DRINKING MILK PRODUCTS IN VIETNAM - ANALYSIS

Country Report | Aug 2024

KEY DATA FINDINGS Market Sizes

Retail value sales rise by 4% in current terms in 2024 to VND63.4 trillion Sales of Drinking Milk Products
Flavoured milk drinks is the best performing category in 2024, with retail value sales Retail Value RSP - VND billion - Current - 2010-2029
rising by 7% in current terms to VND23.0 trillion
Vietnam Dairy Products JSC (Vinamilk) is the leading player in 2024, with a retail
63.413 Forecast
100.000
value share of 38%
Retail sales are set to grow at a current value CAGR of 6% (2024 constant value CAGR
of 2%) over the forecast period to VND84.5 trillion 80.000

2024 DEVELOPMENTS 60.000

Health and wellness trend playing a key role in the development of

drinking milk products 40.000

Drinking milk products is set to see current value growth in Vietnam in 2024. Drinking
milk is increasingly seen as an essential food for children and young adults in Vietnam, 20.000
especially in urban areas. This is making the category more attractive for investors. As
drinking milk products are perceived to be an important source of nutrition in Vietnam,
they are seen as playing a key role in supporting the growth and development of local 0
children. Full fat shelf stable milk remains the most popular format as it offers greater 2010 2024 2029
convenience to local consumers, many of whom do not have large refrigeration storage
capacity. They appreciate the ability to purchase this product in bulk prior to opening
due to its longer shelf life, compared with fresh milk. Shelf stable milk also sees strong Sales Performance of Drinking Milk Products
sales through small local grocers, which is the dominant distribution channel for % Y-O-Y Retail Value RSP Growth 2010-2029
drinking milk products. Unlike modern grocery outlets, such as hypermarkets, small
local grocers tend not to have the refrigeration capacity required to store a wide range
of fresh dairy products. Nonetheless, urbanisation is supporting a shift towards modern
3.8% Forecast
grocery retailers, with the demand for fresh milk increasing due its healthier and less 30%
processed image.
The important role of health and nutrition in the rising demand for drinking milk 25%
products is supporting an increasing interest in products with a lower sugar content.
Sugar has become a key focus for consumers’ health concerns as it has been 20%
increasingly strongly linked with the development of a wide range of health issues,
including type 2 diabetes, hypertension, and cancer. Perhaps most forcibly in terms of
public debate and consumer considerations, sugar has been prominently associated 15%
with the increasing prevalence of obesity, particularly amongst children. The fact that
drinking milk products are seen as supporting children’s development, therefore, 10%
makes sugar a particularly pressing issue in the category. While the fact that the taste of
no sugar products is very different from milk products with sugar makes consumers
reluctant to switch, the expanding range of lower sugar products is making it easier for 5%
people to try them and decide to change their shopping choices.
0%
2010 2024 2029
Intensifying competition
Vietnam Dairy Products JSC (Vinamilk) is expected to remain the clear leader in
drinking milk products in retail value terms at the end of the review period. However,
in the face of growing competition, the company is projected to continue to lose retail Sales of Drinking Milk Products by Category
value share in 2024. Vinamilk is having to invest a much larger amount than its Retail Value RSP - VND billion - Current - 2024 Growth Performance
competitors to maintain its leading position because of the larger scale of its business.
In addition, many active players are entering the fray and eating into Vinamilk’s share. Flavoured Milk Drinks
23.011,5
Drinking milk products is becoming increasingly competitive, with more players, both
international and domestic, entering in recent years, including Vitadairy, CP-Meiji Milk
38.564,0
Vietnam and Morinaga Milk Industry. As the economy remains sluggish and consumers’
incomes have shrunk, consumers are tending to tighten their budgetary belts, which is Powder Milk
1.837,2
also adding to the competitive pressure in the market.
0% 10% 15%
Ranked third in the fast-growing fresh milk category, Vinamilk’s strength lies in its
DRINKING MILK PRODUCTS 63.412,7 CURRENT % CAGR % CAGR
dominance of shelf stable milk, by far the largest category in drinking milk products. YEAR % 2019-2024 2024-2029
Vinamilk has shown resilience in the face of challenges. During the review period, the GROWTH
company, which has strong distribution in southern Vietnam, increased its portfolio
through the acquisition of another dairy manufacturer, Moc Chau Milk, which has strong
distribution in northern Vietnam. This acquisition has broadened Vinamilk’s
distribution reach and brand presence in Vietnam.
The company is also constantly innovating to improve on its product range as well as

