The Vietnam Industry Research and Consultancy (VIRAC) forecasts that the dairy industry will continue to grow in 2020, with increasing investment in dairy farms to reduce dependence on imported milk and to meet domestic consumption needs. The goal for 2020 is to produce 2.6 billion liters of liquid milk, with an average consumption of 27 liters/person/year. Domestic fresh milk production is expected to reach 1 billion liters to meet 38% of the projected demand of 2.6 billion liters. Meanwhile export turnover is supposed to reach USD 120 -130 million.
During 2019, liquid milk and yogurt were the best performing segment.. According to the General Statistics Office, liquid milk production in 2019 increased by 8.3% over 2019 to reach 1 million liters. About 390 thousand tons of yogurt were produced in the country, a year-on-year increase of 17.7%. Condensed milk production stood at 150,000 tons, a drop of 5% from 2018.
Dairy consumption per capita in Vietnam is lower than in other South East Asian nations, but demand is increasing rapidly. With domestic production falling short of demand, dairy imports have been rising, with the bulk coming from New Zealand and the US. Local company, Vinamilk is the market leader, competing with local players such as TH True Milk and international players such as Friesland Campina, Nestle and Abbott. In December 2019, Vinamilk officially become the parent company of GTNFoods, acquiring a 51% stake in Moc Chau Milk – a subsidiary of GTNFoods which holds 9% of the dairy market.
Competition in the sector is expected to intensify with the coming into effect in 2019 of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a free trade agreement signed between 11 countries: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Under the CPTPP, dairy products from these countries are now no longer subject to any import tariffs.
(Source: Vietnam News; Vietnam Investment Review; Vietnam Industry Research and Consultancy)