Equity Analysis /

Vietnam Dairy Sector: Domestic demand is recovering

    Thao Dang
    Thao Dang

    Food & Bev, Textiles

    Rong Viet
    12 September 2019
    Published by

    In this 11-page report on Vietnam's dairy industry, we provide detailed analysis of Vinamilk and Quang Nhai Sugar.

    Bouncing back

    After a period of slow down in the growth of domestic demand for dairy products (especially in urban areas), we believe that the first half of this year has seen positive changes.

    According to Kantar Worldpanel, in Q2 2019, dairy and its related products continue to be the leading FMCG sector with impressive value growth of 14.7% and 6.8% in rural and urban areas (4 major cities), respectively. This shows that demand for dairy products has recovered.

    Favourable demographic factors such as a large population with rapid growth rate, young population structure and a growing middle-class income will help to boost the demand for long-term dairy consumption.

    Changing consumer habits through premiumization strategies

    Consumers are becoming more concerned about their health, switch to high-nutrient, healthy products with more stringent quality standards. Therefore, the demand for high-quality liquid milk (organic milk, A2 milk, etc), yoghurts and alternative products from plants (soymilk, nutmilk, etc) is increasing.

    This is an advantage for companies able to capture consumption trend changes. Pioneering companies such as VNM and TH TrueMilk will benefit over other competitors as they already had a production system adapted to international standards and launch new products rapidly according to market demand.