The dairy industry still has great potential for growth, so investors can be assured when investing in dairy giant Vinamilk, said Nguyen Quang Tri, the company’s marketing executive director.
Speaking at a Thursday forum on the F&B industry in Ho Chi Minh City, Tri said Vinamilk is leading the country in terms of dairy market share, four times higher than its next rival.
"The dairy industry has stagnated in recent years, because of not only economic difficulties and reduced purchasing power, but also fierce competition, various substitute products, and consumers' fragmented and increasingly high requirements," he noted.
"In the past, in marketing, we only had one message for everyone, but today each person has a specific need, so it's more difficult to meet them all," Tri added.
Besides, modern distribution channels such as supermarkets and convenience stores can develop their own products, putting pressure on manufacturers to raise commissions.
Other challenges are strict regulations and standards from major export markets on sustainable development, and unpredictable fluctuations in the world market that affect the supply chain, he said.
However, the Vinamilk leader stressed that the demand for milk is huge given the country recording 1.5 million new babies each year, the population of over 60 years old increasing, customers paying more heed to health and nutrition after the Covid-19 pandemic, the big gap in milk consumption between rural and urban areas, and a low rate of milk consumption per capita compared to regional countries such as Thailand and Singapore.
“The economic difficulties and falling purchasing power are only in the short term, and the company has been preparing for future growth,” he said, adding the brand's repositioning in 2023 was a pivotal step in the next five years.
According to Tri, as a long-standing, national brand, Vinamilk's challenge is the growing polarization and fragmentation between the affordable and high-end segments, requiring more personalized attention and care. This means the company must create a national brand for everyone which is also suitable for people with higher requirements.
In addition, the pandemic has changed consumers' shopping habits. They prefer online shopping and cooking at home now, and young people are going to clubs to learn cooking and bartending or stay at home to make cakes to reduce financial pressure. They also like experiential activities, a green life and sustainable development. Therefore, while liquid milk and baby milk saw negative growth, condensed milk recorded double-digit growth.
“Vinamilk has recognized these changes and sought to explore new customer groups,” he revealed.
The dairy giant’s revenue has stagnated over the past three years, with shrinking profit. In the first nine months of 2023, its revenue remained flat at VND44.75 trillion ($1.83 billion) and net profit decreased slightly to VND6.55 trillion ($267.3 million).
Regarding stock developments, after reaching its peak at the end of 2017, VNM started a downward trend. It closed the Ho Chi Minh Stock Exchange session on Friday at VND67,200 ($2.74) per share, down 15% from September 2023.