Dairy industry lures investors

An increased demand for dairy products in Viet Nam is providing businesses with an opportunity to invest in the industry, said head of Information Centre for Agriculture and Rural Development (AGROINFO)’s Research and Development Department Trinh Van Tien.

Experts forecast that the yearly average growth rate of milk consumption in Viet Nam would be 12 to 15 per cent by 2015.

Tien said the industry’s total turnover last year was VND18.5 trillion (US$1 billion), which was an increase of 14 per cent when compared to statistics from 2008.

A report from AGROINFO showed that milk consumption per capita massively increased from 1997 to 2009.

However, he said foreign companies, with their imported products, continue to hold the largest market share of high-quality milk.

Tien said that powdered milk is the country’s most competitive dairy product, which earned VND6.6 trillion ($356 million) in revenue last year that accounted for 35.6 per cent of the industry’s total revenue. About 70 per cent of the powdered milk consumed in the country is imported.

Viet Nam Dairy Products Joint-Stock Company, Vinamilk, earned a turnover of VND10 trillion ($540 million).

Vinamilk’s managing director Nguyen Quoc Khanh said consumers are paying attention to their health and therefore consuming more dairy products.

He said the country’s milk consumption per capita is 14 litres a year, while Thailand and China consume 23 and 25 litres respectively.

“Viet Nam has a young population and a yearly average income growth rate of six per cent, which could bode well for the dairy industry,” Khanh said.

He added that the company was expanding its production capacity in order to meet the rising demand for dairy products nationwide. The company currently has the two biggest dairy production plants in Southeast Asia, which are expected to become operational in 2012. Vinamilk has also invested VND8 trillion ($432 million) in its farms in order to produce more than 1.3 million litres of milk a day.

However, businesses in the industry are not in the clear yet. Phan Sy Minh, deputy director of the International Dairy Product Company, said if enterprises did not invest in market research, then the sector would not develop to its full potential. — VNS

Tags: Vietnam Dairy sector