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Vietnam Dairy Market Report 2018


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Download free preview of Vietnam Dairy Market 2018 to have overview of market performance, insight and upcoming trends as well as key players within the market.

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Vietnam Dairy Market Report 2018

  1. 1. INDUSTRY PREVIEW Vietnam Dairy Market 2018
  2. 2. Page 2 Table of Contents No Contents Page 1 Vietnam Dairy Market 2018 2 - 14 1.1 Market Structure & Description 3 1.2 Size & Segmentation 4 1.3 Domestic Production 5 1.4 Import 6 1.5 Competitive Dynamics 7 1.6 Financial Indicators 8 1.7 Appendix: Key Players’ Profile 9 – 12 2 StoxPlus Introduction 12 – 22
  3. 3. Page 3 Market Structure & DescriptionDAIRYMARKET Source: StoxPlus Vietnam dairy market has 04 main sectors including Drinking milk, Powdered milk, Yogurt, and Condensed milk Figure 1: Market structure of vietnam dairy market, 2017 • UHT milk dominates drinking milk segment thanks to consumer behavior and food safety, especially in rural area. In particular, the undeveloped cold chain transportation limits the coverage of pasteurized milk to rural area. • Approx. 70% of drinking milk raw materials is imported. However, local giants companies are developing their own farms to sharpen their competitive advantages, such as TH Milk and Vinamilk. • The market is fragmented with over 300 local and global brands. Top players include Abbott, Vinamilk, FrieslandCampina, Mead Johnson and Nestle. • Customers prefer global brand. For instance, in the infant milk powder segment, Japanese products such as Meiji, Morigana or Wakodo are gaining popularity. • The persistent rising trend of health-consciousness in Vietnam is the key driver boosting the growth of yogurt segment - the star-performer in dairy market. • Despites its dominant position, Vinamilk’s market share declined from 90% (2012) to 84% (2017) due to fierce competition. As yogurt is seen as a potential market (CAGR 2012-2017 of 13.1%), companies focused more on this segment with the introduction of new brand and product in 2017. • This sector is in mature stage, largely affecting by the rising health-awareness trend. • Vinamilk brand name “Ong Tho” remains a firm position with approximately 80% market share • The market size is relatively small due to customer behavior. However, cheese and butter are gaining popularity in Vietnam, driven by increasing influence of Western food culture, especially amongst the youngsters in big cities. Thus, this sector is expected to experience high growth rate from low base. • This segment is currently dominated by foreign players such as Bel Group with “The laughing cow” brand and Lactalis with its “Président”. Drinking milk Others Yogurt Condensed milk Powdered milk Pasteurized Milk UHT Milk Drinking Traditional Formula Specialty Butter Cream Cheese
  4. 4. 19% 16.8% 2.0% 10.5% 0 1,000 2,000 3,000 4,000 5,000 2014 2015 2016 2017 US$mn Dairy Consumption Growth Rate (%) Page 4 Size & Segmentation Source: StoxPlus Market size of dairy market reached approx. US$4.6bn in 2017, posting CAGR 2014-2017 of 7.8% Figure 02: Market size (US$ mn) of Vietnam dairy market, 2014-2017 • Market size of dairy market reached approx. US$4.6bn in 2017, posting CAGR 2014-2017 of 7.8%. The market recorded growth rate recovery of 10.5% in 2017, driven by the expansion of powdered milk and other dairy products such as cheese, butter or ice-cream with growth rate of 11.7% and 19.5% respectively. • In 2017, the drinking milk consumption per capita reached 12 liter per person per annum in Vietnam, as much as half of Thailand’s figure or one- third of Singapore’s one. Given low penetration rate, dairy market in Vietnam is expected to enjoy a healthy growth rate in coming years thanks to: 2% average population growth with rising health improvement initiatives; rising health-awareness (driving yogurt, drinking milk and powdered milk segments); zero import tariff with FTAs such as CPTPP Drinking Milk Products Powdered Milk Yogurt Condensed Milk Others 2014-2017 CAGR 7.8% VIETNAM DAIRY MARKET SIZE BY SEGMENTATION Market size
