Dairy Industry

Overview of Viet Nam’s Dairy Industry





Number of companies in the industry

Over 80 (2016)


Number of labours in the industry


Export turnover in 2015

~ 90 million USD


Import turnover in 2015

~850 million USD


Main export markets

Japan, Canada


Main import markets

Singapore, Thailand, Germany, Ireland, Australia, The Netherlands, France, Japan, etc


Main export products

Modified whey powder, cream milk products, liquid yogurt, butter, cheese and curd, concentrated cream and milk, etc

1. The position of the dairy industry 
1.1. The position of the dairy industry in the Vietnamese economy

The industry of producing and processing of milk and milk products of Viet Nam in recent years has developed dynamically, providing diverse products for the national economic life, satisfying the domestic demand and gradually replacing imported milk products and participating in exportation with abundant modes and types. In addition, the sector has contributed significantly to the state budget, creating jobs for labours, contributing to ensure people’s livelihoods and stabilising social status, becoming an important link of Vietnamese agriculture. 

Thanks to being the essential product category, even in the depressed years of the enterprises in the whole economy, dairy enterprises have still kept growing at double digits. In the coming years, the population growth and the increase of people's incomes result in more spending, and growing concerns of Vietnamese people about healthcare products so the dairy industry is expected to maintain this growth momentum. The dairy sector in Viet Nam has great potential for development and is gaining attention from domestic and foreign investors.

However, the development of the industry does not correspond to the potential of domestic market growth because the current consumption demand of products in the industry is still very large.

Production situation

Domestic milk production in Viet Nam can not keep up with the rising domestic demand. From 2001 to 2014, milk domestic production increased by 26,6% per year standing at 456.400 tonnes in 2013, only meeting 28% domestic demand and reaching at 549.500 tonnes in 2014.

Two main segments leading the the growth of the whole domestic dairy industry and being the most important are liquid milk and powdered milk. The total value of those two products accounts for ¾ the market value, in which the value of powdered milk was 45% and liquid milk 30%. The year 2015 recognized the milk production volume of all kinds at the peak up to now. 
Powdered milk market share is mainly held by foreign companies such as Abbott, Friesland Campina Viet Nam and Mead Johnson because Vietnamese consumers are still willing to pay high price for foreign brands. Meanwhile, for domestic milk products, beside Vinamilk, which accounts for over 50% of the market share, there are also other companies such as TH Milk, Nutifood, IDP, Hanoi Milk, etc.

For the period from 2010 - 2015, fresh milk production capacity increased by an average of 16% per annum from 520,6 million litres in 2010 to 1.093 million litres in 2015. Powdered milk has returned to its upward trend after falling in 2014, standing at 97,3 thousand tonnes, up 19.5% compared to 2013 ; powdered milk production capacity increased by an average of 10,5% per annum from 58,9 thousand tonnes in 2010 to 97,1 thousand tonnes in 2015. According to the General Department of Statistics, in 2015 the dairy sector in Viet Nam has recorded the highest milk production capacity so far, mainly focusing on names such as Vinamilk, TH Dairy Food Joint Stock Company,  Dong Tam Nutrition Food Joint Stock Company, IDP International Dairy Joint Stock Company, Nutrition Company Limited 3A, Hanoi Milk Joint Stock Company, etc. In 2016, output and consumption of dairy products continued to flourish.

Milk production capacity 2010-2015

Source: General Department of Statistics

In June 2016, fresh milk production capacity was estimated at 99.1 million litres, increasing by 1.3% compared to the previous month. In general, for the first 6 months of 2016, fresh milk production capacity was estimated at 553.1 million litres increasing by 4% over the same period in 2015. In the first half of this year, production capacity of these two dairy products was also higher than the same period last year, signaling a continued year of output growth.

Fresh milk production capacity monthly in 2015 and first 6 months 2016
Unit:Million litres

Source: General Department of Statistics

Powered milk capacity monthly in 2015 and first 6 months 2016
Unit: thousand tonnes

Source: General Department of Statistics

In the high-value product segment, powdered milk, dairy enterprises in Viet Nam is weaker than foreign companies. According to statistics by Euromonitor International in 2013, the foreign brands accounted for about 75% of the powdered milk market, led by Abbott, followed by Mead Johnson, Dutch Lady, Dumex and Nestle. Only the pride of Viet Nam, Vinamilk, is capable of competing with approximately 25% market share.

