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April 20, 2012


Vietnamese consumers buy less expensive milk



Vietnam's local consumers, while waiting for more effective price management from authorities, are now switching to buying brands with lower prices in what could be considered a protest against milk producers and importers who have repeatedly increased prices of their products.


A can of imported power milk is now sold at a price nearly double that of a domestic product, which have driven many consumers to buy the latter, milk sellers said.


"This is a good sign, as it shows that local residents no longer focus on imported, expensive products, but will turn to those with reasonable prices that are appetising to their children," commented a milk trader in Ho Chi Minh City's District 10.


Sales of the foreign products that have experienced increased prices this year have dropped by 20-25%, while those of other new brands with softer prices soared, he said.


"By turning their backs on imported milk, consumers have proven that their awareness about product brands, prices, and quality has increased," said Bui Thi Huong, director of public relations of Vinamilk.


However, some industry insiders noted that the market is still dominated by imported products and international players. Many international brands have been on shelves in Vietnam over two years, including Nactalia of France, Babaskino of Russia, Japan's Morinaga, and Korean companies Angelac and Angelgrow.


Some of these have officially entered the Vietnamese market through comprehensive investment and distribution plans, enabling them to gain a considerable market share, milk dealers said.


"Domestic milk products have only managed to win the trust of average-income and white-collar consumers, while the high-income earners have yet to be persuaded," explained Tran Huu Duc, director of public relations of Nutifood.


Local milk producers are rushing to improve their products in order to improve their reputation in consumers' eyes, added Duc.

"Some are also working with international research and development centres and institutes to produce higher-quality products."


Milk prices in Vietnam have, over the last few years, been moving in only one direction -- upwards, complained both sellers and consumers.


"I was stunned to learn that the Meiji Gold 3 I used to buy for my two kids is now on sale at VND385,000 (US$18) for a 900-gramme can," said Nguyen Thi Nga, from Phu Nhuan District.


Despite the increased price, Nga said she still has to buy the product, since it is not easy to change her children's tastes. Repeatedly soaring prices have slowed down consumption, especially for those products whose prices are between VND400,000-600,000 (US$20-30) a can, many milk dealers in HCMC said.


"With two cans of milk now costing nearly VND1 million (US$48), many consumers purchase fewer products, and less frequently," said a seller.


Milk prices on the global market in the first quarter of this year dropped by US$50-200 a tonne against the same period last year.


"Imported products have to raise prices due to the foreign exchange rate fluctuation, and the rising labour and operation costs," said a director of an imported milk distributor, in explaining why milk prices in Vietnam have been running counter to the world trend.

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