  5. 5. Page 5 Domestic Production Production volume of drinking milk and powdered milk grew at CAGR 2013-2017 of 11.8% and 6.4%, respectively Figure 3: Production volume of drinking milk and powdered milk, 2013-2017 Source: StoxPlus from GSO Drinking Milk Powdered Milk • Overall, the outperformed growth of the domestic production in the 2014-2015 period was due to the expansion and new construction of cow farming. In particular, the 2 largest dairy plants in Vietnam with a capacity of 54,000 tons of milk powder and 1.2 million liters of drinking milk were put into operation by Vinamilk in late 2013. • Key players in dairy segment in Vietnam including Vinamilk, TH Group, Hanoi Milk are developing their own dairy farm and cooperating with local farmers. TH Group owns the largest farm in Nghe An with 45,000 cows, and plans to invest in 4 new farms (Ha Giang, Phu Yen, Thanh Hoa, Soc Trang). Meanwhile, Vinamilk has planned to develop 8 new cow farms during 2017-2021 period. Of which Vinamilk Hanoi farm has capacity of 10,000 cows, while other farm will have around 4,000 cows each. StoxPlus foresees the milk production volume will record a noticeable increase in the next five years. 8.5% 11.3% 21.4% 7.5% 7.4% 0 500 1,000 1,500 2013 2014 2015 2016 2017 mnlitre Drinking Milk Growth Rate (%) 7.1% 3.7% 10.1% 8.5% 3.7% 0 40 80 120 2013 2014 2015 2016 2017 '000tons Powdered Milk Growth Rate (%) Source: StoxPlus from GSO CAGR 2013-2017 11.8% CAGR 2013-2017 6.4%
  6. 6. 25% 19% 12% 4% 6% 7% 5% 2% 21% 30% 13% 9%7% 6% 5% 5% 4% 22% New Zealand Singapore US Germany Thailand Holand Malaysia Australia Others Page 6 Import Import value of dairy products & materials is on the downward trend with CAGR 2014-2017 of -5% Figure 4: Import value (US$ mn) of dairy product & material Source: StoxPlus from Customs • Cow farming in Vietnam has not yet developed as the qualified dairy cows are still imported. Additionally, Vietnam still relies much on import raw material due to limited local production capacity. However, in recent years, local giant dairy companies including TH and Vinamilk are focusing in developing raw materials with the establishment of big dairy cow farm, resulting in a decrease in import. Please refer to slide 5 for detailed analysis. • New Zealand remains the biggest milk exporter to Vietnam, accounted for 30.3% of total import. Notably, among countries, import products from Japan registered high growth, increased market share (from 0.1% in 2013 to 2.6% in 2017), indicating the strong preference of Vietnamese consumers toward Japan products, especially infant milk powder. • Raw materials expose to zero-import tariff thanks to FTA such as CPTPP. Figure 5: Breakdown Import Value of Dairy Product by Country 2013 2017 Source: StoxPlus from Customs -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% -2,000 -1,500 -1,000 -500 0 500 1,000 1,500 2014 2015 2016 2017 Import vlue Growth rate (%)
  7. 7. Page 7 Competitive Dynamics Vietnam dairy market is dominated by top 5 players, making up approx. 85% market share Figure 6: Market share of dairy companies by net sales in Vietnam, 2017 Source: StoxPlus ** Note: Sales revenue covers ALL BUSINESS LINES Figure 7: Net sales of top 5 dairy companies, 2017 Source: StoxPlus • There are 238 companies producing and trading dairy products in Vietnam. The market is concentrated as top 5 players dominated the market with 85% market share. Vinamilk remained the as the leading company with approx. 