Shares of big brands in Viet Nam in 2013

In the other important segment, liquid milk (the main product of the dairy sector), Vietnamese companies are temporarily dominating with Vinamilk accounting for nearly 50% of market share. In addition, advantages in terms of cost and preservation time are also helping Vietnamese companies dominate the market in many other dairy related products such as pasteurized milk, yogurt, sweetened condensed milk, with a series of domestic brands such as Vinamilk, TH True Milk, Moc Chau, Ba Vi, Dalatmilk, Lothamilk, Vixumilk and Nutifood.

A majority of milk products in Viet Nam are produced for children under 3 and the elderly while the big market for daily consumption or milk for adults is not invested significantly. The research of Nguyen Viet Khoi (2013) showed that 10% of population in the two big cities of Viet Nam, Ha Noi and Ho Chi Minh City, consumed up to 78% milk products. This is unbalanced in terms of the demand of milk products

The amount of dairy cow in Viet Nam has sharply increased in recent years. According to the General Statistics Office, until the 1st October 2015, it accounted for 257.000 dairy cows, which experienced a growth of 21% compared to 2014. In the last 10 years (2006-2015), the average growth of dairy cows was 11% per year. This expansion has been a positive factor in promoting the production of milk in Viet Nam, which has had the propensity for increasing considerably every year. 

Dairy industry is strongly heightening the modernization of dairy cow farms. Viet Nam has also defined a project which meets 60% of domestic fresh milk demand, corresponding to the forecast of population growth to 113 million people by 2045. In order to satisfy this target, the country will have to increase the amount of dairy cow with the production capacity of 5,65 million of ton each year. 

Roughly 24.000 households take part of the dairy production chain. This is a major force enabling the development of the dairy industry in Viet Nam, as a medium-scale household farming sustains less pressure in terms of environment compared to large-scale farms. According to the Dairy association of Viet Nam, solely focusing on the development of large-scale farms regardless of developing the household farming would face much difficulties, such as: lack of land, farmers losing land will face difficulties in their livehood, productivity, disease and especially environmental issue. 

Forecast of dairy output growth in Viet Nam from 2015-2045:

- Period 2015 – 2025: Growth of 12,0%/year.
- Period 2026 – 2035: Growth 5%/year.
- Period 2036 – 2045: Growth 3,0%/year.

Equipment investment and quality management:A large number of enterprises in the industry are investing in modern equipments, updating advanced technology in order to produce high-quality products, ensuring food safety and competitivity in the domestic and foreign market, which satisfy the increasing demand of consumers.  

Most of major enterprises in the industry possess the quality management system according to the international standards such as ISO, HACCP...in order to output quality products which ensure food security. Furthermore, there still exist several small enterprises that do not meet the quality and food safety. 

The real situation of equipments, technology and quality management and food safety of enterprises in the dairy processing industry is as follows: 

Equipment, technology

Most of dairy factories were invested after 1990 with integral and modern investment scale. Comprehensive production line as well as advanced technology are imported from countries that possess developed technology and dairy equipments such as Sweden, Danemark, Germany, Italy, Swizerland...alongside with automatic and semi-automatic self-contained production lines. Enterprises invested the automatic control program into the technological line in order to control closely the technological parameters so the products will have a stable quality and attain the goal as it expected. 

Tetra Pak is a Swedish group specialised in providing, installing lines, equipements for the dairy industry in Viet Nam. Between 2007 and 2015, Tetra Pak Group installed the automatic sterilized milk packaging machine system for most of dairy factories (357 equipments); installed integrally 25 sterilized milk processing line, 3 yogurt processing lines, soya milk processing lines; installed 32 main sterilized milk processing equipments, 16 pasteurized milk processing equipments,  25 sterilized sinks, 15 mixers, 22 CIP devices and 42 anabolic equipments. 

The majority of dairy enterprises invest in importing comprehensive equipment line, somehow other enterprises only import the main equipments, other equipment such as milk tank, boiler system, water treatment system, etc. purchased from domestic companies such as Polycochemical Refrigeration Electrical Engineering Company (POLYCO), Eresson Refrigeration Electrical Engineering Corporation, etc.

