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Dairy market maintains strong growth
Hoang Phi
Sunday,  May 12, 2013,22:01 (GMT+7)

Dairy market maintains strong growth

Hoang Phi

By Hoang Phi - The Saigon Times Daily

HCMC – The local milk market had shown strong developments in 2012, taking the lead in the fast moving consumer goods (FMCG) industries with sales growth of 15% in cities and 18% in rural areas.

A survey conducted by Kantar Worldpanel in HCMC, Hanoi, Can Tho and Danang cities and some rural areas shows Vietnamese households spent around VND40 trillion on dairy goods last year. Therefore, local experts in the industry believed that the consumption level in the whole local market might be double.

As per Kantar Worldpanel’s report, milk and dairy products make up a significant slice of a household’s budget for FMCG items in urban areas and they have recently marked a breakthrough development in rural areas compared to other FMCG sectors.

The experts forecast the competition between dairy brands to get fiercer in the near future, especially among local producers and foreign rivals as well as among domestic players. In the next three years, the dairy market is expected to become more important to local consumers, especially those in remote areas, and Kantar Worldpanel predicts milk revenues in the four big cities at an estimated VND70 trillion.

According to Antonie Louat De Bort, senior account manager of Kantar Worldpanel, 80% of households in cities and half of the households in rural areas purchase milk or dairy products every month.

Like other foodstuff industries, traditional distribution channels still play a major role in the dairy industry, with street-front shops making up over 70% of the retail channels. In the meantime, supermarkets are the second popular shopping channel, posting higher growth in cities while traditional markets represent more than 30% of the market share in rural areas, especially in the central and southern regions.

The survey indicates that local consumers are used to shopping dairy products along with other FMCG items, especially packed goods like instant noodles, cooking oil and sugar.

In addition, the major trends in the FMCG market like the tendencies of higher purchasing volumes and stronger demand for high-end items are also reflected in both urban and rural markets.

With such huge potential, shifting from the public market to serving every segment and catching up with changes in consumer demand and behavior will be key to success in the dairy market at home, the experts said.

For instance, Vinamilk has recently made hefty investments in high-class dairy products, including powdered milk, fresh milk and yoghurt. The firm, therefore, achieved over VND6.7 trillion in sales in the first quarter, up 14% year-on-year, while its profit posted more than VND1.5 trillion, year-on-year growth of nearly 21%, according to Mai Kieu Lien, general director of Vinamilk.

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