Local businesses explore milk market potential

Nguyen Phuong Dung, a resident of HCM City, says her family drinks fresh milk produced by local companies.

Brands such as Vinamilk, Dutch Lady, TH True Milk, Nutifood, Hanoi Milk, Ba Vi Milk, Moc Chau Milk, and Long Thanh Milk are gaining a bigger share of the domestic market.

Nielsen Vietnam reports that by July 2013, the milk market was dominated by Vinamilk (48.7%), FrieslandCampina Vietnam (25.7%), and TH True Milk (7.7%). Its research concurs with other expert forecasts of a promising project for production in Vietnam.

FireslandCampina Vietnam’s Legal and Corporate Affairs Manager Truong Van Toan says per capita consumption in Vietnam is still relatively low, just at 15 litres a year, compared to 21 litres in Thailand and 25–27 litres in China.

Against this backdrop, several local businesses are focused on building and expanding milk factories to meet quality control, food safety and hygiene, and environmental protection standards.

Vinamilk’s (Vietnam Dairy Products Joint Stock Company) My Phuoc 2 Industrial Park “super factory” in the southern province of Binh Duong, has just got off the ground, with an initial capitalization of VND2.4 billion. In the first phase of operation, it has an annual capacity of 400 million litres of milk, equal to Vinamilk’s existing nine factories combined. Production capacity is expected to grow to around 800 million litres per year in the second phase.

Vinamilk Chairman and CEO Mai Kieu Lien says the factory will help Vinamilk increase its annual milk output by 10% and raise its domestic market share from 47.8% to 60%.

Vinamilk has a plan afoot to develop a “material supplying zone” up to international standards that encompasses grass cultivation, bovine food processing, veterinary monitoring, and environment protection.

Lien says her company began investing in fresh milk production by cooperating with farmers in 1990. It currently purchases almost 500 tonnes of fresh milk from farmers per day, but only meets half of the new factory’s requirement. Land shortage is a major stumbling block.  “If there is enough grass land, we can raise cows ourselves, in the interests of quality control,” she says.

Her company has set up five farms, with another taking shape in Tay Ninh province and two more in Thanh Hoa province.

A representative of FrieslandCampina Vietnam says from now until the end of the year, the company will re-launch its 100 percent fresh milk products which mere suspended in 2011 due to material shortages.

TH True Milk Joint Stock Company has joined the market since 2008. It is not directly involved in raising cows and building farms, but works closely with farmers on improving grass cultivation, cow breeding, and technical facilities.

FrieslandCampina Vietnam has as many as 35,000 head of cattle raised in the northern, central, southern, and central highland regions, boasting its daily milk output of around 240 tonnes.

FrieslandCampina Vietnam, TH True Milk, and Moc Chau are set to develop their own “material supplying zones” in line with modern farming techniques. There is high hope that local businesses will soon secure a firm foothold on the domestic market.