Vietnamese Milk Prices Excessively High

VIET MAN - Milk products in Vietnam are unreasonably expensive, experts say, adding that local consumers may be paying the price for their own “expensive is good” mindset.

27 May 2009

2 minute read

Asia

Ho Tat Thang, vice chairman of the Vietnam Standard and Consumer Association (Vinastas), said at a conference in Hanoi last week that although global dairy prices and import tariffs fell last year, the prices of milk products have continued to rise in the domestic market.

“Several imported milk products are being sold at the highest prices in Vietnam,” Thang said, pointing out that fresh milk retails at US$1.40 a litre in Vietnam, compared to $1.10 in China, 50 cents in India and 50-90 cents in the US and Europe.

Milk prices on the global market have dropped more than 40 per cent since they peaked in the third quarter last year.

Powdered milk is imported to Vietnam at around VND60,000 ($3.37) a kilogram, after tariffs. Experts said after vitamins, DHA and other ingredients are added and all overheads included, the reasonable price of formula milk should be around VND100,000 ($5.60) per kilo.

However, locally branded formula milk now retails at VND143,000- 165,000 ($8.04-9.20) per kilo while products of foreign brands cost VND305,000-425,000 per kilo.

“That is too much,” Thang said.

Statistics from Vinamilk show that the domestic dairy market was worth VND8 trillion ($458 million) last year, with foreign producers holding an 80 per cent market share.

Experts said dairy firms, especially in the upscale products segment, always try to compete with each other by advertising that their products have more ingredients to bolster children’s immune systems and intelligence.

Tran Ngoc Dung, an expert at market research firm FTA, said many consumer studies in the 2007-2008 period showed that all parents, irrespective of their income level, tend to choose expensive dairy products that are advertised to have many nutrients.

Local consumers believe that expensive milk can make their children healthy and smart, Dung said.

According to FTA, although the imported materials used in formula milk products of different brands are almost the same, prices of the so-called high-end products are proportionally much higher.

The firm also said consumers judge the quality of milk products based on their packaging, brand names and how expensive they are. This mindset has widened the price gap among milk products, it said.