In recent years, concerning the packaging field, enterprises in the industry have invested in renovating comprehensive production lines, modern equipments in diversification of packaging, which use sterilized paper packaging to pack the product. This type of packaging possesses a special composition of 6 layers that allow to protect against harmful effects from light, air, humidity in the air in the storage process of the product. Nowadays, Viet Nam only has 2 exclusive paper box cover suppliers which are Tetra Pak Group ad Combiblock (Germany). In 2005, Dutch Lady Ldt. (FrieslandCampina Viet Nam) invested a bottling line with a most advanced technology in the world. In 2008, Nutifood invested the latest production line of powdered milk, with equipments provided by WOLF (Germany), which is totally automatic in terms of can sanitary and sterilization, finished product, including the injection of inert gas during the extraction process to limit oxygen in the product, increasing the shelf life of milk.In 2013, Vinamilk inaugurated a baby powdered milk factory in Viet Nam, which required a total capital invested at 2.000 billion VND, having a capacity of 54,000 tons of powdered milk per year and is one of the most modern and efficient factories in Asia.

Concerning the production technology, liquid milk product in Viet Nam is currently processed and packaged in 2 forms which are pasteurization and sterilization. Sterilization (UHT) technology is simply understood as a heat treatment process for high temperature milk (130-150oC) in very short time (3-15 seconds) in a closed sterile environment. Thanks to this technology, pasteurized milk retains many nutrients, can be stored at normal temperature and can last from 6 months to 1 year. Fresh pasteurized milk is heated at 85-90oC for a short time (30 seconds - 1 minute) and then cooled. Throughout the process, almost all the vitamins and minerals found in primordial milk are guaranteed. Pasteurized milk must be stored continuously in cold conditions (at 4 ° C) and have a shelf life of only 7 days.

 It is feasible to pasteurize and sterilize milk inside or outside the packaging product.  While pasteurizing and sterilizing inside the package, people poured milk into glass or plastic packaging, closed the lid and then paste into pasteurizing or sterilizing equipment. When using pasteurization or sterilization, we use paper packaging. The milk is pumped into the heat treatment equipment, heated to keep heat and cool, then transferred to the intermediate and pumped into the pouring equipment. All packaging and equipment in the filling line must be sterilized.

Concerning the yogurt production, Viet Nam puts into practice a large number of different technologies in order to ferment the yogurt such as the use of natural lactic acid fermentation or the use of milk hydrolysis enzymes and the addition of thickening additives. Supporting the modern fermentation technology in major enterprises is the automatic fermentation equipment system which is controlled automatically to ensure the technological parameters of fermentation temperature, ventilation mode, microbial density, pH, sterilization mode. Yogurt fermented yeasts of different enterprises are different and are mainly imported from France, Denmark, Holland to create the unique product flavors of each enterprise.

In the powdered milk production, there have been innovations in technology in the drying and extraction of cans such as spray drying from spraying technology to gas blowing technology; pumping nitrogen gas, hydrogen gas into the packaging to limit oxygen in the product.

Quality management and food security

Main enterprises with trade mark and modern processing systems in the industry have been building quality management systems according to ISO international standards. In 1999, Vinamilk applied Quality Management System ISO 9002 and is currently applying Quality Management System ISO 9001: 2000. Dutch lady ltd (currently FrieslandCampina Viet Nam) received the ISO 9001 certificate in 2000 and the HACCP certificate in 2002. The Hanoi Milk Ltd. received the ISO 9001 certificate in 2000 and the HACCP certificate in 2004. Nowadays, several companies have applied the quality management system VSATTP according to the ISO 22.000 standard. The ISO and HACCP are internationally standardized standards that are now universally applicable to food manufacturers. These standards show the production and provision capacity of products which possess the highest quality of food sanitary and safety for the consumers’ benefit. HACCP is also considered as a passport for the food importing enterprises.   

Enterprises take much interests in quality product from the supply of raw materials. Concerning powdered milk, enterprises usually select leading and reliable raw materials suppliers in the world. As for fresh milk, the quality of milk is checked directly at livestock producers and dairy transfer agents, which apply the reward regime to the purchasing price of milk for household that possess good quality milk. 

All stages of milk production are controlled by a team of experienced engineers and specialists. All products are strictly controlled by food sanitary and safety standards and ISO quality management system. The batches of products are fully tested by microbiological and physico-chemical criteria from input materials, semi-finished products and finished products in parallel with sampling. The system of microbiological and physico-chemical laboratories has enough equipment for analyzing the parameters and checking important parameters in the entire production process.

In addition, there are still small manufacturing facilities, cramped warehouses and simple packaging equipment that have imported powdered milk (finished and semi-finished) for packaging and sale while not guaranteeing food sanitary and safety standards, the product quality is not inspected and controlled. 