50% market share by net sales in 2017. • The market witnessed fierce competition: ➢ Product offering: While TH Milk delivered premium organic products, Nutifood offered powder milk targeting low-income customer class, and Vinamilk with diversified portfolio reaching high-come to economic product). The market also witnessed new product such as Kido Group’s iced yogurt (‘brand’) or Vinamilk’s Greek yogurt. ➢ Distribution network: Besides the retailers’ network (supermarkets, grocery stores, etc.), Vinamilk and TH Milk pioneered in developing their own retail chains. In 2018, Vinamilk and TH Milk owned 415 and 213 stores nationwide. ➢ Dairy cow farming: Key players also actively invest in dairy farm. While Vinamilk plans to develop 8 new cow farms during 2017-2021 period, TH Milk continues to invest in 2 large-scaled farms with advanced technology application similarly to the precedent farms. Vinamilk Nestle Vietnam Nutifood Frieslandcampina TH Milk Others - 500 1,000 1,500 2,000 2,500 Vinamilk Nestle Vietnam Nutifood Frieslandcampina TH Milk US$ mn
  8. 8. COMPANY KEY BUSINESS LINE TYPE SALES REVENUE COGS NPAT TOTAL ASSET OWNER’S EQUITY Vinamilk Dairy product SOEs (formerly) > 1,000 1,073.2 410.9 1,289.1 983.1 Nestle Diversified Foreign-owned 500 - 1,000 307.6 48.6 349.3 103.9 Frieslandcampina Vietnam Dairy product Foreign-owned 300 - 400 202.0 50.3 143.5 53.0 Binh Duong Nutifood Dairy product Private 300 - 400 204.8 45.0 227.9 89.8 TH True Milk Dairy product Private 100 - 200 141.6 -8.9 39.7 -76.2 Moc Chau Milk Drinking milk Private 100 - 200 81.1 8.9 47.7 31.1 IDP Drinking milk (UHT milk) & yoghurt Private < 100 44.1 -9.2 37.1 5.9 Page 8 Financial Indicators Vietnam dairy market is dominated by top 06 players, making up approx. 90% market share Figure 7: Selected financial indicators (US$ mn) of key players in dairy market, 2016 Source: StoxPlus
  9. 9. Appendix| Key Players’ Profiles • Registered name: TH Food Chain Joint Stock Company • Head office: No. 166 Nguyen Thai Hoc, Quang Trung Ward, Vinh City, Nghe An Province • Establishment Year: 2009 • Charter capital: US$167.1mm (as of 2017) • Principal businesses: TH Food Chain Jsc. (TH True Milk) focuses on manufacturing and distributing drinking milk and yogurt. TH True Milk farm is the biggest hi-tech cow rising facility in Asia. The company enjoys great advantages due to having developed a large cow herd and applied modern technologies provided by Israel, the US and Europe in raising cows and managing the farm. Currently, TH Milk owns 45,000 cows, of which more than 22,000 are lactating at 30-40 liters per cow every day. COMPANY PROFILING FINANCIAL PERFORMANCE PRODUCTION SITES KEY PRODUCTS & DISTRIBUTION CAPACITY Unit: US$mn 2014 2015 2016 2017 Net sales 123.6 CoGS 113.2 Gross Profit 10.4 % Gross Profit(*) 8.4% NPAT (11.8) % NPAT (*) -9.5% Total Assets 64.1 Total Liabilities 95.2 ROA (*) -18.4% ROE (*) 37.8% No Plant Location (Province) Designed Capacity (‘000 tons/year) 1 TH Milk Farm Nghe An 500 DRINKING MILK • Pasteurized milk • UHT milk • Formula milk YOGURT • Tradition yogurt • Drinking yogurt OTHERS • Ice cream • Butter and cheese • Healthy beverage • Nut milk TH Group’s business strategy is to develop the "True Milk" brand - bring fresh milk from the farm into production instead of using powdered milk to mix with water. In order to create strong brand positioning, TH Group has developed its own TH True Mart retail channel with up to 200 outlets nationwide besides distributing its products through traditional distribution channels and supermarkets, Contents to be removed for demo purpose • In Ha Giang, TH Milk will develop a cow farm of 10,000 cows with total estimated investment value of US$100 mn. The Company has kicked off the project in November, 2017 • TH Milk will develop a dairy cattle farm of 20,000 heads in Phu Yen, which is divided into 2 phases. The total estimated investment value is around US$201 mn. The project in Phu Yen has commenced to construct the first phase with capacity of 5,000 cows in 2018 • Additionally, TH Milk will continue to invest in large-scale farm in Thanh Hoa (10,000 cows) and Soc Trang (20,000 cows) with advanced technology application similarly to the precedent farms.
