Domestic dairy groups enlarge capacities to meet fresh demand

The Vietnam Dairy 2022 International Exhibition, held from May 31 to June 4 at the Cultural Friendship Palace in Hanoi, will provide a panorama of Vietnam’s dairy market in recent years, as well as the expansion and contributions of dairy businesses to the economy and society.

Major domestic and international dairy brands will be present at the exhibition, including Vinamilk, FrieslandCampina, Nestlé, Nutifood, Abbott, Vinasoy, Nutricare, Vitadairy, and Aiwado, along with several large players from New Zealand, France, and the Czech Republic.

The exhibition will introduce different categories such as dairy products and ingredients, additives used in the industry, production and packaging technologies, cow breeding techniques, milk products standards, and technologies for environmental treatment, among others.

Last year the value of the dairy sector increased 1 per cent, AC Nielsen reported. The higher income and health awareness of urban consumers has boosted the demand for high-quality product lines such as organic products. Three major players in the industry – Vinamilk, FrieslandCampina, and TH Group – have introduced organic dairy products to the market.

To address the rising demand for organic milk, domestic producers continue to increase their control and exploitation of raw material areas.

Industry leaders such as Vinamilk recently debuted a Green Farm system in the central province of Quang Ngai with a scale of 4,000 cows and will bring into operation a farm complex in Laos in 2023.

Smaller-sized companies like Moc Chau Milk also enlarged their current farming capacity and are planning to develop a new ecological farm.

According to Euromonitor, yoghurt consumption dominated the sector last year thanks to public awareness of its benefit in strengthening the immune system and resistance. The demand for liquid milk remained stable since it is easy to consume and serves a crucial function in the nutritional support of early children’s growth. The usage of condensed milk slightly increased, driven by the habit of using the ingredient in making coffee and desserts.

The demand for powdered milk was meanwhile impacted by the decline in fertility rate and the changing purchasing behaviour of parents towards liquid milk, as it is more affordable for a majority of Vietnamese households.

The domestic dairy industry is confronting several challenges. The Vietnam Business Council for Sustainable Development (VBCSD) highlighted that rearing cows requires a high level of expertise and investment, but 95 per cent of the country’s dairy cows are raised by small and unskilled households.

Farmers lack training on livestock methods and disease prevention. In addition, they are massively impacted by other socioeconomic factors including livestock and cow feed price, as well as productivity.

In addition, the VBCSD pointed out that a substantial amount of investment capital is required to establish a proper dairy farming system. Due to the limitations of local technology, product costs, and company earnings, companies in the dairy sector must import the materials and equipment from abroad in order to meet market demand.

The dairy sector relies on imported milk powder rather than domestic products, and local herds are unable to fulfil more than 20-30 per cent of national demand, resulting in supply and demand mismatches in the sector. The changing price of imported dairy products also poses a risk of margin compression.

Tran Quang Trung, chairman of the Vietnam Dairy Association (VDA) said, “Among the efforts in post-pandemic economic development, the Vietnam Dairy exhibition is a crucial activity to strengthen investment cooperation, thereby contributing to the recovery of Vietnam’s and the global economy.”

The exhibition, co-organised by the VDA along with Vietnam Exhibition and Advertising JSC, is a periodic event that will enable Vietnamese-based dairy companies to exchange technologies and methods for sustainable development.

Through the event, individual participants may acquire practical knowledge of milk and dairy product consumption in order to make the best decisions for their families.