The Vietnamese dairy market is growing rapidly in recent years and still has growth potential. After the steadiness in 2011 and 2012, the sector's revenue had started to rise sharply by 2013. Growth rate of the industry next year is higher than last year, at average 17% per year in the period of 2011-2015.

In 2014, according to the assessment of Euromonitor International, the dairy revenue in Viet Nam reached 75,000 billion, which increased by 20%. By 2015, total revenue is expected to reach 92,000 billion VND, which went up by 22.7% compared to the previous year, more than doubled compared to 2010 (accounted for 42 trillion VND), the highest in history sector.

In just six years from 2008 to 2014, a person's monthly spending more than doubled from 792,000 VND to nearly 1.9 million VND. Remarkably, out of spending, the Vietnamese are using more and more money spending on food, including milk eventually. For nearly 1.9 million of Vietnamese, each of them can spend up to half of this amount on food, a rate that has improved considerably compared to 2007.

Dairy sales growth in Viet Nam

As a densely populated country with a high population growth rate of 1.2% per year, the dairy market in Viet Nam is always considered to have great potential. The GDP growth rate represents 6% - 8% per year, income per capita increased by 14.2% per year, combined with the tendency to improve the health and stature of the Vietnamese, resulting in the constant high growth of demand for consumption of dairy products. The average milk consumption per capita of Viet Nam in 2015 was about 23 liters per person per year, while in 2010 it was 12 liters per person per year. For the period of 2010 - 2015, on average, each Vietnamese consumed roughly 15 liters of milk per year. In the coming years, the dairy industry will have great potential as demand is expected to grow by 9% per year, reaching 27-28 liters per capita per year by 2020, nearly double compared to the current situation. Currently, the consumption of milk per capita in Viet Nam is still low compared to other countries in the region and the world.

Among fast-moving consumer goods sectors, the dairy industry, including powdered milk and fresh milk, is also showing a strong double-digit revenue growth. And according to the general trend of the world market, Viet Nam's dairy industry is still in a bull market. It can be said, the dairy market is experiencing unprecedented growth in recent years with growth next year higher than last year. Dairy products contributed 13% of total consumer goods. But the huge profits that come from the dairy industry are now shifting market share to foreign dairy companies and foreign suppliers.

In fact, the potential consumption of Viet Nam dairy market is still considered to be very large and does not expect to cease. 

Sales and consumption of milk per capita for the period 2010-2015

Source: Euromonitor International

As before, looking at shelves selling powdered milk in supermarkets, it is easy to see the dominance of foreign milk despite the constantly increased price owing to the merits of brand and resources. But in recent years, this gap has been significantly reduced, many domestic dairy firms has good consumption level.

The value of powdered milk is estimated to account for 45% of the Vietnamese dairy market at an average annual growth rate of 10.1% for the period 2010-2013, but by 2014-2015 it tended to decrease, especially in milk consumption in urban areas.


With low dairy cow production, Viet Nam is heavily dependent on dairy imports. Recently, despite the high growth rate of dairy cow in Viet Nam, it is still one of the 20 biggest importers of dairy milk in the world. Over the years, Viet Nam's imports of milk and dairy products have increased steadily and surpassed 1 billion USD in 2013, reaching 1.1 billion USD, an increase of 130% over the same period last year. By 2015, imports of milk and dairy products will show signs of decline (with a total import turnover of 900.7 million USD, decreasing by 18% compared to 2014).

Monthly import of milk and dairy products
Unit: million USD

Source: General Statistics Office

In 2015, New Zealand is still the main supplier of milk to Viet Nam with 24% (216.3 million USD), followed by the United States with 14.6% (131 million USD). Other big dairy markets for Viet Nam are Singapore, Thailand, Germany, Ireland, Australia, Netherlands, France and Japan. However, Viet Nam's dairy imports are expected to increase sharply, reaching 3.6 billion USD by 2045.

Structure of Viet Nam's dairy import market in 5 months of 2016


100% fresh milk in Viet Nam is still limited, due to the number of domestic herds which are only enough to supply about 30% of the country's demand. Even in the amount of fresh milk purchased by the farmer, 20-50% of the milk did not meet the required quality (according to a report from the Institute of Policy and Strategy for Agriculture and Rural Development). In addition, the source of fresh milk purchased also has to be used in many other products, not only serve exclusively for the production of liquid milk.

