Research Paper
12 April 2010
SECTOR VIEW
Developing a taste for dairy
Appetite for powdered milk and yoghurt
We are POSITIVE on Vietnam’s dairy sector. We expect it to maintain high-growth momentum due to a growing customer base, low milk consumption per capita, rising disposable income and increasing health awareness among consumers. Distribution networks are expanding and dairy producers are launching aggressive advertising campaigns. Anh Dang
(84 8) 3520-2050 - Ext : 8136
Hanh.p.dang@mekongsecurities.comH
The dairy sector, valued at VND21,275 billion (USD1.1 billion) in 2008, is among the fastest-growing in Vietnam’s non-discretionary consumer sector, with a CAGR of
14.6% over the last eight years. We estimate the value of the sector will rise 9.5% per annum during 2010-13, while volume should increase at a 7% CAGR for the next four years. Duong Pham
(84 8) 3520-2050 - Ext: 8125
Hduong.t.pham@mekongsecurities.com
Thu Vo
(84 8) 3520-2050 - Ext: 8158
Hthu.a.vo@mekongsecurities.comH
We see growth potential in powdered milk and yoghurt. Powdered milk, which makes up 13% of Vietnam’s dairy market, was the most attractive sub-sector during 200309, posting double-digit CAGR of 10.7% in volume and 16.6% in value. Powderedmilk producers benefit from their ability to pass on rising imported-material costs to end consumers. We expect the sub-sector to continue to offer strong growth potential. Euromonitor has projected CAGR of 14.43% in value for the sub-sector in
2010-13. Yoghurt meanwhile accounts for 15% of the dairy market’s value and includes health-conscious target consumers. The yoghurt sub-sector’s value grew
12.6% in 2009, and consumers seemed relatively insensitive to price rises. The
CAGR in terms of value for the yoghurt sector could remain as high as 11.8% in
2010-13.
The sector faces supply and demand imbalances as domestic herds can only meet about 20% of total nationwide demand. Heavy dependence on foreign markets for input materials creates a risk of margin
SECTOR VIEW
Developing a taste for dairy
Appetite for powdered milk and yoghurt
We are POSITIVE on Vietnam’s dairy sector. We expect it to maintain high-growth momentum due to a growing customer base, low milk consumption per capita, rising disposable income and increasing health awareness among consumers. Distribution networks are expanding and dairy producers are launching aggressive advertising campaigns. Anh Dang
(84 8) 3520-2050 - Ext : 8136
Hanh.p.dang@mekongsecurities.comH
The dairy sector, valued at VND21,275 billion (USD1.1 billion) in 2008, is among the fastest-growing in Vietnam’s non-discretionary consumer sector, with a CAGR of
14.6% over the last eight years. We estimate the value of the sector will rise 9.5% per annum during 2010-13, while volume should increase at a 7% CAGR for the next four years. Duong Pham
(84 8) 3520-2050 - Ext: 8125
Hduong.t.pham@mekongsecurities.com
Thu Vo
(84 8) 3520-2050 - Ext: 8158
Hthu.a.vo@mekongsecurities.comH
We see growth potential in powdered milk and yoghurt. Powdered milk, which makes up 13% of Vietnam’s dairy market, was the most attractive sub-sector during 200309, posting double-digit CAGR of 10.7% in volume and 16.6% in value. Powderedmilk producers benefit from their ability to pass on rising imported-material costs to end consumers. We expect the sub-sector to continue to offer strong growth potential. Euromonitor has projected CAGR of 14.43% in value for the sub-sector in
2010-13. Yoghurt meanwhile accounts for 15% of the dairy market’s value and includes health-conscious target consumers. The yoghurt sub-sector’s value grew
12.6% in 2009, and consumers seemed relatively insensitive to price rises. The
CAGR in terms of value for the yoghurt sector could remain as high as 11.8% in
2010-13.
The sector faces supply and demand imbalances as domestic herds can only meet about 20% of total nationwide demand. Heavy dependence on foreign markets for input materials creates a risk of margin