Milk is a vital and essential good; however, the high price of dairy products deprives Vietnamese from using it. Spending for milk accounts for 10% of total food expenditure in Vietnam. Steady increase of average GDP per capita is important to incent the consumption milk. In recent years, dairy industry’s revenue in cities continuously remained at the same level or negatively grew; since consumption in rural areas continuously grew at double digit rate.

The participation of Vietnam in TPP will help cut dairy import tax rate towards 0% by 2018. Vietnam’s enterprises are expected to struggle in the powdered milk market which is already occupied by foreign companies.

Cow raising requires capital and high technical skills, but raising model in Vietnam lacks basis and dilute, resulting in low productivity, high production cost, and unstable milk quality has to be imported. High cost of production resulted in double prices in comparison with foreign products. Purchased material price in Vietnam remains at 0.63 $/kg, higher than some countries, such as America and Canada. In calculation, up to 50% of milk in the market is created from fresh milk. Cheaper powdered milk’s input materials compared to domestic supply and customer don’t known detail information in packages, so enterprises continue to seek for imported powdered milk. In upcoming years, producing capacity will surge because enterprises are continuously investing in producing input materials. However, the supply shortage remains due to faster demand growth. Vietnam’s dairy market size grew at the rate of 15% for the last 5 years. Consumers’ income increase, consume behavior changed and retail system developed are push dairy industry. Revenue growth in dairy industry is mainly contributed by powdered milk and liquid milk, accounting for 74% of total market value.

Foreign enterprises dominated in powdered milk market ( up to 75% of market share). The price of foreign milk selling in the market is 5 times higher than imported price. Vietnam’s companies such as Vinamilk, Nutrifood…. Have relatively cheap price compared with imported powdered milk but are still struggling to increase their market share, especially in urban areas, where demand is getting saturated and consumers have higher living conditions hence are capable to consume imported milks. Domestic enterprises are dominating milk market with typical companies such as Vinamilk and FrieslandCampina. Imported milk is also available in the market but unidentified origin coupled with higher price makes it unpopular. Yogurt market share in Vietnam is only 12%, lower than many countries in the world( about 50%). Vinamilk dominates yogurt –to-eat segment, while Yakulta Japanese company, dominated yogurt-to-drink segment.

Annually, Vietnam has to import about 1 billion USD of milk, including input materials and goods. At the same time, Vietnam is one of a small number of ASEAN countries that exports milk with typical company, such as Vinamilk. Typical markets for Vietnam’s exports are America, Australia, Canada, Russia, Japan, Middle East region… Currently, Vinamilk has the biggest and spreading distribution system, TH True Milk has a unique way to approach the market using its retail system TH True Mart.

I.                    Business environment 7-18
1.      Macroeconomic situations 7-12

Figure 1. GDP and average milk consumption per capita

Figure 2. Food and dairy goods spending, 2012-2015E

Figure 3. Urbanization ratio, 2004-2014

Figure 4. Consumption growth in cities and rural areas 2010-Q3/2015

Figure 5. Vietnam’s population structure, 2014

Figure 6. Population and growth rate, 2004 – 2015

Figure 7. VND/USD Exchange rate, imported milk input price, 2010 – 7/2016

Figure 8. Monthly CPI fluctuation

Figure 9. Consumer’s Confidence Index CCI

Figure 10. Retails sales

 
2.      Legal Framework 13 – 16
3.      Trade Agreements 17 – 18
Table 1. Vietnam’s tariff on milk and dairy goods  
II.                  Global market 19 – 52
1.      Chain value of the dairy industry 19 – 22
2.      Input materials 23 – 28