As a result, the lack of 70% of milk for processing and consumption has made Viet Nam join the group of 20 largest dairy importers in the world. This more or less pushes Viet Nam's dairy industry into dependency and risk, and actively enhances the foreign sector. Mead Johnson, Abbotts and Friesland Campina are the three major milk importers, accounting for 67% of the milk powder market.

Most of the powdered milk imported into Viet Nam is processed into reconstituted milk. This has been misleading to consumers when consuming liquid milk products, they can not distinguish between fresh milk and powderedmilk.
The types of milk imported into Viet Nam are very diversified, including modified whey powder, cream milk, liquid yogurt, butter, cheese and curd, condensed milk and cream, etc.

Import turnover of several types of milk and milk products in 5 months 2016
Unit: USD



Total in 5 months


Whey and modified Whey, whether or not condensed or added with sugar or other sweetening matter



Milk and cream, concentrated without added sugar



Milk and cream, concentrated in the form of powder or granules



Unsweetened milk and cream have a fat content of more than 1% but not more than 6% by weight



Liquid yogurt, whether or not condensed



Cheese and curd



Milk and cream of other kinds


9Whey powder
10Milk and cream not containing added sugar
11Milk and cream contain more than 10% liquid fat
12Powdered milk and cream, with a fat content of more than 1.5%
13Fat anhydrous butter
14Buttermilk, curd and ice cream, yogurt, kephir and milk, other fermented or acidified creams
15Fresh cheese (not cooked or uncooked), including whey cheese
16Grated or powdered cheese, of all kinds
17Dairy spreads
20Processed cheese, not grated or powdered
21Milk and cream of a fat content not exceeding 1%
22Cheese was grated or powdered packed with over 20 kg weight
23Milk and cream in powder, granules not containing added sugar

Import turnover of milk and milk products of some enterprises in 5 months 2016
Unit: USD



Total in 5 months


Dinh Duong 3A Co., Ltd. (Vietnam)



Mead Johnson Nutrition Co., Ltd.  (Vietnam)



Friesland Campina Co., Ltd. Ha Nam



Vietnam Dairy Products Joint Stock Company



Fonterra Brands Co., Ltd. (Vietnam)






Delys Trade Development Investment Joint Stock Company


8Nestlé Vietnam Co., Ltd.17.647.840
9DKSH Vietnam Co., Ltd.
10Hoang Lam Food Technology And Trading Joint Stock Company
11Branch of Le May Trading Service Co., Ltd. in Hanoi
12Calpis Vietnam Limited Liability Company
13Dai Tan Viet Joint Stock Company
14Maritime Logistics & Service Joint Stock Company
15BEL Vietnam Co., Ltd.
16Song Than Hanoi Joint Stock Company
17DLe May Trading Service Production Co., Ltd.
18Vinalines Logistics - Vietnam Joint Stock Company
19Danone Vietnam Co., Ltd.
20Good Food Co., Ltd.
21Van An Trading Co., Ltd.
22Snb Distribution Co., Ltd.
23V.I.P Viet Nam Co., Ltd.
24Mavi International Co., Ltd.
25Betagen Viet Nam Co., Ltd.
26Chau Dai Duong Co., Ltd.
27Phi Hung Co., Ltd
28Jebsen & Jessen Ingredients Viet Nam Co., Ltd.
29TRAPHACO Joint Stock Company
30Duc Nam Import - Export and Production Joint Stock Company
31Hsc Bac Viet Joint Stock Company
32Thuan Phat Export - Import Joint Stock Company
33Nutifood Nutrition Binh Duong Joint Stock Company
34Develing International Co., Ltd. (Viet Nam)
35Mesa Trading and Service Co., Ltd
36Otsuka Thang Nutrition Co., Ltd.
38Hoang Ha Production and Trading Co., Ltd
39Viet Nam I - MEI Frozen Food One Member Ltd.
Source: The General Department of Customs

In addition to the achievements, it can be seen that the production and processing of milk is rather modest compared to the demand of the domestic market and the potential for development of the industry. The process of deep and wide international integration of Vietnam into international economy will create many opportunities for the development and export of products but there are also many challenges to the industry, especially competition pressure.

1.2. The position of the industry in the general picture of the industry in the region

The world dairy industry is mainly concentrated in the developed countries such as USA, New Zealand, Australia, etc. and their products are usually exported to developing countries. The driving force for the development of the dairy industry comes from China and Europe (growth rate is up to 20% per year).

