004 2005 2006 2007 2008 2009
Groceries 40.0 39.5 39.5 39.0 39.5 39.0
Supermarkets 14.5 15.0 15,5 16.0 16.5 17.0
Nutrition and health centers 37.0 36.5 36.0 35.5 34.0 33.0
Others 8.5 9.0 9.0 9.5 10.0 11.0

(Source: EMI 2009)

In 2009, groceries and supermarkets continued to be major distribution channels of baby milk products. The advantage
of groceries is the ability to cover nation-wide market, while supermarkets can supply abundant products at competitive
prices. Nutrition and health centers are losing their importance due to limited coverage, mainly in big cities. However,
this channel is still crucial, as urban population now consumes more than 70% of dairy products.
Domestic companies. VINAMILK and Dutch Lady have built their own distribution system. VINAMILK presently has
more than 135,000 retail points all over the country (VINAMILK 2010). Meanwhile, Dutch Lady is now distributing its
products through 150 authorized agents and over 100,000 retail points (Dutch Lady 2009).
Foreign firms. These firms need to distribute through authorized agents, who will carry out selling latter on. These
agents’ tasks include quality certification and packaging according to Vietnam’s standards.

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Besides, there exists an unofficial distribution channel, i.e. hand-carried products from the U.S. and Europe, however,
with insignificant amount.
3. Input supply sources
As for domestic companies, domestic supplies just account for 30% of their production demand, while the rest 70%
must be imported.
3.1. Domestic supplies
Domestic dairy inputs depend on the potential of the milk cow-raising industry.
The number of milk cows grew 16%/year during 2001-2009, mainly raised in the South. The North only accounted
for 15-25% of total milk cows in Vietnam during this period. In the South, Ho Chi Minh city is the largest cow-raising
region, with more than 69,000 cows in 2008 (Appendix – Table 1).
Although the cow number declined in 2007 and 2008, total milk output kept increasing steadily, at the average
rate of 23%/year (Appendix – Table 1). Along with its large-scale cow-raising sector, the South produced more than
85% of total milk output. In 2009, nation-wide milk production reached 278,190 tons, a 6.11% increase as compared to
2008. This was the lowest rise recently, due to the restructuring of the cow-raising sector. Hence, a certain number of
cows were incapable of producing milk.
Large domestic dairy firms such as VINAMILK and Dutch Lady have begun to develop their own supplies.
Especially, VINAMILK, besides collecting milk from farmers, has built 5 farms, with Vietnam’s largest cow farm in Nghe
An province. However, Vietnam’s tropical weather and limited land is unadvantageous for the cow-raising sector.
Therefore, in spite of efforts by the Government and dairy firms in developing domestic milk supplies, currently more
than 70% of the dairy sector’s inputs must be imported.
3.2. Imported supplies
Along with the rapid growth in dairy production and consumption, demand for imported inputs of the sector also
increased.
Table 5: Import value of dairy products and materials
Unit: Thousand USD

2002 2003 2004 2005 2006 2007 2008 Till T11/2009

Import value 129,569 163,589 204,066 n/a 302,659 462,229 533,909 287,140

(Sources: Breeding Agency, GSO)

In 2009, total dairy imports would expectedly drop, with initial statistics of import value for the first 11 months reaching
only USD 278 million, along with a drop by 116.8 million tons in volume as compared to the same period last year
(Agromonitor, 2010). The decreased export volume in New Zealand and Australia – the main dairy exporters to
Vietnam, was the main contributor to this situation.

Graph 4: Major dairy exporters to Vietnam

Vietnam mainly imports milk powder from Oceanian
29,22% countries (New Zealand and Australia), the U.S. and
30,67%
Holland (Graph 4). In addition, import value from
New Zealand
ASEAN countries, such as Thailand and Malaysia also
Hà Lan made up for a considerable part, mostly finished
Mỹ products of Dumex or Dutch Lady, with production
Malaysia facilities in these countries. Lately, Vietnam has
Úc imported most of its dairy products from New Zealand,
Thái Lan followed by Holland. The biggest dairy company in
3,30%
Khác
Vietnam – VINAMILK, imported the majority of its inputs
3,63% from Fonterra – a multi-corporation based in New
Zealand, who accounts for one-third to world milk trade.
5,62% 18,66%
8,89%

(Source: GSO 2008)

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In the scheme of dairy input supplies development, the number of milk cows nation-wide is expected to reach 426,088 in
2020 and 601,436 in 2025. Accordingly, expected milk output in 2020 and 2025 would be 934.5 and 1,344.7 million
tons, respectively. Specialists in the sector forecast that in spite of the rather high growth of the cow-raising sector
recently, total milk output in 2020 just meet 35-36% of production demand and 40% in 2025. Consequently, domestic
dairy producers are still dependent on imported supplies (VEN 2009).
4. Dairy product prices
Prices of milk products picked up by 10-15% in 2009, becoming the main motive for revenue growth in the
sector. In 2010, just during January and February, dairy firms raised their product prices by 7-10%. According to the
survey by the Department for Consumer Protection – Vietnam Competition Authority, the Ministry of Industry and Trade,
prices of imported powder milk into Vietnam were 20-40% higher than those of the same products in neighborhood
countries. Vietnam’s average milk powder tax rates range from 3-5%, while the tax rate of finished products is around
20%. These rates are much lower than import tax rates of other countries in the region. For instance, such import tax
rates in Thailand fluctuate around 9-40% (DDDN, 2009).
Reasons for increasing prices of milk products include the depreciation of VND against USD and European currencies,
while most of powder milk, both finished products and inputs, are imported for New Zealand, France, Switzerland and
the U.S. Besides, world milk powder prices had been increasing since the second half of 2009, which contributed to
rising production costs. Secondly, advertising costs were pushed up during 2008-2009, because dairy producers paid a
lot for advertisements and promotions, particularly among baby milk products (milk formula). Lastly, some firms blamed
the rising sugar prices for their prices upgrading (sugar prices went up by 100% in 2009 as compared to 2008).
Additionally, there has been criticism that increasing prices is a part of the marketing strategy of producers, as many
consumers equate higher prices to better quality. Hence, pushing up prices could boost revenue, at least in the short
term.
Dairy products were among price-controlled goods under Circular 104. However, this Circular contains some
weaknesses that producers can make use of to continuously increase their prices. For example, a violation is only
counted if prices rise by more than 20% at one time. Meanwhile, dairy companies often raise their prices in many times,
each time under 20% of increase. Besides, this Circular does not apply to foreign firms. Thus, there is going to be a
replacement for this Circular. Yet, difficulties in identifying production costs might trouble the application.
5. Porter’s Five Forces Analysis
Figure 2: Michael Porter’s five forces analysis on Vietnam’ milk industry

3.1. Rivalry competition among current firms: Medium

Fierce battle for market share and strong effort to keep pace with the industry’s growth rate.
The growth rate of VINAMILK or Dutch Lady in recent years was equivalent to the industry’s, at an average rate of 20%/
year for the 2005-2009 period. Market share in the sector did not change significantly. For instance, Abbott and Mead
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Johnson’s share in the powder milk products during 2004-2008 fluctuated around 23% and 15%, respectively.
VINAMILK showed great improvement in this product segment, with its market share gradually rising from 11.2% in
2004 to 17% in 2008 (EMI, 2009).
Vietnam’s dairy industry is growing at a fast and stable speed. However, firms in the sector need to implement various
competitive strategies to position their products. Abbott positioned its GAIN product as “advance IQ for children” before
switching to “Vietnam’s No.1 powder milk” because “advance IQ for children” is quite common to many milk companies.
VINAMILK was once positioned as “international quality”, showing that VINAMILK was the only Vietnam’s milk company
to export dairy products to over 10 countries in the world. It has recently switched to the dairy products which specifically
meet the needs of Vietnamese children.
Dairy companies have upgraded their products. Vietnam consumers now tend to equate high price with better
quality and more nutritious ingredients. Therefore, milk companies have upgraded their products, for example, from
Friso to Friso Gold (Dutch Lady), Dumex to Dumex Gold (Dumex), Dielac to Dielac Alpha with colostrum (VINAMILK)
Besides selling products, dairy producers also focus on developing after-sale services. The most common way is
to establish free clubs or health counseling centers such as Enfa A+ of Mead Johnson, Anlene of Fonterra, Calcimex of
Dutch Lady or Gain Advance of Abbott, etc to give regular nutrition advice to their customers as well as consultation on
product consumption.
3.1. The bargaining power of suppliers: Medium
• Limited bargaining power of domestic milk material suppliers.
Regarding the scale of the cow-raising industry, 95% are raised in households while only 5% are raised in specialized
farms which have minimum scale of 100 – 200 cows (VEN, 2009). It can be inferred that farmers raise cows
spontaneously leading to their inability to ensure the quantity and quality of milk supplies. Their bargaining power is thus
weakened. Their lack of management experience, as well as the small-scale farms and high proportion of reproductive
disorders and diseases in dairy cows, etc cause many difficulties to farmers. Therefore, domestic dairy companies take
the initiative in negotiating fresh milk purchase price.
• High dependence on imported milk powder prices.
As 70% of input milk is imported, international milk powder prices also greatly affect Vietnam’s milk production industry.
In the forthcoming time, milk powder price will tend to increase. Meanwhile, supply from Vietnam’s main exporters such
as New Zealand or Australia will slightly rise in the context that import demand of Asian countries also grows. Therefore,
companies’ ability to control milk powder purchase contract, regarding both quantity and quality, is of great importance
to their competitive capacity. However, the recent fluctuations in milk powder prices have put domestic in passive
position.
3.2. The bargaining power from customers: High
• End-users have a significant power on companies’ product quality. There are a variety of dairy products
available, which can be substitutes for each other. Price is not the most important factor to consumers in their
consumption decision. Therefore, companies have to compete with each other by quality, product diversification
and brand power, etc before competing by price.
• Direct customers such as distribution agents or nutrition centers have a great impact on consumers’
purchasing decisions. Domestic dairy companies and sole agents of foreign dairy companies have to
compete to scramble for strategic distribution points, mainly by discount and commission for retail agents. Such
distribution points as nutrition centers, hospitals, pharmaceutical stores, etc, could have considerable bargaining
power, as they can influence end-users’ purchasing decisions through product consulting and introduction.

3.3. The threat of substitute products: Low

The threat from new entrants is not high as dairy products are essential nutrition supplements. However, market share
competition can be seen among products in the industry. For example, soy milk or other beverages like cereal or cocoa
may pose threat to liquid milk products’ market share.
3.4. The threat of new entrants: Low
Some outstanding characteristics of the milk industry include stable growth, high profit, and comparatively stable market
share. Therefore, in order to enter the market, companies must have an abundant source of capital to overcome such
barriers as:
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- Product specification: Most major dairy companies in the world have participated in Vietnam’s dairy market, who
have already had a certain and stable market share. Therefore, new competitors who want to enter the market
will have to invest substantially in order to alter present customers’ loyalty.
- Large capital requirement: Capital source must be abundant enough to cover advertisement and R&D
expenses.
- Distribution channels: Dairy market’s distribution channels are filled. Hence, new entrants have to attract these
distribution channels by paying higher commission, leading to higher cost.
It can be concluded that the pressure from new competitors is not high. Competition is much harsher in the internal
industry.

4. Prospect on Vietnam’s dairy industry

According to EMI, in the forthcoming time, dairy industry will continue to have high growth rates and high profitability,
albeit with slower pace. Details can be seen through the forecast on CAGR of dairy products’ revenue as follows:
Table 6: CAGR of dairy products

Dairy Products 2004-09 2009-14

Milk Formula 20.8 6.9
Liquid Milk 15.2 7.5
Soya Milk 24.2 7.7
Other Powder Milk 19.5 10.0
Yoghurt 13.4 4.5
Condensed Milk 9.7 3.0

(Source: EMI 2009)

The powder milk market is also projected to experience lower growth in the next years, which is resulted from Vietnam’s
decreasing birth rate. Breastfeeding will continue to be common in rural areas; hence, powder milk market will still
concentrate in cities and surrounding provinces. CAGR of the powder milk sector would projectedly be 8.5%/ year in
average for the 2009-2014 period (EMI 2009). Regarding the potential of drinking milk market, liquid milk would account
for the largest part.
As mentioned above, yoghurt and condensed milk segments are reaching their saturation. Hence, these would be the
slowest growing segments, with CAGR of yoghurt and condensed milk reaching 4.5% and 3%, respectively.
The continuous price increases of milk products are also controversial. The Government is implementing some
measures to stop this condition. Thus, dairy companies are also put under the pressure to control milk prices, and prices
of dairy products will not increase as much as they did. Besides, rural market can be potential for domestic dairy
companies such as VINAMILK and Dutch Lady, thanks to their more reasonable prices than those of foreign dairy
companies.
Advertising and promotion strategies through different means of communication will be crucial competition measures of
milk producers. Besides, R&D is also pre-requisite for dairy companies to increase sales.
In general, Vietnam’s dairy market still has a lot of opportunities thanks to the rising standard of living. GDP is expected
to grow at around 6% per year in the upcoming years. Moreover, Government’s measures to develop Vietnam’s milk
industry and supply areas such as Decision No.10/2008/QD-TTg on the cow raising development, aiming at the
personal milk consumption per capita of 10kg in 2010 and 20kg in 2020; and boosting export to overseas markets

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APPENDIX

Table 1: Milk cows and milk output 2001-2008

Milk cow statistics Milk output

Unit: thousand heads Unit: tons
32,607 
2008 18,455  89,528  2008 229,553 
24,669 
2007 17,845  80,814  2007 209,769 
28,360 
2006 23,335  89,880  2006 187,594 
35,230 
2005 26,308  77,812  2005 162,448 
22,645 
2004 24,151  71,643  2004 128,669 
17,087 
2003 2003 109,609 
17,885  61,358 
11,617 
8,216 
2002 66,836 
2002 47,632 
8,986 
6,170 
2001 55,717 
2001 35,071 

0 50000 100000 150000 200000 250000 300000

0 20,000 40,000 60,000 80,000 100,000 120,000
Miền Bắc Miền Nam Miền Bắc Miền Nam

(Sources: GSO, Dairyvietnam, Breeding Agency) (Sources: GSO, Dairyvietnam, Breeding Agency)

Table 2: Total revenue of dairy products

2004 2005 2006 2007 2008 2009
Powder Milk 2,950.3 3,685.6 4,499.8 5,424.2 6,426.1 7,539.4
- Milk Formula 2,560.3 3,209.8 3,916.9 4,730.6 5,607.6 6,590.0
- Other Powder Milk 390.0 475.8 582.9 693.6 818.5 949.4
Liquid Milk 3,180.7 3,607.5 3,065.3 4,620.5 5,225.9 5,856.8
Yoghurt 1,052.0 1,193.3 1,363.6 1,568.0 1,780.4 1,976.8
Condensed Milk 1,819.0 1,955.4 2,111.9 2,323.1 2,578.6 2,888.0
Soya Milk 81.8 107.0 135.7 165.4 203.3 241.9
Total 9,083.8 10,548.8 11,176.3 14,101.2 16,214.3 18,502.9

(Source: EMI 2009)

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Table 3: Some statistics of dairy producers in Vietnam

Gross Gross Profit/ Net Profit/ ROA ROE EPS BVPS
Revenue Net Profit Revenue Revenue PE PB
No. Ticker Profit
2009/2008 2009/2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2009
2009/2008

1 VNM 29.3% 49.3% 90.0% 36.5% 31.6% 22.4% 15.2% 32.9% 21,9% 41.7% 27.5% 6,746 3,566 18,897 27,168 12.63 24.5

2 HNM -21.4% 11.0% Negative 26.5% 18.7% 4.7% -10.7% 6.0% -15.3% 9.0% -24.5% 1,029 -3,727 12,439 13,009 13.02 1.07

3 Nutifood 80.6% 393% Negative 42.9% 20.6% 12.3% -51.5% 22.1% -46.5% 36.4% -67.1% 4,148 N/A 13,370 9,582 N/A N/A

(*) Nutifood: not yet listed (Source: HBBS)

Table 4: Drinking milk market share by revenue (%)
Firms 2004 2005 2006 2007 2008
Dutch Lady 23.6 28.2 28.4 27.8 26.6
VINAMILK 25.0 24.8 23.7 23.7 25.2
Nestlé 8.2 8.1 7.8 7.8 7.9
Mead Johnson 4.0 4.2 4.7 4.9 4.9
Fonterra Brands 3.2 3.5 3.8 4.0 4.0
Hanoimilk 1.7 2.2 2.6 2.7 3.1
Associated British Foods (ABF) 2.1 2.0 2.0 2.1 2.2
Vinasoy 0.5 0.8 0.9 1.1 1.2
Moc Chau 0.4 0.6 0.7 0.7 0.8
Nutifood 0.2 0.3 0.3 0.4 0.5
Others 31.1 25.3 25.1 24.8 23.6
Total 100 100 100 100 100
(Source: EMI 2009)

Table 5: Powder milk market share by revenue (%)

Firms 2004 2005 2006 2007 2008
Abbott Vietnam Co.Ltd 23.1 23.8 23.4 23 23.1
VINAMILK 11.2 14.4 15.6 16.4 17
Mead Johnson Nutrition 14.3 13.9 14.9 15.1 14.7
Dutch Lady Vietnam 10.8 12 12.4 13.2 13.8
Nestlé Vietnam 8.9 10.1 9.3 8.6 8.5
Meiji Dairies Corp. 2.9 2.1 1.8 1.6 1.5
Others 28.8 23.7 22.6 22.1 21.4
Total 100 100 100 100 100

(Source: EMI 2009)

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