DRINKING MILK PRODUCTS IN VIETNAM - ANALYSIS

Country Report | Aug 2019

HEADLINES Market Sizes

Retail value and volume sales rise by 10% and 9%, respectively to reach VND55.5 Sales of Drinking Milk Products
trillion and 1.3 million tonnes Retail Value RSP - VND billion - Current - 2005-2024
Strong economy and high demand for milk prompt expansion of domestic raw milk
production 55,595 Forecast
100,000
Fresh milk see the highest value growth of 13% to reach VND2.2 trillion in 2019
Average unit price of drinking milk products rises by 1-2% but the price of milk
alternatives declines by 2% 2019 80,000

Vietnam Dairy Products (Vinamilk) maintains its lead with a 42% value share in 2019
60,000
Value sales are expected to rise at a current value CAGR of 12% (7%2019 constant
value CAGR) over the forecast period to reach VND96.3 trillion in 2024
40,000
PROSPECTS
Flourishing economy enables health-conscious consumers to buy high- 20,000
quality, nutritious food, including drinking milk products
Vietnam’s GDP growth continued to be high and all aspects of the country’s economy 0
2005 2019 2024
continued to flourish in 2019. This is reflected in double-digit growth of drinking milk
products, as the improved standard of living boosted milk consumption per capita in
2019 by the highest percentage seen over the review period. Vietnam has undergone
many changes in recent years, with a focus on building the economy and on societal Sales Performance of Drinking Milk Products
progression. With increasing average incomes, the consumption demands of % Y-O-Y Retail Value RSP Growth 2005-2024
Vietnamese consumers have also changed – from basic necessities for survival, such as
sufficient food to eat and a place to sleep, to a better standard of living in terms of
better-quality food, nutrition and comfort. Now that Vietnamese people have more
9.9% Forecast
35%
resources with which to invest in improving their quality of life, their interest in
purchasing nutritious food like drinking milk products for daily use is also matched by
30%
their ability to afford it. Moreover, now that affordability has become less of an issue,
players in drinking milk players are expanding their target consumers beyond children
that require them for bone development to include young adults and the elderly, who 25%
also increasingly care about their diet. Thus, drinking milk products is expected to
continue seeing strong volume and value growth over the forecast period, as the 20%
economy continues to improve.
15%
Increased awareness and affluence creates demand for greater variety
of healthy functional products and invites expansion into rural 10%
communities
5%
Vietnamese consumers today are more knowledgeable and aware of their choices. In
general, the average educational level of the population improved over the review 0%
period, and especially urban citizens are quite knowledgeable about food safety and 2005 2019 2024
food nutrition. Thus, consumers favour drinking milk products because they are aware
of the need to stay healthy and perceive these products to be both healthy and
nutritious. Indeed, many consumers consider drinking milk products such as fresh milk,
shelf-stable milk and even flavoured milk drinks as an essential source of energy for Sales of Drinking Milk Products by Category
daily use. However, with higher living standards and affluence, consumers are Retail Value RSP - VND billion - Current - 2019 Growth Performance
expected to increasingly demand greater product variety and functional ingredients in
their products. Thus, manufacturers are expected to innovate and position their Flavoured Milk Drinks
14,766.8
products well to take advantage of their demands so as not to risk becoming obsolete
in the changing environment. Furthermore, manufacturers will need to overcome Milk
32,763.8
certain challenges to tap into the potential in rural areas of Vietnam – namely, by
generating demand for products that are not considered as necessities, and distributing Powder Milk
1,811.8
these products to rural consumers.
Milk Alternatives
6,252.3
TH Group and Vinamilk expand domestic milk production to meet -5% 0% 20%
demand
DRINKING MILK PRODUCTS 55,594.7 CURRENT % CAGR % CAGR
Recognising that the Vietnamese have strong national pride and usually prioritise YEAR % 2014-2019 2019-2024
GROWTH
choosing domestic good-quality products over imports, as well knowing the need for
domestic supplies of raw milk to meet local demand, TH Group and Vinamilk both
continue to expand domestic production. After starting its first high-tech dairy and
dairy processing project applying high technology in Nghe An province in 2009, TH

© Euromonitor Interna onal 2019 Page 1 of 2

Group is now is implementing ambitious plans to capitalise on what it achieved in Competitive Landscape
creating a dairy facility that meets international standards. In May 2019 it broke ground
for another dairy cow and concentrated dairy processing facility in Yen My commune,
Nong Cong district, Thanh Hoa province, which will have 20,000 cows and is set to be a Company Shares of Drinking Milk Products
model of sustainable development with farmers in the model of high-tech % Share (NBO) - Retail Value RSP - 2019
cooperatives. Vinamilk has built a system of 12 international standard dairy farms
Vietnam Dairy Products J... 41.5%
across Vietnam and also invested in Asia's largest independent dairy farm that meets
the Global GAP (good agricultural practices) standard. Their domestic production is of FrieslandCampina Vietnam... 19.7%
high quality and highly affordable, and beyond that it has become highly demanded for TH Food Chain JSC 10.9%
export, for example to China.
Vietnam Soy Milk Co Ltd ... 7.7%

