Philippines dairy industry Vinamilk’s next cash cow, says GlobalData

The Philippines dairy market recorded a robust growth in 2019* and is continuing to attract both regional and international players. The entry of Vinamilk, the largest dairy manufacturer in Vietnam, marks a strategic and cash booster move given the heightened interest for dairy products in the country, says GlobalData, a leading data and analytics company.

Sheryl Gajete, Consumer Analyst at GlobalData, comments: “Health and wellness has emerged as an important trend among the consumers amid the COVID-19 pandemic. GlobalData’s survey, conducted in August 2020, with 700-900 respondents, highlights that three in four (76%) consumers agree that a positive impact on their health is now more important or their top priority as a result of the pandemic*2. This is likely to impact the dairy category positively, as many products endorse health and immunity boosting claims.”

The low per capita consumption of packaged dairy products in the country presents a window of opportunity for dairy manufacturers, which in recent years has already seen the foray of key market players like Arla, Asahi, Cimory and Ajinomoto. GlobalData forecasts the annual per capita consumption of dairy beverages to grow from 6.8 litres in 2019 to 7.6 litres in 2020*.

Gajete continues: “The COVID-19 pandemic has been a boon for the Philippines dairy industry. GlobalData’s 2020 full year growth projections for Philippine dairy drinks shows that the country will outpace all key southeast Asian markets.”

The presence of Vinamilk in this fast-growing market is a step towards strengthening its foothold in the Asia-Pacific (APAC) market. The company has established manufacturing facilities in high-potential countries like Myanmar and Cambodia. In 2020, Vinamilk started exporting condensed milk to China and expanded operations in South Korea.

Gajete concludes: “Vinamilk’s foray into the Philippines market is an exciting development given the company’s wide product portfolio of fortified dairy products catering to all ages and income groups. While ready-to-drink milk and yogurt drinks offer huge potential, local consumers’ growing consciousness on the quality and ingredient base of beverages*2 has the potential to drive success for Vinamilk’s premium products. However, one of the key challenges for Vinamilk will be competing against established incumbents like Nestle, Friesland Campina and Fonterra, which have strong brand equity gained from their long-standing presence in the market.

“Recognizing the current urban-rural divide and that the Philippines being an archipelago which has huge implications in terms of logistics and distribution, a ‘bespoke’ strategy to successfully penetrate the market is needed. Having a partner with local knowledge, expertise and extensive distribution network would greatly benefit a company like Vinamilk.”

* GlobalData’s Global Market Data – Dairy Database

*2 GlobalData 2020 Market Pulse Consumer Survey Snapshot: Consumer Attitudes and Behaviors in the Philippines, conducted in August and published in GD Intelligence centre November 2020

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