Bel Vietnam, Lactalis Group, Fonterra Brands: The race to dominate the cheese market in Vietnam

The cheese market in Vietnam

Over the past decade, the cheese market in Vietnam has been steadily growing. Cheese is considered as a supplement with six times richer in calcium than milk or yogurt. Produced by freezing dairy proteins, cheese products are prized for their ability to transport and store long term. In addition to being compact with a longer storage life than other dairy products, such products are high of fat, protein, calcium and phosphorus.

In terms of revenue, Vietnam’s cheese industry in 2019 had a relatively good growth, consumption value reached more than 2,000 billion VND, an increase of 11% compared to 2018. Consumption value in Vietnam still accounts for a small proportion in comparison to other dairy products. The market, despite slow growth, is expected to continue to maintain a stable growth rate of around 13% per year in the period 2020-2024.

Source: VIRAC, Euromonitor, GSO

In terms of imports, total imports increased sharply as the consumption of Vietnamese people is gradually becoming popular and Vietnamese people tend to prefer fast food, especially pizza or cake. noodles and other products.

Natural cheese is imported to Vietnam mainly from the following markets: New Zealand, Germany, France and Australia. Vietnam’s exports of milk and dairy products have also seen significant developments.

Source: VIRAC, Euromonitor, GSO

Processed cheese remained the most popular product by category

Natural cheese has a small share of the market compared to processed cheese, about 2% of total sales. Meanwhile, the number of natural cheese production and distribution companies in Vietnam is still quite modest, with 69% of the market share belonging to two big name companies, Bel Vietnam and Lactalis Groupe. Bel Vietnam is the leader in the market with the brand Babybel, accounting for more than 40% of the revenue in 2019. According to forecasts, natural cheese revenue is expected to reach more than 65.5 billion by 2024, almost double that of 2019.

Source: VIRAC, Euromonitor, GSO

Meanwhile, processed cheese accounts for 98% of sales in 2019. Processed cheese is the most popular product in Vietnam, accounting for about 85% of the retail cheese market in terms of volume and price. consumption value. Vietnamese youth love fresh cheese products and seem more familiar when they can enjoy a variety of trendy western dishes. Demand for processed cheeses is forecast to grow over the next few years as consumption habits with the target audience of children continue to use cheese in the future. Cheese has not been considered a part of the daily diet of Vietnamese people and is mainly used by children and young people under 25.

Main distribution channel

In terms of sales channels, the main food and beverage products are still sold at points of sale, accounting for 99.0%. Only 1.0% of products are sold through e-commerce. In all types of stores, traditional stores dominate, with a market share of over 51.5%. However, with the strong growth of e-commerce, it is forecasted that the distribution trend will shift to more modern and convenient channels.

Source: VIRAC, Euromonitor

In fact, Vietnamese consumers’ perceptions of nutritional value and demand for cheese have changed in recent years. However, the majority of consumers in rural areas, accounting for 80% of Vietnam’s population, do not know cheese or have never tried this product. 

The race of foreign big names

According to Euromonitor, more than 90% of the cheese segment is dominated by products from leading brands in the world such as: Bel Vietnam, Lactalis Group, Fonterra Brands… with high experience in cheese production. Furthermore, the conditions in Vietnam are currently not suitable for the cheese industry: the quality of raw fresh milk, modern production systems…

Source: VIRAC, Euromonitor, GSO

With the double-digit revenue growth, Vietnam is considered a potential cheese market for suppliers from all over the world. After 4 years in Vietnam, Bel Vietnam has built a factory in Song Than 3 Industrial Park which is 5 times larger than the old factory and 9 times larger than the old factory in My Phuoc 3 Industrial Park. About 80% market share in Vietnam market dominated by 4 big brands: Smiling Cow, Kiri, Babybel and Leerdammer. Bel Vietnam’s goal in the coming years is to become a product supply hub for the entire South Asia.

Domestic companies such as Vinamilk, TH True milk are on the way to catch up with foreign companies. Despite maintaining its leading position in the dairy market for many years, Vinamilk is still gradually entering the cheese segment. However, according to vinamilk’s representatives, businesses have received some good signals from the market about the increase in the total annual sales as well as a positive response from consumers.

Growth of cheese projection

The change in Vietnamese lifestyle

Western dishes entering the Vietnamese market promote the love for cheese with most dishes from KFC or Pizza Hut chains associated with this ingredients such as burger, pizza, burrito, pasta,… Its influence spread to Asian cuisine, including Vietnam with the appearance of spicy chicken cheese (Korea), grilled oysters, milk tea with cream cheese and spicy noodles…

The development of online distribution channels

Today’s Western branded products are easily found and purchased at e-commerce channels such as Lazada, Shopee, Tiki or other online stores. The shelf life of such products is also usually quite long (about 8 months for the product of Con Bo Cuoi). As a result, the distribution activities of businesses in the industry will continue to be promoted.

Vietnam demographics are very favorable for consumption growth

Vietnam has an increasingly young population (estimated 56% of the population of Vietnam is under 30 years old, Nielsen), improved income levels are favorable conditions to help Vietnam become a market for potential consumption in the region. According to Nielsen’s report about Vietnamese consumers, 73% of respondents are willing to pay more for better products and 39% put health standards first. These figures show that Vietnamese consumers have an increasing awareness of health and have high standards when choosing goods.

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