Consumers are getting milked

May 15, 2013 | 17:20

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Hanoi Milk Joint Stock Company chairman Ha Quang Tuan provides the inside word on why milk products in Vietnam are more costly than that in other countries.

The price of milk in Vietnam averages $1.4 per litre against $0.8-0.9 per litre in the Europe and US markets. Why?

Theoretically, a price is based on the supply and demand situation.

Big companies, particularly foreign businesses, often operate large-scale production, target vast consumer market and sell popular items at low costs.

By contrast, small companies target a tighter market segment such as children’s milk.

Consumers, however, want to buy products of big companies with well established reputation thanks to intensive investment into brand promotion. In this case, the milk price also covers brand promotion costs.

Does this mean high product price has stemmed from businesses?

The input costs cover sales expenses, material costs, equipment depreciation and distribution costs, just to date a few. The price of milk products could hardly go down when these costs were on the rise.

Are local milk products failing to meet consumers’ demands?

Foreign or local milk products all source fresh milk.

It should be admitted that most fresh milk sources provided by farmers are of poor quality.

However, several farms in Vietnam are raising the bar.

At this time, most local firms use foreign imported materials for milk products processing, since we still do not have sufficient conditions and technology to turn fresh milk into powder milk.

Foreign milk may be good for kids, but it may not suit to Vietnamese children. For instance, in Japan and Thailand children’s powder milk does not need iodine, whereas this substance is important for kids in Vietnam.

By Hai Ha

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