  10. 10. Appendix| Key Players’ Profiles • Registered name: International Dairy Products Joint Stock Company • Head office: Km 29, National Road 6, Truong Yen Commune, Chuong My District, Hanoi, Vietnam • Establishment Year: 2004 • Principal businesses: International Dairy Products Jsc. (IDP) is a milk and yogurt manufacturer and distributor in Vietnam,. The company owns 04 brand names including Love'in Farm (LIF), LIF Kun, Ba Vi, and Men Song. Besides the traditional products, IDP also develops a “hybrid“ product line between milk and soft drink to create nutritious energy drinks. The corporation currently operates 03 milk processing and manufacturing plants, of which 02 factories in Ba Vi (Hanoi) and only 01 factory in Ho Chi Minh City. COMPANY PROFILING FINANCIAL PERFORMANCE PRODUCTION SITES KEY PRODUCTS & DISTRIBUTION CAPACITY Unit: US$mn 2014 2015 2016 2017 Net sales 79.9 CoGS 59.7 Gross Profit 20.0 % Gross Profit(*) 25.1% NPAT (3.2) % NPAT (*) -3.9% Total Assets 8.3 Total Liabilities 40.8 ROA (*) -37.9% ROE (*) 9.7% No Plant Location Designed Capacity (mn litre/year) 1 Truong Yen factory Hanoi City 48 2 Ba Vi factory Hanoi City 3 Cu Chi factory Ho Chi Minh City N/A DRINKING MILK • UHT milk • Corn milk YOGURT • Tradition yogurt OTHERS • Milk café • Fruit milk • Choco milk IDP focus its business on 02 segments: fresh milk and yoghurt, in which "Love'in Farm" and BaVi are the major fresh milk brands. “Love’in Farm” is positioned as a premium 100% fresh milk product line, competing directly with major players such as Vinamilk and TH True Milk. Meanwhile BaVi targets at the low- and middle-income consumers, strongly focuses on rural markets. Contents to be removed for demo purpose
  11. 11. Appendix| Key Players’ Profiles • Registered name: Binh Duong Nutifood Nutrition Food Joint Stock Company • Head office: 281-283 Hoang Dieu Street, Ward 6, District 4 Ho Chi Minh • Establishment Year: 2003 • Principal businesses: NutiFood is a manufacturer and distributor of specialty dairy products focused on 03 groups: Infant milk powdered, specialty milk, and high-energy nutrition product. Today, Nutifood is one of the leading brands in whole milk powder. Besides the milk powdered lines, the company also distributes a wide range of products including UHT milk, yoghurt, condensed milk, and most recently the company has invaded the field of instant coffee in 2018. COMPANY PROFILING FINANCIAL PERFORMANCE PRODUCTION SITES KEY PRODUCTS & DISTRIBUTION CAPACITY v Unit: US$mn 2014 2015 2016 2017 Net sales 270.7 CoGS 167.7 Gross Profit 102.5 % Gross Profit(*) 37.9% NPAT 23.0 % NPAT (*) 8.5% Total Assets 99.8 Total Liabilities 43.2 ROA (*) 23.0% ROE (*) 40.5% No Plant Location Designed Capacity (per year) 1 NutiFood Binh Duong Binh Duong Province - PM: 50,000 tons 2 NutiFood Cao Nguyên Gia Lai Province - DM: 500 mn liters POWDERED MILK • Formula • Specialty DRINKING MILK • UHT milk OTHERS • Yoghurt • Soymilk • condensed milk • Café • Nutritious cereal At present, NutiFood has 03 exclusive distribution centers located in Ho Chi Minh City, Dong Nai province, Quang Nam province. From these 3 centers, NutiFood builds a professional distribution network covering 64 provinces and cities nationwide • In 2015, the company started the construction of NutiFood Vietnam Factory in Kien Khe Industrial Zone, Ha Nam with the processing capacity of 200 million liters of fresh milk and 31,000 tons of milk powder, which is the largest factory in the North. • In 2017, the company invested in NutiFood Vietnam Factory II at Pho Noi Industrial Zone, Hung Yen Province with total investment capital of US$$72 million. Contents to be removed for demo purpose
  12. 12. Page 12 Table of Contents No Contents Page 1 Vietnam Dairy Market 2018 2 - 14 1.1 Market Structure & Description 3 1.2 Size & Segmentation 4 1.3 Domestic Production 5 1.4 Import 6 1.5 Competitive Dynamics 7 1.6 Financial Indicators 8 1.7 Appendix: Key Players’ Profile 9 – 12 2 StoxPlus Introduction 12 – 22