The dairy industry plays an important role in the global food system and also in the sustainable development of rural areas. In fact, the dairy industry is actively contributing to the economy of many communities, regions and countries. Currently, the demand for milk in the world tends to increase, in addition to that the industry is trending towards globalization, which leads to an increase in the scope and level of global milk transactions.

In Asia, Vietnam is emerging as one of the countries with dynamic milk production and processing industries, especially in recent years.

Like many other dairy producing and processing countries, Vietnam's dairy industry is also experiencing a shortage of supply for domestic and export markets.

Vietnam is a country that does not have history of developing dairy cattle. This trend has only appeared in Vietnam in the early 20th century. By 2015, Vietnam has more than 275,000 cows with a total of 19 thousand dairy farms. Dairy farming requires capital and high technology, but Vietnam currently maintains small scale livestock production (less than 20 cows), farmers lack knowledge about animal husbandry and disease prevention for cattle, which leads to low productivity, high production costs and unsustainable milk quality compared to many other countries.

According to Viet Nam Industry Research and Consultant (VIRAC), Western Europe has a production cost of 45 - 55 USD / 100 kg. In the United States, this number is about 35 - 60 USD depending on the level of development of the region. In countries such as Argentina which has favorable weather and large farming land, the cost is lower. The cost of production in Oceania is about 36.6 USD per 100 kg, including: Australia – 30 - 35 USD per 100 kilograms and New Zealand - 41 - 42 USD / 100 kg. This difference is due to differences in food prices, land prices and the recent appreciation of the NZD currency. New Zealand had a very competitive cost (12 USD / 100kg), but the appreciation of the currency and the rise in raw input material prices cause the cost to triple. In general, production costs do not fluctuate dramatically over time.

According to Euromonitor, in 2009 production of raw milk from domestic cattle only met about 20-30% of total milk consumption. In Vietnam, only 5% of the total dairy cows are concentrated in the farm, the rest is fed by households on a small scale. By the end of 2009, there were 19,639 dairy farmers with an average of 5.3 cows per farm. As a consequence, Vietnam's dairy products are one of the most expensive in the world. The average cost of milk in Vietnam is 1.40 USD per liter, compared with 1.30 USD/liter in New Zealand and the Philippines, 1.10-1.20 USD/liter in Australia and China, and 0.9 USD/ liter in the UK, Hungary and Brazil. In order to build a qualified dairy system, businesses have to invest a huge amount of capital. Moreover, in order to meet the market requirements, dairy enterprises must import technology, raw materials and equipment from abroad due to limitations of domestic technology which affecs the production cost and business turnover. Dairy companies depend on imported milk powder rather than fresh milk production in the country. Milk production faces an imbalance in supply and demand when domestic dairy cattle meet only about 20-30% of total dairy demand nationwide. Dependence on foreign markets for raw materials poses a risk of squeezing profits from fluctuating prices of imported dairy products. According to the Ministry of Agriculture and Rural Development, Vietnam imported 72% of total dairy products in 2009, including 50% of raw milk and 22% of milk products. On the other hand, since the accession to the WTO, Vietnamese dairy enterprises have faced increased competition due to the reduction of tariffs on imported milk under Vietnam's tariff reduction policy when implementing commitments under the Common Effective Preferential Tariffs in the ASEAN Free Trade Area (CEPT / AFTA commitments) and commitments with the World Trade Organization (WTO). The "foreign-oriented" psychology of the Vietnamese also negatively impact on the consumption of Vietnamese dairy products.

But by 2014, the number of dairy cows in the country has more than doubled compared to 2008, the breed quality improved, fresh milk ensures food safety and is gaining the trust of consumers. Dairy productivity is increasing and exceeds other countries in Southeast Asia and China. Compared to other countries in ASEAN and China, dairy cow yields in Vietnam are higher. However, Vietnam still significantly lags behind Japan, South Korea and Taiwan. Because Vietnam is not a country with advantages in dairy farming, suitable temperature for cow husbandry is from 20-250C. Meanwhile, the structure of green food for dairy cattle in Vietnam is not yet formed. Small and medium producers account for 66% of all dairy cows. The linkages between business and farmer households have not yet been established. It is projected that by 2045, Vietnam will reach the current productivity of Taiwan with 1 million dairy cows. However, in Viet Nam there appear many effective models of livestock production, with the link between livestock farmers and milk purchasing and processing enterprises.

