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Inside...The Vietnam Milk Factory

‘Mega factory’ to catapult Vinamilk onto world stage

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By Rachel Arthur+

19-May-2014
Last updated the 19-May-2014 at 18:20 GMT

Children are encouraged to drink milk for its nutritional benefits
Children are encouraged to drink milk for its nutritional benefits

The Vietnam Milk Factory will fuel Vinamilk’s expansion dreams and meet a growing demand for dairy products in the country and wider region.

Ho Chi Minh-based Vinamilk, already Vietnam’s top dairy manufacturer with a 42% market share, aspires to become one of the world’s top 50 largest dairy producers by 2017 with a target for total sales set at US $3bn.

Nguyễn Quoc Khánh, supply chain managing director, Vinamilk, branded the company’s $110m (€80m) Vietnam Milk Factory an ‘investment for the future.’

The Vietnam Milk Factory

Doubling capacity

With an initial capacity of 400m litres of milk a year, a second phase will double that to reach 800m litres of milk per year.

The space for expansion has been built into the factory, ready for 18 lines to be added to the existing 17, bringing the total to 35. Khánh told DairyReporter.com Vinamilk had planned for phase two to start in 2015-2016, but it can be flexible.

“It depends on the market,” he said. “If the economy still slows down, we can delay a little bit, if everything’s ok we can push on earlier.”

Although Vietnamese milk consumption is currently relatively low, the company interprets this as potential for growth. Khánh said he is confident that the investment will pay off because consumers consider dairy to be nutritious and are prepared to spend money on these products.

“The consumption is still low compared to other countries, but I think the people know that milk and dairy is good for their health. Their income is better compared to five years, better compared to ten years ago.”

The company inaugurated two factories in 2013: the Vietnam Powder Milk Factory and the Vietnam Milk Factory, bringing its total production facilities to 13. When the company was founded as The Southern Coffee Dairy Company in 1976, it had two factories.

The Vietnam Milk Factory, which produces milk and drinking yoghurt for Vinamilk, is equipped with Tetra Pak’s processing and packaging equipment. Automation and plant integration allows the plant to meet high food safety standards and a more efficient production process, the company says.

“These two factories are applying the latest technology to production, to provide customers with quality and diversified dairy products,” Khánh said.

“They will also help Vinamilk increase its competitiveness at world class level.”

In Vietnam, it will have to compete with companies such as Friesland Campina (which sells under the Dutch Lady brand) Abbot, and Mead Johnson Nutrition.

Vietnamese demand

Vietnamese consumption of ready-to-drink liquid dairy products has doubled over the last four years, according to Euromonitor.

Dairy products have been positioned as a way to increase health and wellbeing among Vietnamese people, particularly for children.

Vinamilk’s milk products include a ‘daily nutrition’ milk pouch, as well as products that are low fat, calcium rich, and fortified with micronutrients.

Bert Jan Post, managing director, Tetra Pak, said there is a ‘high consumer appreciation’ of dairy products in the country.

“We have seen growth, and we can expect growth to continue,” he said. “To do it people have to invest, and I think this factory is a testimony of the vision of Vinamilk to build something for the future.”

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