Milk producers try to increase market share with higher number of cows
Milk producers try to increase market share with higher number of cows
While the powdered-milk market is controlled by foreign companies, the liquid-milk market is dominated by domestic dairy producers, who are competing to own a higher number of cows, which directly influences their ability to grab market share.
Several days ago, VinaCapital Vietnam Opportunity Fund and Daiwa PI Partners from Japan announced a $45 million investment deal with the dairy producer IDP.With 70 percent of shares, they are the biggest shareholder of IDP, well-known for products with the Ba Vi brand, including UHT milk, pasteurized milk and yogurt.
In early November, 2014, Rong Viet Securities Company reported that TH True Milk JSC bought 5.35 percent of Dalatmilk’s chartered capital.
The fact that TH True Milk injected money into a small company which holds a small market share and has unimpressive business performance, according to analysts, showed that the dairy industry is an appealing sector.
In 2011-2013, according to Rong Viet, Dalatmilk made a modest profit of hundreds of millions of dong. It even took a loss of VND8.6 billion in 2013.
Rong Viet believes that most attracts TH True Milk is a large area for cow farming. Though Dalatmilk is not a strong brand, it now owns more than 2,800 cows, 800 goats and 3,300 hectares of agricultural land.
Analysts believe that in the competition in the liquid-milk market, those who can control the material supply sources will have advantages.
At present, the domestic supply of materials for making liquid milk is a herd of 200,000 cows which is just enough to make 456,000 tons of material, satisfying 28 percent of total demand.
As domestic sources cannot supply enough materials, in 2013 Vietnam had to import 1.2 million tons of powdered milk material, worth $841 million. The material imports, according to experts, accounted for 65-70 percent of the total input cost.
Therefore, developing its herd of cows is what Vinamilk, the leading dairy producer, has paid special attention to over the last few years.
Vinamilk began developing farming in 2007, and now has about 9,000 milk cows.
The dairy producer in September 2014 signed a contract with Hoang Anh Gia Lai to develop a farm with 80,000 milk cows and 45,000 beef cows in a project capitalized at VND11 trillion.
TH True Milk, which is believed to be Vinamillk’s biggest rival, has 45,000 cows after four years of operation. This allows it to make 400 tons of fresh milk a day.
