Challenges and opportunities for Dalat Milk in the dairy market 2020

Da Lat Milk Joint Stock Company (Dalat Milk) started operation as a joint stock company named Lam Dong Dairy Cattle Breeding JSC. In early 2000, the company was selected as the centre for the dairy cow development program in Lam Dong province. The company’s products, including milk, yogurt, drinking yogurt, peach yogurts and so on with various options and flavors are high quality dairy products completely from highland fresh milk.

The company currently has a head office, a dairy farm and a milk processing factory located in Lam Dong Province, and one branch in Dist. 7 in Ho Chi Minh City. Such products are available across Vietnam via different distribution channels, including: convenient stores, distributors, online stores and supermarkets.

The company has supplied products and established partnership with well – known companies in different fields, including: coffee shop chains (Highland Coffee, Starbuck Coffee, Gloria Jean’s Coffee, etc.), artisan bakery chains (Tous Les Jours, Paris Baguette, etc.), supermarket chains (Big C, Co.op Mart, Maximark, etc.), convenience store chains (Family Mart, MiniStop, Vinmart+, etc.), hotels and resorts (Sheraton, Vinpearl Resort, etc.). 

In 2014, the company was acquired by TH Group – one of the leading dairy companies in the country. Some strategic shareholders: Kenematsu (Japan), Park Si Bok (Korea), Vietnam Livestock Corporation JSC, Ho Chi Minh City Dairy Cattle Co., Ltd.

Financial Review

Dalat Milk Joint Stock Company (Dalatmilk) is not yet a big name in  Vietnam dairy industry; however, Dalatmilk is one of the leading names in the pasteurized milk segment. Currently, the strong development of the milk tea and coffee shops and stable demand from the market will help Dalatmilk assert its position.

The company’s key customers are individuals and corporations/businesses (cafes, restaurants, supermarkets, hotels and resorts, etc.) with demand for consuming/selling of dairy and dairy products via B2B activities. The company distributes its products through indirect agents (convenient stores, distributors, online stores, supermarkets, etc.). Net revenues in 2019 reached USD 15,x million, an increase of 116% and 152% compared to 2018 and 2017 with the revenue record of roughly USD 13 million and USD 10 million.

Company Insights

Key Business Risks

Dalatmilk products are distributed at supermarkets and convenience store chains including Aeon, Big C, B’s Mart, Circle K, Co.op Food, Co.op Extra, Lotte Mart, Intimex, Tmart and so on. The company has a system of distributors in the North (6 distributors), Central (9 distributors) and the South (12 distributors). The company’s pasteurized milk is popular with many coffee, and milk tea shops and chains, for examples, Gongcha, Highlands Coffee, Milano Coffee, Passio, Starbucks, The Koi, The Alley, and so on.

Key Business Risks

Besides, the dairy industry is an attractive potential market for businesses, but it is also not a “piece of cake”. Up to now, Vietnam milk market has had a competition between big and familiar names such as Vinamilk, TH True Milk,… and the “large enterprises about milk” in the world such as Nestle, Abbott,… Dalat Milk’s main products are milk products – not a key product segment of large dairy companies such as Vinamilk and TH True Milk. It’s milk must compete with not only similar products but also UHT milk and reconstituted milk in the market. 

Additionally, as natural catastrophes and animal infectious diseases occur more frequently and severely due to climate change, cow farming activities of the company might face tough challenges in husbandry as well as supply of raw milk.

Company Prospects

Vietnam’s dairy industry in 2019 has relatively good growth, especially liquid milk, yogurt and condensed milk. According to statistics from the General Statistics Office, liquid milk production in 2019 reached over 1 million liters, up 8.32% compared to 2018. The goal for 2020 is to produce 2.6 billion liters of liquid milk, with an average consumption of 27 liters/person/year. These statistics show a potential market for growth Dalatmilk in particular and among dairy companies in general.

Dairy products is popular in making different types of drinks in which milk tea is currently one of the most popular drinks of many customer segments such as teenagers, white collars, etc. The milk tea market tends to continue to witness strong demand in the future as consumption of milk tea has gradually become a street – food culture in Vietnam. In addition, dairy and dairy products consumption will grow in the future because of the impact of Western – style cuisine. Therefore, as a dairy company with products used in many well – known coffee and milk tea shops and chains in Vietnam, sales of Dalat Milkwill rise in the future.

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