  13. 13. Page 13 Overview • Date of incorporation: March 11, 2008; • Legal representative: Mr. Nguyen Quang Thuan • Number of staff: 80 (as of April 2018) including Data Analysts, Market Analysts, IT Engineers and Product Developers. • Charter capital: VND24 billion (US$1.1 million); Shareholders: NIKKEI: 17.55%; QUICK: 17.55%; Management and other: 64.9%; • Two offices: Hanoi Head Office and HCMC Branch StoxPlus is a pioneer and a Vietnam’s leader in financial and business information services since 2008 Leveraging on our financial and corporate database we provide, on the order basis, research services by our professional team with local insights and international experience: • Industry Report • Customized research • Commercial Due Diligence • Market Entry Consulting • Business matching and Support We offer below products leveraging on our comprehensive financial database: • FiinPro Platform: financial database for professionals covering equity, industry and economic data and analytic tools • FiinTrade Platform: the first comprehensive information platform for trading into Vietnamese stocks • Securities Datafeed: via API or XML StoxPlus Joint Stock Company We offer below products on-the-shelf and by order basis by leveraging on an aggregated source of more than 1 mil+ Vietnamese companies: • Company Report: from basic profile, factsheet, credit report to comprehensive research reports. Financial Information Research & Consulting Business Information
  14. 14. Page 14 Board of Directors and Management Our Management have extensive and diverse experiences in information, technologies & related services Thuan Nguyen, FCCA Chairman and CEO Co-founder of StoxPlus previously working as an investment manager of Vietnam Holding Asset Management Ltd and manager at PwC Vietnam & Australia Hieu Nguyen, MBA Vice Chairman Co-founder of StoxPlus previously working as a specialist at the Department for International Development of UK (DFID) in Vietnam. and Consulting Manager at PwC Vietnam Yoichi Noor Iwamoto Board Member Representative of NIKKEI Inc. at StoxPlus. He is currently Managing Director of NIKKEI CHINA (Hong Kong) Ltd. Chiharu Kawai Board Member Representative from QUICK Corp at StoxPlus. He is currently General Manager of Global Business Department at QUICK Corp. Bolat Duisenov Board Member CEO of Kusto Group Vietnam – a private equity fund with AUM of US$300M operating in Vietnam. Huy Mac, CFA, FCCA Board Member A well-known financier with Lehman Brothers and KPMG. Recently he was CEO of KB Securities (Vietnam) and ex-DCEO of MB Securities. Dong Le, CFA Director, BiinForm Previously Senior Investment Manager at BIDV-Vietnam Partners Investment Management and audit manager at Deloitte Vietnam Trang Truong, MBA Managing Director, FiinForm Managing Financial Information Unit of StoxPlus and lead business analyst for innovative product development at StoxPlus Tung Do CTO Oversight technology and product development at StoxPlus. Previously various managerial position at IT Outsourcing firms including CMC and EKGIS
  15. 15. Page 15 Research and Consulting Services • Leveraging on industry and corporate database, we offer insightful industry reports for Vietnam. • Our Analyst team cover around 20 key sectors of Vietnam and offering reports ready to use in the portal or in an order basis Industry Report A selection of sectors we cover: Consumer Finance Cement PET Packaging Healthcare Services Banking SOEsLogistics Flexible Packaging Fertilizer Food & Beverage
  16. 16. Page 16 Our advantages in database business make us differentiated from other international vendors Research and Consulting Services VCCI Trade Associations StoxPlus Data Exchanges Self–contribution General Statistics Office Credit Information Centre Stock Exchanges Ministries (MOF, MOIT) Banks Chambers of Commerce Local Market Insights Biinform Database Data Cleaning up and Validation • Database of~1 million businesses registered in Vietnam • Company profiles, Ownership and financial data • All types of enterprises: JSC, LTD, FDI, SOE … • All key industries of Vietnam
  17. 17. A Global Standard: International Corporations Client CONSUMER FINANCE CEMENT OTHERS Research and Consulting Services
