Is Vietnam’s dairy market no longer attractive to foreigners?

The news that Danone Vietnam, a subsidiary of French Danone, the owner of Dumex brand, would shut down by 2017 has raised doubts that the Vietnamese dairy market is no longer attractive.




What is happening with Vietnam’s dairy industry, which market analysis firms believe is one of the fastest-growing consumer industries with two-digit growth rates?

Milk shops and sales agents were surprised about the news that Danone is scaling down its operation in Vietnam, saying that they still continue receiving goods from the supplier for sale.

Ngoc, the owner of a shop on Nguyen Thai Son street in Go Vap district, said she receives VND3-4 million worth of Dumex dairy products a month.

Ngoc said Dumex is a well known brand. However, compared with other brands, Dumex’s products sell more slowly and there are fewer loyal customers.

The manufacturer rarely launched sales promotion program in the last year, which could be a reason for the slower sales.

Some other sales agents said the sale has been going as usual, with no big increase and decrease. The best sellers are products for children aged 6-12 months and 1-2 years old.

A report shows that there are over 700 products for children below six.

Nguyen Hoang, a branding expert, commented that the decision by Danone, which has been present in China and South East Asia for many years, to leave Vietnam shows that it cannot see potential and opportunities in the market.

“The most important reason behind this is the unsatisfactory business result,” he commented.

The departure has raised doubts that the Vietnamese dairy market is no longer attractive to foreign producers.

However, an analyst said that many others have joined the market.

He said that a Japanese dairy producer has decided to distribute its products officially in the Vietnamese market after realizing that the products brought to Vietnam by travelers and imported through unofficial channels have been selling very well here.

According to Euromonitor International, the growth rate has been very high in Vietnam in the last few years. The demand is forecast to increase by 9 percent per annum to 27-28 liters of milk per head per annum by 2020, while the consumption level was 19-20 liters in 2014.

Milk powder products now account for 45 percent of Vietnam’s dairy market, growing by 10.1 percent per annum in 2010-2013.

The Ministry of Finance controls milk prices, setting the ceiling selling price for formula products for children aged below six until December 31, 2016.

Thanh Mai / vietnamnet