The opportunities lie in both actual dairy products or in products, services and expertise to help Vietnam develop its own dairy industry, Martin told Dairy News.
Vietnam has plenty of arable land and has historically grown products like rice, coffee and tropical fruits. But with 90 million population, growing wealth and changing diets, people want more protein.
“Dairy is a big part of that. Vietnam imports about 70% of its dairy; there is no way they can produce enough to satisfy 90 million people’s demand, so it is a big export market for New Zealand milk powder which is great,” says Martin.
“Longer term, Vietnam wants to push its own production of dairy just to keep up with the demand. But even though they currently import 70% of their dairy, in 15 years they will probably still need to import that proportion.
“But they need to invest in growing their own dairy production at the same time, so we have a multitude of companies that have fantastic expertise and capability in the areas Vietnam is looking for.”
They need help in establishing good breeding programmes for dairy cattle, developing good milking systems and establishing integrity through supply chains to manage food safety.
“At all these types of things New Zealand is world class. There are great opportunities for New Zealand companies to partner with businesses in Vietnam and in other countries in similar situations around the world,” Martin says.
Vietnam’s dairy sector is dominated by three big players, one local player and two international companies. The remaining 25-30% of supply is small-time farmers with two-three cattle. To grow the overall size of the market, investors are coming in to challenge the bigger players, Martin says.
A delegation came to National Fieldays representing a big Vietnamese conglomerate with interests in commercial and residential property but it wants to invest in agriculture and plans a dairy proposition soon. They visited to look at how New Zealand does dairying and our levels of expertise.
Vietnam has a lot of dairy technology and expertise so there are opportunities in consulting, farm management, services and breeding programmes and milking systems – the whole spectrum, says Martin.
The average GDP in Vietnam is about US$2000 so people don’t go to the supermarket and buy three 1kg blocks of cheese each week.
“But certainly in food service there are a lot of fantastic resorts and hotels for the tourist trade that provide great opportunities for New Zealand companies to export our value added products up there,” says Martin.
“Over time, as Vietnamese consumers and consumers right across the Asia region increase their protein intake there are opportunities for other types of products – yoghurts, cheddars and other protein rich dairy based products.
“At New Zealand Trade and Enterprise (NZTE) we try to find where the pockets of growth are for NZ companies that intend to export to that part of the world.
“If they are persistent and keen to look at a longer term strategy then markets like Philippines, Vietnam and Indonesia, and to a lesser extent Myanmar, are great for New Zealand type products.”
Although not as familiar with other Asian countries as he is with Vietnam, Martin says he knows the Philippines is keen to increase its own production but faces the same challenges as Vietnam with the climate and does not have as much access to good farm quality land as other places.
“The same formula applies: we produce the best dairy in the world, we have the best systems, milk production, milk quality and food safety and our products are perceived as being premium.
“So in the short term there are lots of export opportunities for New Zealand products in those markets. Longer term we will see more of this trend – our expertise moving from just shipping our product in containers to shipping our intellectual property and our expertise. We are world leaders in this area.
“We have free trade agreements with ASEAN nations so we get really favourable import duties and it is good way to facilitate trade between countries because these countries know they can’t do it all themselves.
“So for the most part they are supportive in helping us to introduce our companies to businesses in Vietnam and other countries across that region.
“It is not a quick get in, get the job done and get out [scene]. Like many markets in that part of the world it is very relationship driven and you have to spend the time to understand the market and get to know the people. It’s not a transaction, it is a relationship.”
Vinamilk is the biggest dairy company in Vietnam, it has about a 50% market share of consumer product sold in Vietnam and is a famous brand in Vietnam. It has been very successful in expanding distribution and production capabilities. It has about a 17% share in the Maori dairy company Miraka.
“Vinamilk is very smart, has a good connection with New Zealand and it is a huge advantage for them to have that investment. It gets them much closer to our industry.
“This is part of the trend that will continue. It makes it interesting and a bit challenging for us because on the one hand we want to increase the growth of our high end, good quality product exports out of New Zealand. When it gets to market, in some cases it will be on the supermarket shelves competing with other companies we are dealing with on a domestic basis who are trying to increase their own production. We are mindful of this.
“But pointing in the right direction is that overall demand is increasing significantly, so we have to look at both sides of the equation in developing trade with Vietnam.”