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investing in e-commerce and marketing. In July 2023, Vinamilk unveiled its new logo as Competitive Landscape
part of a brand repositioning effort. The redesigned logo aims to create a captivating,
dynamic, youthful and powerful packaging identity. This strategic move is one
component of Vinamilk 's comprehensive 5-year plan. Company Shares of Drinking Milk Products
% Share (NBO) - Retail Value RSP - 2024
Drinking milk products is becoming increasingly competitive, with more players, both
international and domestic, entering in recent years, including Vitadairy, CP-Meiji Vietnam Dairy Products J... 38.3%
Vietnam and Morinaga Milk Industry. As the economy remains sluggish and consumers’ TH Food Chain JSC 15.0%
incomes have shrunk, consumers are tending to tighten their budgetary belts, which is
also adding to the competitive pressure in the market. FrieslandCampina Vietnam... 10.2%
Nestlé Vietnam Co Ltd 8.8%
Growing focus on sustainability International Dairy Prod... 5.2%
The ongoing rise in consumers’ environmental awareness is encouraging manufacturers Coca-Cola Beverages Viet... 5.1%
to pay greater attention to sustainability. At the same time, the government is
Lothamilk JSC 1.3%
encouraging businesses to take greater responsibility for sustainable development.
Players such as Vinamilk, TH Milk and Nestlé Vietnam committing to the Nutifood Nutrition Food ... 1.0%
implementation of sustainability focused strategies not only helps manufacturers to Interfood Shareholding C... 0.8%
gain support from government, but also increases their competitive standing in the
market. Fonterra Brands (Vietnam... 0.6%
Mead Johnson Nutrition (... 0.5%
The rise in environmental awareness is going hand in hand with increasing consumer
health consciousness to drive growing interest in organic drinking milk products, Abbott Vietnam Co Ltd 0.5%
despite broader economic challenges and higher prices forcing changes in consumer Murray Goulburn Co-opera... 0.5%
behaviour. The target audience for organic milk products is middle- and high-income
consumers, who are more aware of health and wellness issues and are more financially Suntory PepsiCo Vietnam ... 0.4%
able to afford such products. Rising awareness of organic drinking milk is supported by Hanoi Milk JSC 0.4%
active steps being taken by players in the category, especially Vietnam Dairy Products
Namyang Dairy Products C... 0.1%
JSC (Vinamilk), to educate consumers on the benefits of organic products. For example,
they highlight that organic milk from cows is not treated with synthetic hormones or Others 11.3%
antibiotics, while the animals are fed organic feed. Moreover, Vinamilk constantly
advertises its organic milk on prime-time television, as well as social networks such as
Facebook.

PROSPECTS AND OPPORTUNITIES Brand Shares of Drinking Milk Products

% Share (LBN) - Retail Value RSP - 2024
Positive outlook underpinned by rising health consciousness Vinamilk 37.5%

Drinking milk products should continue to benefit as many Vietnamese consumers TH True Milk 13.3%
perceive milk to be a healthy addition to their diets, due to its high nutritional content, Milo 8.8%
supported by government campaigns and players’ marketing efforts. For example, the
government is aiming to try to improve the health of the Vietnamese population by Dutch Lady 7.9%
encouraging people to consume more nutritious food and beverages such as drinking KUN 5.1%
milk products. This includes its Milk at School programme, offering free milk to
Nutriboost 5.1%
schoolchildren. Increasingly health conscious parents are paying growing attention to
the role that nutrition plays in their children’s development, with drinking milk Lothamilk 1.3%
increasingly widely being seen as a must-have food for children. Demand is also being Ovaltine 1.2%
supported by the fact that drinking milk is relatively affordable and accessible for
average households in Vietnam. Dalat Milk 1.1%
NutiMilk 0.9%
Consumers becoming more demanding in terms of health and wellness Fristi 0.9%
claims
Latte 0.8%
Health and wellness is set to be a key focus of new product development in drinking TH True Nut 0.6%
milk products in the short to medium term. As inflation and economic pressures in
general affected consumer incomes and consumption behaviour, manufacturers Anlene 0.5%
focused more on distribution and marketing support for their core products, instead of Enfamama 0.5%
investing in new product development. However, as the market stabilises and the
Similac 0.5%
economy improves, they are expected to launch more products with health and
wellness positioning in mind. Devondale 0.5%

Drinking milk products are strongly associated with health and nutrition in the minds of Dielac 0.4%
consumers in Vietnam. Therefore, innovation in the category is likely to focus on health Tropicana 0.4%
and wellness. This is predicted to include the promotion of ingredients with immunity
Others 12.7%
boosting claims and/or products that are fortified with vitamins and minerals to
provide a more complete nutritional intake. Health orientated trends in Vietnam are 5-Year Trend
still at a relatively early stage of development and, therefore, there is significant room Increasing share Decreasing share No change
for local players to learn from international markets in order to develop new products
that meet the needs and demands of the local population. For instance, a wide range of
low sugar drinking milk products is already being promoted under leading brands,
including Vinamilk, TH True Milk and Dutch Lady.
As consumers become more health conscious, they will require higher and clearer
product standards. Moreover, their capacity to pursue their health goals is set to be
bolstered by an expected rise in disposable income over the forecast period.
Consumers are becoming more knowledgeable, and they are demanding more
information and clear facts relating to products’ claims. In this environment, products
simply claiming to be healthy are becoming less common, with consumers looking for
particular qualities, such as no sugar, no added sugar or low sugar, and particular
functional benefits, such as contributing to brain development or enhanced functioning
of the immune system. Going forward, then, manufacturers will need to provide more
precise health claims backed up with convincing communication.

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Over the forecast period, prominent players in drinking milk products, such as Vinamilk
and TH Food Chain, are expected to step up their product innovation and improvement
strategies in order to further capture consumers' interest. This approach is set to
involve the development of novel and enhanced drinking milk products that cater to
evolving consumer preferences and demands within the health and wellness trend. By
investing in research and development, these key players aim to introduce unique and
appealing features, flavours and packaging options to differentiate their offers.

Growing competitive threat from plant-based alternatives

Over the forecast period, the shifting lifestyles and evolving attitudes of consumers are
expected to bring significant changes in dietary preferences. As a result, there is
predicted to be a noticeable increase in the number of Vietnamese people adopting
vegan, vegetarian or flexitarian diets. This emerging dietary trend is anticipated to have
a profound impact on the demand for drinking milk products in the short to medium
term. The rise of veganism, vegetarianism and flexitarianism reflects a growing
consciousness amongst consumers regarding the ethical and environmental
implications of their food choices. Many Vietnamese consumers are opting for plant-
based diets to reduce their carbon footprint, promote animal welfare and improve
personal health. As a result, planted-based alternatives are projected to pose a growing
threat to drinking milk products in the forecast period.

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