Vietnam’s biggest producer of dairy goods aims to beef-up its domestic market dominance by snapping up a significant stake in a major competitor which also ploughs a sizeable furrow in the wider agricultural sector.
Dairy industry giant Vinamilk has offered to acquire a 47% stake in GTNFoods JSC which, at present, owns 51% of Moc Chau Milk JSC and two other state-run agricultural companies, according to a filing with the Ho Chi Minh Stock Exchange.
The move is significant because it signals the intention of the country’s largest dairy producer to milk the potential not just of Vietnam’s burgeoning demand for dairy products but that of the wider Asian region too.
Dairy sales in Vietnam are projected to rise by more than 10% a year from now until 2023, according to global investment database Passport. This makes it one of the fastest-growing markets in the world.
A rapidly growing urban middle class and an improving mix of products are fuelling this growth. According to Vinamilk, the consumption of dairy products in Vietnam’s more affluent urban areas is twice that of rural regions.
Despite that growth, however, it should come as no surprise that Vietnam’s per-capita consumption still lags far behind mature markets overseas.
Per capita dairy consumption in the country is still less than one-fifth of that in Australia, Germany, Sweden and the United Kingdom.
Vinamilk’s chief executive officer, Mai Kieu Lien, described the company’s business strategy as “flexible”.
“At present, the dairy industry still has a lot of room for growth. If good husbandry is developed, increasing the number of cows will reduce the price of products and profits will grow,’’ said Mai.
Indeed, the move to acquire a stake in Moc Chau will go some way to delivering that enhanced husbandry. The firm currently owns more than 24,000 cows, a figure expected to grow steadily by 14% a year, eventually producing 150 tons of milk a day and 100,000 tons a year.
Also, in August last year, Vinamilk imported its first A2 dairy cows from New Zealand.
A2 milk differs from regular cow’s milk because it only contains A2 beta-casein protein which is easier to digest and is increasingly popular in dairy products in the Asian marketplace.
