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Having more than 10 years of import and export expertise between Vietnam and the EU. We are delighted to provide free answers to any of your import- and export-related questions.

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Entering The Vietnam Milk Powder Market Guide (2021)

Table of Contents

When approaching the milk powder market in Vietnam, some foreign milk powder brands feel unfamiliar with this market. Here are things you should know about the Vietnam milk powder market before entering.

The Potential Of The Vietnam Milk Powder Market 

With 98 million inhabitants as of 2021, Vietnam is the third most populous country in ASEAN and the 15th in the world. The country has transformed itself from a planned to a market economy, with GDP growth averaging 6.3% of approximately $270 billion over the last decade.

According to the Vietnam Dairy Association, the Vietnam formula milk market size reaches $5.9 billion and grows about 8-10% each year.

The reason behind this upward trend is the increase in the young population in Vietnam. According to statistics, there are 4243 babies born per day, which makes up 1,4 million children per year. 

They use milk powder until 4 years old, which means on average every child will need 0,3 kg milk powder per week, which makes 84.000 metric tons per year.

At the moment the Vietnamese milk powder market still depends on imported milk, this includes Vinamilk, one of the biggest milk producers in Vietnam. In fact, Vietnam ranked 16th in the top 20 countries that imported the highest value of milk in 2021 (World’s Top Exports). The milk imported value of Vietnam reached $560,348,000 in 2021, increasing 43.9% during the period from 2017 to 2021.

top 16
Milk: All Importer Countries in 2021 by World’s Top Exports

 

Additionally, there is also the good news for foreign players that the import tariffs for European milk powder decreased from 2.5% to 0%, according to the EVFTA (Europe – Vietnam Free Trade Agreement).

All of these factors make Vietnam Milk Powder Market turn to be one of the most potential markets in South East Asian.

Competitors’ landscape – Things you need to know

At the moment, Vinamilk is one of the top brands in the industry, making up about 43.3% of the market, followed by Frieslandcampina, which takes 15.8% of the market.

Regardless of the high competition in the Vietnam milk powder market, there are still 14.3% of market shares left over for other brands, and new players come to the market.

 

marketshare
Vietnamese milk powder market share

 

As a diverse market, the Vietnam milk powder market has many production lines with a different price ranges to serve any type of customer segmentation, here is the sum of the price range of the Vietnam milk powder market:

  • Domestic milk powder varies from 250.000 VND (10,7 USD) to 400.000 VND (17,12 USD) for a 900gr milk powder package.
  • Organic milk powder is about 600.000 VND (25,68 USD)
  • Fully imported Baby Milk Powder can vary from 500.000 VND (21,41 USD) up to 1.000.000 VND (42,8 USD)

Understanding Vietnam’s milk consumers

One important factor when entering the Vietnam milk powder market is customer behaviour.

Just like consumers anywhere in the world,  Vietnamese consumers nowadays are more concerned about the product quality when they choose dairy products. Especially young Vietnamese moms, who tend to spend hours learning about the different types of milk powders and checking reviews on Google and social media channels, before picking products.

Despite Vietnamese consumers tend to learn about products by themselves online, they still tend to buy formula milk in offline stores such as mom shops, specialty stores, or supermarkets. This is because Vietnamese customers feel safer when buying formula milk from reliable stores rather than online shops.

At this moment, the trading volume through e-commerce platforms remained low at around 1% of total retail sales in 2019.

Regarding customer preferences, Vietnamese people enjoy functional products. In fact, to win Vietnamese consumer’s hearts, here are some interesting product features that will catch their eyes effectively:

  • Products supporting consumers to develop height contain extra calcium, DHA, iron, and HM-O. 
  • Those that strengthen the immune system or promote higher IQ.
  • Dairy products help people gain or lose weight.
  • Ones that have extra vitamins will attract Vietnamese consumers. 
  • Bilingual language on the package (Vietnamese & English).
  • Breast-milk-like taste
  • Fast delivery (1-2 days).
  • Long shelf-like, discount, point accumulation system, etc.
sua mau
Abbott Grow Gold

 

For example, Abbott Grow Gold contains DHA, Taurin, Canxi and Vitamin D, and the product advertises itself as a nutritious source, which will help children grow faster and taller.

Hence, foreign producers should pay attention to these features if they aim to become competitive “players” on the stage.

In contrast, what pushes Vietnamese consumers away are the following factors:

  • The lack of verified sources or storage time and hazardous or old packages (sharp edges, loss of contents, tampering, loss of lid). 
  • Carton packaging products: Vietnamese people may consider paper packaging products as not having high-quality products, which is opposite to EU countries’ which consider carton packages as a friendly environment.

These factors lead to a negative impact on Vietnam’s milk consumption, so it’s necessary to avoid these mistakes. 

Obstacles when entering the Vietnamese market

Although the Vietnam milk powder market is a full potential market for any new brands, there are several difficulties in the Vietnamese powdered milk market that foreign brands need to consider before entering. 

Firstly is the government regulation, to encourage breastfeeding, the Vietnamese government applies for Regulations Number 100/2014/NĐ-CP, which bans advertising for dairy products that replace breast milk for babies under 24 months, and supplement food for babies under 6 months. 

In addition, the government tends to protect the domestic production of Vietnamese baby milk powder. Because of this reason, imported milk and dairy products cost much higher than national ones. 

Besides, complex compliance, document processes, and strict customs procedures are the other factors preventing exporters of baby powdered milk to Vietnam.

And also, if there is no careful research before exporting, foreign companies may not get correct insights of customers. This leads to misunderstanding about the dairy industry and companies can approach the market in an insufficient way.

How to approach the Vietnamese milk powder market?

To win customers’ hearts, it is important for foreign milk brands to spend time researching and understanding the milk market and the competitors’ landscape as mentioned above.

Additionally, the organisation should learn about Vietnamese consumers, things as: Which flavour do Vietnamese consumers prefer? Which product features are the best for Vietnamese consumers? What is the price strategy?  or Which channels work best to promote and sell your products?  These things need to be considered carefully. 

And the price is one of the biggest disadvantages for foreign brands, that your organisation needs to keep your eyes on when it comes to Vietnam’s milk powder market.

To be competitive in the market nowadays, besides high-quality, and attractive product features. The price of the new players should be affordable for local consumers, in order to win the Vietnam milk powder market. 

However, it is easier said than done. Reducing the cost of products is not as simple as it sounds, because it does only depend on your company, it also depends on many other factors and parties, such as intermediaries, distributors, logistics, etc.

Although it is true that your company can not do much to change the supply chains to reduce the cost, there is a way for you to cut off some unnecessary parties, so that the price when it comes to the end customers will reduce significantly.

And one of the easiest ways to do that is by exporting your product directly to the Vietnamese market. In fact, when your company applies the direct export model, it will reduce about 90% of overhead costs and create a big advantage to entering the Vietnam milk powder market successfully. 

 

 

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