This document summarizes Vinamilk's story of success as Vietnam's largest dairy producer and distributor. It describes Vinamilk's growth from its founding in 1976 through two periods: a growth period from 1995-2005 when it established factories nationwide and expanded distribution to gain market share, and a modern period from 2005 to present when it continued expanding through acquisitions and a diversified product portfolio to target different consumer segments and markets overseas while maintaining its domestic market dominance. The document analyzes Vinamilk's competitive environment and strategies used during each period through PESTEL and Five Forces frameworks.
5. VINAMILK - STORY OF SUCCESS
Produce & Trade
beverages
Dairy farming,
produce raw
fresh milk
Process & trade
milk & dairy
products
40%
Market leader
Revenue 2016
Production volume
47 bil VND
01 mil tones
9. HISTORY
2013
Lovemark
brand with
94%
awareness
2016
> Free trade
ASEAN
> Launch of
organic products
2010
Start of a
global
expansion
2007
creation of
automated
dairy farms
nationwide
2003
Privatizatio
n of the
company
1995
Fierce
competitio
n: Dutch
Lady,
Nestle…
1976
Creation of
Vinamilk
GROWTH
(1995 – 2005)
MATURITY
(2005 – NOW)
START
(1976 – 1995)
11. GROWTH PERIOD
PESTEL ANALYSIS (1995 – 2005)
• Government’s
plan on human
physical &
mental
development
• Government’s
protection for
Vnese companies
against foreign
investors after
Doi Moi
• 167/2001/QD/TT
g: Dairy industry
improvement
Decision from
Government
• GDPs growing y-
to-y
• Era of Golden
Population
• Lack of milk
usage habit
• High
Technological
barriers for new
comers
• Ideal country to
breed cows (WB
2011)
POLITICAL
FACTORS
LEGAL
FACTORS
ECONOMICS
FACTORS
SOCIAL
FACTORS
TECHNOLOGI-
CAL
FACTORS
12. GROWTH PERIOD
5 FORCE ANALYSIS (1995 – 2005)
• Small diary farms: not
guarantee quantity & quality
of raw material
• Imported milk powder
ingredients from New
Zealand, USA, Netherlands,
France
• International competitors
have a strong supply network
Dutch Lady (FrieslandCampina):
(1994)
joint venture then built factory
$1millions/year investment /
middle-end powder milk brands
Nestlé & Danone (1995)
joint venture, then built factory
Brought high-end powder milk
• Vietnamese consumes more
milk because of healthy
benefits
• Imported powdered milk
became popular & took over
part of the consuming of
condensed milk
• Vietnamese people unable
afford imported powdered
milk
• Consumer habit
• Homemade product
• Functional Food
Buyer
Supplier
New
entrant
Substitues Supplier
New
Entrant
Substitu
es
Buyer
13. GROWTH PERIOD
STRATEGIC MOVE (1995 – 2005)
Cost Domination strategy:
By lowering the price of its dairy products, Vinamilk made its products affordable for
lower and middle class, and thus, grabbed market shares.
• Established factories nationwide (Nghe An, Binh Dinh, Can Tho,
Saigon, Tien Son) to take economic of scales
• Established its own transportation function in 2003
• Condensed Distribution network through General Trade channel
14. MODERN PERIOD
PESTEL ANALYSIS (2005 - NOW)
• Government’s
plan on human
development
• Government’s
protection for
Vietnamese
companies
against foreign
investors
• Changes of VN
laws to fulfill
the
commitments
in FTAs
• Global
Integration
(WTO, AEC,
FTAs, and
coming TPP)
• Increase
awareness on
health and
nutrition
• High
Technological
barriers for
new comers
POLITICAL
FACTORS
LEGAL
FACTORS
ECONOMICS
FACTORS
SOCIAL
FACTORS
TECHNOLOGI-
CAL
FACTORS
15. MODERN PERIOD
5 FORCE ANALYSIS (2005 - NOW)
• Liquid milk: bargaining
power of supplier is still weak
• Powdered:Imported milk
powder ingredients from
New Zealand, USA,
Netherlands, France
TH True Milk (2010)
- New Local competitor who is very
aggressive and acquired 50%
market share of Pasteurised Milk
Market (2015)
General Trade:
• Over 80% revenue comes
from traditional distribution.
Retailers (Small shops)
• Because of Fierce
Competition and low
switching cost -> company
has to invest more on Trade
marketing activities for
retailers
Modern Trade
• MT is future channel of
Vietnam retail Industry. MT
developed so fast and has
17% total volume, also with
Vinamilk.
• Homemade products
• Soya milk,…
Buyer
Supplier
New
entrant
Substitues Supplier
New
Entrant
Substitu
es
Buyer
18. MODERN PERIOD
STRATEGIC MOVE (2005 - NOW)
Cost Domination strategy and Differentiation Strategy:
Taking advantage of the market dominant position from prior period, Vinamilk
continue to expand its business to rural area in Vietnam, established a diversified
product portfolio and expanded overseas
• Standardize the supply chain: raw material supplies by establishing automated farms
and educating current suppliers
• M&A/ Joint venture to expand overseas (USA, EU, Australia, New Zealand, South East
Asia,…)
• Created a diversified product portfolio to satisfy the needs in every stage of the
human being life cycle
• Change the product structure, aiming at the high-end segment with nutrition-
supplemented products (61.3% in 2015), sugar-reduced and low-fat products (13.1%)