COMPETITIVE LANDSCAPE Nestlé Vietnam Ltd 7.1%

International Dairy Prod... 2.5%
Messaging controversy concerning Milo and Ovaltine ends up boosting Fonterra Brands (Vietnam... 0.8%
both
Mead Johnson Nutrition (... 0.6%
In March 2018, Milo (Nestlé Vietnam) began an impressive communication campaign, Tribeco Binh Duong Co Lt... 0.5%
which both reinforced and improved the brand’s leading position in flavoured milk
drinks, especially in the segment of barley cacao drinks, in 2019. Nestlé’s television Tan Hiep Phat Group 0.5%
commercial “Nhà vô d?nh làm t? Milo”, meaning “Champions made by Milo” was a huge Long Thanh Dairy Coopera... 0.5%
success; it attracted more than 25 million views on YouTube. However, in September
2018, right at the start of school and six months after Milo launched its “Champions” Abbott Vietnam Co Ltd 0.5%
campaign, FrieslandCampina launched a campaign in support of Ovaltine that Moc Chau Dairy Cooperati... 0.4%
presented an opposing message, “No need to champion, just to like you”. This
Murray Goulburn Co-opera... 0.4%
campaign generated a lot of attention when Nestlé accused FrieslandCampina of
confusing consumers by equating Milo campaign messages with "achievement Hanoi Milk JSC 0.3%
disease." Nestlé specifically called the latter company out for violating Nestlé’s Namyang Dairy Products C... 0.1%
copyright, claiming that the Ovaltine campaign featured elements that were clearly
inspired by the Milo campaign's commercial products, including the use of “champion” Nutifood Nutrition Food ... 0.1%
messages. The controversy, which was widely covered in the media, wound up Others 5.8%
spreading both brands’ messages. Consequently, both brands saw their sales increase
in 2019, although Milo’s growth was higher.

TH Group launches major campaign to support its first line of nut milks
Brand Shares of Drinking Milk Products
“Other” milk alternatives, especially various kinds of dairy- and gluten-free nut milks, % Share (LBN) - Retail Value RSP - 2019
have been performing well since they first began appearing in the Vietnamese market
in 2016. Amongst the most successful players in this category so far have been Thailand- Vinamilk 34.7%
based Simple Foods (137 degrees) and Woongjin Food (Morning Rice brand), which is
Dutch Lady 16.0%
now owned by the Taiwanese food giant Uni-President Enterprises. However, in the
spring of 2018, the Hanoi-based TH Group launched its TH true NUT nut milk product TH True Milk 10.8%
line combining macadamia nuts, walnuts, oats and fresh cow's milk. It simultaneously Milo 7.1%
launched the products in its entire chain of 250 TH True Mart stores, supermarkets and
retail stores nationwide. Although there is a dairy ingredient in TH true NUT, the brand Fami 5.5%
widely introduced nut milk to Vietnamese people through multiple channels, from Fristi 2.4%
sales distribution to public media, and the products performed well. TH true’s entry
into the Vietnamese market caused other players to join or expand their presence in Vinasoy 2.2%
the “other milk alternatives category; for example, Vinamilk launched walnut- KUN 2.2%
flavoured soy milk and 137 degrees enhanced its promotion of cashew, almond and
Ovaltine 1.1%
hazelnut pistachio almond milk in stores. Given the interest it has generated amongst
the Vietnamese so far, this category is expected to grow well, especially TH true NUT, GoldSoy 0.7%
which has made considerable gains since its launch in 2018. Anlene 0.7%
Enfamama 0.6%
Leading players add organic shelf-stable milk to health and wellness
lines Tribeco 0.5%
Number One 0.5%
New product development in shelf-stable milk was focused on adding health and
wellness benefits in 2018-2019. Indeed, after successfully competing with organic fresh Lothamilk 0.5%
milk during the review period the three leading players – TH Food Chain, Vinamilk and Similac 0.5%
FrieslandCampina Vietnam – now offer organic shelf-stable milk in recognition of its
great potential in Vietnam. In the product line of A2 milk, which supporters claim is Dielac 0.5%
easier to digest and absorb, only TH and Vinamilk products are currently available, but Moc Chau 0.4%
all of the players are regularly refreshing their fortified products to sustain consumer
Devondale 0.4%
interest. Now, as Vietnamese consumers are becoming increasingly health conscious,
new product development is expected to continue following organic as well as other Others 12.6%
developing health and wellness trends.
Increasing share Decreasing share No change

© Euromonitor Interna onal 2019 Page 2 of 2