By 2015, the cost of dairy production in Vietnam would have surpassed the world average, given that the livestock sector remained at a low concentration level and small scale (not achieving economic benefits from larger scale production), low yields (12-15 liters / cow / day) and animal feed and veterinary prices remain high, nevertheless, businesses have better developed modern processing lines. In general, the country's dairy processing industry now has a good level of equipment and technology in the region, especially many large enterprises in the sector have modern equipment and technology on a par with those from developed countries in the world. As the industry develops, the demand for improvement and technological innovation of enterprises in the industry is huge. At present, most of the large enterprises in the sector are interested in renovation, enahncement and technology management through new construction projects and expanded investment and increasing the capacity of the plant which uses advanced equipment and modern technology. In addition, for some low-capacity dairy processing establishments, the updating of technology in these facilities has not been paid due attention. Although in some small manufacturing establishments, imporovement and technological innovation has received little attention, but the concept of technology management still seems very strange.

Nevertheless, this has led to a shortage of fresh milk raw materials for the dairy industry in Vietnam for many years thus making the industry heavily dependent on the import market.

 n the future, Vietnam should make more efficient use of geographical features and tropical climate intermingled with the temperate belt which is favorable for development of dairy cattle. Grasslands such as Ha Tay, Moc Chau, Binh Duong, etc. provide abundant and diverse food source and good growing conditions.

2. Current status of business in the industry

- Number and size of businesses

The dairy sector in Vietnam is considered to have developed rapidly with only 1-2 milk producers and distributors in the period before 1992, but by 2005 the country already had 39 enterprises. After more than 10 years this number has doubled. By 2016, it has grown to more than 80 enterprises with hundreds of brands, most of which are members of the Vietnam Dairy Association. Of these, medium and large sized dairies are comprised of 10 enterprises with a total of 26 dairy processing factories (of which Vinamilk alone has 13 factories); the rest are mainly small and micro enterprises. .

In addition, foreign milk brands such as Abbott, Babysan, Dumex, Dutch Lady (Frieslandcampina), Meiji and Nestlé, etc. have entered the market. The competition among domestic milk producers and processors with foreign brands makes Vietnamese dairy industry face great challenges, but there are also many opportunities to develop and dominate the market.

Enterprises involved in dairy production and processing in Viet Nam include foreign invested enterprises (FDI) and domestic enterprises.

The FDI segment has a large market share in the powdered milk market and is closely following local firms in the liquid milk market, especially FrieslandCampina Vietnam. This firm has taken strong measures by training distributors and cooperated with banks to fund their capital. Since 2009, FrieslandCampina Vietnam has "developed" a strong dítribution system with 150 distributors and 100,000 retailers in Vietnam. While Abbott took another step in acquiring the exclusive distributor of Nutrition 3A Co. in 2012.

Of the domestic enterprises, Vinamilk is still regarded as the biggest counterparts by foreign investors. Vinamilk is developing 9 large scale farms with whole breeds imported from Australia, New Zealand and USA. Soon the company will put into operation 4 more farms. They also link with nearly 8,000 households, purchasing an average output of about 500 tons of milk per day. Vinamilk is holding nearly 50% market shares in the liquid milk segment in Vietnam. Vinamilk is also known as a company that does not hesitate to spend money on advertising with a sharp increase in costs over the years, i.e. ratio of advertising / revenue rises from 1.85% (2011) to 4.15% (first 9 months of 2015). This increase, on the other hand, also reflects the fierce competition on the milk market.

Vinamilk no longer operate only in the domestic market. They set a target of becoming one of the 50 largest dairy companies in the world by 2017 with sales of more than 3 billion USD. The company has considered many globalization solutions, such as pouring capital into the Miraka plant in New Zealand, which owns 70% of the shares in Driftwood Dairy Plant (USA), investing in Poland and investing in the plant in Cambodia. With the restoration of the Iraqi market (the main export market of Vinamilk) and the Myanmar market's penetration, the company's export turnover in 2016 may increase 20% compared to the same period of last year, contributing to 22% of total revenue.

Another domestic company, TH True Milk, is also excited to participate in the expansion race by investing 1.2 billion USD in a closed-loop production chain, including dairy farms, factories and distribution channels. Its ambition is that by 2017 it will be able to supply 50% of raw milk material. But with the number of cows reaching only one-third of the plan and the modest market share of liquid milk (7.7%), TH True Milk will probably face a huge pressure, especially because a little of time is left till TPP enters into force. Recently, they announced 2.7 billion USD investment in a closed-loop production chain in Russia, but the effectiveness cannot be assessed yet.