Figure 11. Number of cows in the world 2008-2015F

Figure 12. World’s milk production, 2010-2014

Figure 13. Milk production structure, 2014

Figure 14. World’s milk production cost 2014

Figure 15. Milk price/ feed price ratio in America, 2010-2015

Figure 16. Farm’s fresh milk price in some countries, 2014-2015

Figure 17. Average milk consumption per capita, 2008-2023

Table 2. Capability to satisfy regional demands

 
3.      Dairy goods 29 – 43

Figure 18. Quantity production and consumption of liquid milk

Figure 19. Change in milk consumption per capita by countries, 2014

Figure 20. Trade of dairy, 2008-2023F

Figure 21. Milk Import/Export structure, 2015

Figure 22. World’s yogurt production value

Table 3. Quantity production of yogurt by the region

Figure 23. Milk consumption structure

Figure 24. Skimmed milk production structure, 2008-2015

Figure 25. Skimmed milk production and consumption structure, 2015

Figure 26. World’s skimmed food transaction, 2008-2015

Figure 27. Export structure, 2015
Figure 28. Import structure, 2015

Figure 29. Whole milk production and consumption, 2008-2023F

Figure 30. Whole milk production structure, 2015

Figure 31. Whole milk consumption structure, 2015

Figure 32. Global trade of whole powdered milk

Figure 33. Whole milk export structure, 2015

Figure 34. Whole milk import structure, 2015

Figure 35. Cheese production and consumption , 2008-2023F

Figure 36. Cheese export structure, 2015

Figure 37. Cheese import structure, 2015

Figure 38. World’s cheese transaction, 2008-2015

Figure 39. Butter consumption and production

Figure 40. Butter consumption structure 2015

Table 4. World’s top 5 most importing countries, 2015

Figure 41. World’s butter transaction, 2008-2023F

Figure 42. Butter export structure, 2015

Figure 43. Average dairy consumption, 2015

Figure 44. Movement of milk and dairy goods, 2010-T1/2016

 
4.      Typical producing countries 44 – 49

Figure 45. China’s average milk consumption per capita, 2009- 2014

Figure 46. Powdered milk production and consumption, 2010-2015E

Figure 47. Milk material production in China

Figure 48. New Zealand’s average milk and dairy good consumption per capita

Figure 49. New Zealand’s input materials, 11/12-14/15

Figure 50. Input material production structure, 2015

Figure 51. Europe’s input materials situation 2010-2015

Figure 52. America’s input material situation, 2010-2015

Figure 53. America’s average milk consumption per capita, 2009- 2014

 
5.      Key players in the world 50 – 52

Figure 54. Top 10 companies’ profit and production, 2015

Table 5.

 
III.                Vietnam’s market 53 – 94
1.      History of establishment and development 53 – 55
2.      Producing procedures 56 – 57
3.      Producing technology 58 – 62
4.      Input materials 63 – 69

Figure 55. Number of cows in Vietnam

Figure 56. Number of cows by region

Figure 57. Fresh Milk production by region

Figure 58. Cow’s growth of companies in the industry

Figure 59. Domestic production

Figure 60. Input material production

Figure 61. Movement of world’s input prices

Figure 62. Fresh material milk in Viet Nam

Table 6. Global raw milk price movement, H1/2016

 
5.      Production 70 – 73

Figure 63. Number of enterprises and labor in milk industry

Figure 64. Production quantity of liquid milk

Figure 65. Production quantity of powdered milk

Figure 66. Production quantity of other milk

Figure 67. Monthly production quantity of powdered milk and liquid milk

 
6.      Consumption 74 – 80

Figure 68. Sale of milk consumption in Viet Nam

Figure 69. Quantity consumption of milk

Figure 70. Revenue of milk companies

Figure 71. Milk Consumption per capita

Table 7. Several powdered milk brands in Vietnam

Figure 72. Sale of powdered milk in Viet Nam

Figure 73. Market share of powdered milk in 2014

Figure 74. Sale of liquid milk

Figure 75. Liquid milk market share in 2014

Figure 76. Sale of Yogurt, 2010-2015

Figure 77. Yogurt market share, 2014

Figure 78. Condensed milk market shares, 2014

Figure 79. Sale consumption of condensed milk

 
7.      Competition analysis 81 – 83
8.      Exports Imports 84 – 86

Figure 80. Imports value of dairy, 2010 – H1/2016

Figure 81. Structure of import market, H1/2016

Figure 82. Export value and export revenue of Vinamilk, 2010 – H1/2016

 
9.      Prices 87 – 89

Figure 83. Price movements of 400g milk powder

Figure 84. Powdered milk wholesale price 2015

Figure 85. Condensed milk wholesale price in the market 2015

Figure 86. Milk powder wholesale price 2015

Figure 87. Yogurt wholesale price 2015

 
10.  Distribution methods 90 – 92

Figure 88. Top 10 most popular beverages in Vietnam’s rural areas 2014

Figure 89. Top 10 most popular beverages in Vietnam’s urban million CRP areas 2014

 
11.  Inventory 93 – 94
Figure 90. Dairy inventories  
IV.               Industrial risks 95 – 97
V.                 Industrial development plan 98 – 103
1.      Population growth 98 – 99

Table 8. Forecast of several basic population indicators

Figure 91. Population and population growth forecasts Vietnam 2017

 
2.      Raising industry development 100 – 101

Table 9. Domestic dairy herd growth target 2010 – 2020

Figure 92. Milk production forecasts 2020

 
3.      Dairy industry development 102 – 103
Table 10. Dairy product development plan until 2020, vision 2025  
VI.               Prospects and forecasts 104 – 109
1.      Development incentives 104 – 106
Figure 93. The percentage of families having children in several countries 2014  
2.      Forecasts 107 – 109
Figure 94. Milk consumption forecast in Viet nam 2020  
VII.             Business analysis 110 – 127
1.      Overview 110 – 117
Table 11.  
2.      Financial analysis 118 – 127

Figure 95. Net Revenue and Gross Profit, 2015

Figure 96. Selling expenses, 2015

Figure 97. Advertising and Selling costs of Vinamilk 2015

Figure 98. Selling Expenses Structure of Vinamilk 2015

Figure 99. General & Administrative expenses, 2015

Figure 100. Capital Structure, 2015

Figure 101. Forecast of TH Milk loans until 2020

Figure 102. Assets structure, 2015

Table The evaluation indicators of solvency 2015

Table Indicators to assess efficiency of assets 2015

Table The evaluation indicators of business performance, 2015

 
VIII.           Financial analysis annex 128 – 134

– Vietnam Dairy Products Joint Stock Company (VNM)

– TH True Milk Joint Stock Company

– Dong Tam Nutrition Food Joint Stock Company

– Hanoi Milk Joint Stock Company (Hanoimilk)

– International Dairy Joint Stock Company (IDP)

– 3A Nutrition (Vietnam) Company Limited