  18. 18. Page 18 Research and Consulting Services • When the information standard reports is not sufficient nor available, we customize our report to specific requirements by clients plus value added services including presentation, company visits, or business matching. • The scope is more in-depth research tailored to clients’ specific segments of interest with insights input by industry experts. We have a team of seasoned and experienced consultants for customized research assignments and market entry consulting projects. We provide comprehensive analysis and local insights to our clients at quality standards of the world’s prestige advisory firms Market Research • We support investors to explore investment opportunities and define market entry strategies into Vietnam. • Our market entry services range from market due diligence, partner screening, to business set-up. We support clients who are penetrating into Vietnam by either M&A, Equity Investments, Foreign Direct Investments or simply business alliance with domestic enterprises. • Actionable recommendation for clients’ entry strategies, including advisory on all stages: • Market assessment • Business Intelligence • Investment Screening • Trade Connection Market-entry consulting
  19. 19. Page 19 Research and Consulting Services We differentiate our services by leveraging on our Corporate Database; Industry Database and Local Market Expertise with down on-the-ground surveys and a network of industry experts Local Market Insights Biinform Database International Experience RESEARCH SPECIALISATION SURVEY/IN-DEPTH INTERVIEWS WITH LOCAL INSIGHTS NETWORK OF INDUSTRY EXPERTS COMBINATION OF TOP DOWN AND BOTTOM UP APPROACH • Professional teams with experience in market research/due diligence for water & utility • Track records with prestige customers (both fund and industry players) • Most updated industry database (incl. water sector) We put strong focus on developing network of experts who are C-level personnel in the industry. This expert network will be fully utilized for this project. Gaining market intelligence via in-depth interviews with: • Market players • Industry experts • End-use sector players • Policy-makers The advantage of understanding appropriate approaches to generate insights is leveraged. A thorough approach for the project is applied. Demand estimation from end-use industry and industry landscape from industry players will be both included. • Combination of hard data leveraging Biinform database and local insight (track record, expertise & network) • Database of all Vietnam Water Companies (production data such capacity, key operational indicators)
  20. 20. Research and Consulting Services We have a great track record in supporting large local and foreign clients from Day 1 when they first come into Vietnam Page 20 JAPAN FINANCIAL SERVICES OTHER INDUSTRIES KOREA WESTERN COUNTRIES OTHERS
  21. 21. Research and Consulting Services We are proudly making contribution to capital and trade flows within Vietnam and between Vietnam and the World via our product and services; and also via various conferences and industry seminars providing thought leadership about Vietnam market Speaking at Cemtech Asia 2015, 2016, 2017 Annual Consumer Finance Conference, co-host with SBV 2016, 2017 Annual Foreign Investor Conference, co-host with HOSE M&A Seminar, co-host with Singapore Business Group, 2017 SME Financing Conference, 2017 Trade Risk management Conference, co-host with CIC, 2017 FiinPro Talk Series (quarterly) Vietnam Renewable Energy Conference, co- host with Eurocham, 2018 Page 21
  22. 22. Contact us at StoxPlus Nguyen Thi Huyen Trang Senior Associate, Client Service Advisor t: +84 (28) 3933 3586 e: Head Office 5th Floor, Anh Minh Building 36 Hoang Cau Street Hanoi, Vietnam + 84 (24) 3562 6962 Ho Chi Minh City Branch 3rd Floor, Profomilk Plaza Bldg 51-53 Vo Van Tan, District 3 Ho Chi Minh City, Vietnam + 84 (28) 3933 3586 For Financial Information Services For Business Information Services For Research and Consulting Services Le Xuan Dong, CFA Director, Research and Consulting t: +84 (24) 3562 6962 (ext. 110) e: Nguyen Anh Tuyet Manager, Client Service Advisor t: +84 (28) 3933 3585 (ext. 208) e: