Marketing Random

Vietnamese milk gradually depends on imports

The proportion of imported dairy products is decreasing as domestic dairy companies expand their production capacity to more meet domestic demand.

By the end of 2017, the dairy industry achieved revenue of 100,000 billion VND, an increase of 10% compared to 2016 according to the Vietnam Dairy Association. The main driver comes from powdered milk and liquid milk, which accounts for 75% of the industry’s revenue growth. According to the report of Rong Viet Securities Joint Stock Company (VDSC), this proportion has been maintained for many years. This shows that the consumption trend of dairy products in Vietnam has not changed much.

Source: VDSC.

In terms of production structure, the proportion of imported dairy products is decreasing as domestic dairy companies expand their production capacity to more meet domestic demand. According to a report by Ban Viet Securities Joint Stock Company, Vinamilk has just increased the capacity of its dairy factory from 400 million liters / year to 600 million liters / year and will continue to increase to 800 million liters / year in 2018.

Source: VDSC

VDSC said that in 2017, the import turnover of dairy products, although up 2% to 868 million USD, only accounted for 19% of the total value of the industry, lower than the figure of 2016. Besides, manufacturers domestic export enhances the expansion of farms to proactively source raw materials, reducing dependence on raw materials from abroad.

Source: Rong Viet Securities Joint Stock Company.

In the context that consumers increasingly prioritize high quality foods, companies in the industry choose to develop new products to meet their needs, typically Vinamilk’s organic dairy product. In addition, the development of alternative dairy products derived from plants is also a new direction and is embraced by companies in the industry such as Quang Ngai Sugar with black sesame, green tea or Milk JSC. International (IDP) with corn milk products since 2016.

Not stopping there, Thailand is considered as a potential export market that Vietnamese dairy enterprises can target. With the introduction of the ASEAN Trade in Goods Agreement (ATIGA), quotas and tariffs on many items, including milk, will be eliminated when exporting to Thailand. Recently, the Ministry of Industry and Trade has provided information on Thai milk import procedures to help businesses penetrate this market.

According to the General Department of Vietnam Customs, the import turnover of milk and dairy products in March reached 102.7 million USD, up 102.8% compared to February. However, for the first quarter, turnover reached 231 million. USD, increased only 7.5% over the same period last year.

The main import markets for milk are New Zealand and Southeast Asian countries, accounting for 47.4% of the total turnover. Of which New Zealand reached 76.7 million USD, up 340.71% over the same period last year.

In contrast, milk imports from the Southeast were down more than 41%, equivalent to $ 32.7 million.

Milk import turnover from Belgium, Ireland, and Australia decreased by 63.78%; 60.23% and 57.68% to 407,800 USD; 4.3 million USD and 6.1 million USD.

Duc Quynh
* Source: Partner


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