Vinamilk and TH True Milk are considered as the pioneers of the domestic dairy industry in Vietnam. With the application of modern technology in the production in terms of feed, livestock and milk products to ensure high productivity, quality and scale advantages, the cost of milk products of those two enterprises are also more competitive than the milk of small farms. The share of these firms in the sector is still low, but this will be the development orientation and objective of Viet Nam in the years to come.
For smaller companies like Nutifood, the way to develop raw material areas and cooperate with partners will be a key priority strategy to survive. Nutifood cooperated with Hoang Anh Gia Lai in the project to develop the milk raw material areas and help to lower expected milk price to the level of a half of the market price. Nutifood will invest in the factory and consume the milk of Hoang Anh Gia Lai.

Meanwhile, International Dairy Company (IDP) is developing the direction of cooperation with Australian partners to make fresh milk. IDP CEO Tran Bao Minh shares and always emphasizes that, except some areas like Ba Vi, natural conditions in Vietnam are less suitable for dairy farming. The core of the big competition is about the raw material area and farmer level. Again, experts are concerned about the prospect that farmers may leave the dairy market when price of imported raw milk is expected to fall and spill over into Vietnam after the TPP.

Against such attack of foreign milk, small companies such as IDP are also looking for new, distinct and high quality dairy products. The fact proves that the focus on other dairy sectors, such as soy milk and corn milk, is a way for smaller, smaller companies to gain market foothold.

- List of major businesses in the industry:

1. Vietnam Dairy Products Joint Stock Company (Vinamilk)
2. Abbott Nutrition Vietnam
3. Hanoi Milk Joint Stock Company (Hanoimilk)
4. Mead Johnson Nutrition (Vietnam) Limited
5. International Dairy (IDP) Joint Stock Company
6. Soybean Dairy Vietnam
7. Ba Vi Milk Joint Stock Company
8. FrieslandCampina Vietnam Company
9. Moc Chau Dairy Cattle Joint Stock Company
10. Vietnam Vitality Milk Joint Stock Company (VitaDiary)
11. Nestle Vietnam Limited Liability Company
12. Hanco Food Joint Stock Company
13. Truemilk TH Milk Joint Stock Company
14. Yakult Vietnam Company Limited
15. Viet Nam Foremost Company Limited

3. Current status of export markets

The dairy sector in Vietnam has been continuously developing and trending in the right direction. In the past Vietnam had to import completely, nowadays Vietnam has been able to export milk to more than 40 foreign markets. Vietnam is also one of the few countries in Asia that exports milk. However, Vietnam's annual export turnover is still low, reaching just around 100 million USD. In 2014, Vietnam exported 92.8 million USD worth of dairy products, down from 115.5 million USD a year earlier, nearly three times more than in 2010, of which Vinamilk accounted for majority (around 90%). This demonstrates that domestically produced dairy products are gaining the trust of Vietnamese consumers and have more opportunities to reach the international dairy market.

In recent years, export turnover of dairy products has decreased due to instability in the Middle East market but still achieved the target set out in the master plan. Dairy exporters (mainly Vinamilk) maintain traditional markets (Middle East and Southeast Asia) and develop new markets in Africa and Central America.

Vietnamese dairy products are widely exported, including: milk powder, nutritious powder, condensed milk, liquid milk, soymilk, yogurt, milk whey powder, buttermilk, butter oil, skim milk powder, butter, cheese, etc.

Export turnover of milk and dairy products of Vietnam in the period from 2010 - 2014


Two Vietnamese companies have strong export capacity for domestically-produced dairy products are Vietnam Dairy Products Joint Stock Company (Vinamilk) and Friesland Campina Vietnam (Dutch Lady brand).

In 1998, Vinamilk started exporting its first powdered milk products to the Middle East, with the main market being Iraq under the United Nations Food Program. The volume of milk exported in 1998 of Vinamilk reached nearly 9,000 tons.
Until now, through many years of efforts to seek markets and participation in trade promotion activities, Vinamilk's products have been exported to 43 countries around the world.

By 2015, Vinamilk have exported more than 47,000 tonnes of milk, an increase of 430% compared to 1998 - the first year Vinamilk participated in export activities.

Exports contribute about 13% of the company's total consolidated revenue. In recent years, the company has continued to export to traditional markets in the Middle East and Southeast Asia, concentrating on exploring potential markets in Africa and especially the markets that require high quality products like Japan, Canada.
Analysis & Reports
Vietnam maps showing administrative units, sources of critical raw materials and industrial zones locations.