Vietnam Dairy Association has projected that the dairy industry will grow at an average 9-10% with per capita milk consumption reaching 28 litres in 2020.
Chairman of the Association Tran Quang Trung said that growth is due to rising incomes and the development of modern sales chains. Demand for high-value dairy products like organic milk, and plant-based/nut milk is also expected to grow sharply due to demand from the younger population and middle income consumers.
In the dairy category, the most consumed products will be liquid milk, powdered milk, yogurt and condensed milk, while consumption of other products like cheese and butter will remain modest.
Presently the per capita consumption of milk in Vietnam is at 26 litres which is still lower than Thailand (35 litres), Singapore (45 litres) and EU (80-100 litres).
The domestic dairy industry can only satisfy 35% of market demand, and the Association, under a domestic dairy development master plan, aims to achieve 1 billion litres in production of fresh milk by 2020 and 1.4 billion litres by 2025, which will meet 40% of domestic demand.
Two major segments in the domestic dairy market are liquid milk and powdered milk which accounted for nearly 75% of the market value with an annual output of 1.5 million litres and 138,000 tonnes respectively.
In recent years, dairy businesses have diversified into value-added organic products and special nutritional products. Many large enterprises have increased their market shares through developing new products such as Vinamilk, TH True Milk, Moc Chau Milk and Nestle.
These large businesses have also increased investment in expanding the production of their animal farms by importing special herds from the US and Australia while also upgrading their farms to reach GlobalGAP standards.
Vinamilk currently has 12 farms across the country, including 2 farms under European organic standards and 10 farms following GlobalGAP standards. It is also building a modern organic milk plant in Laos which will start operation by early-2021.
TH Group, parent of TH True Milk, has also invested US$2.7 billion developing a fresh milk production project in Russia.
In contrast, a separate report from brokerage firm, SSI Securities Corporation projected that Vietnam dairy market will maintain a single-digit growth in 2020, as consumer spending on essential goods has reached saturation while they focus on non-essential products. It also projected that the large dairy firms will see drastic drop in revenues in 2020.
