Vietnamese brand to contest in highly competitive powdered milk market

Late last month, Nova has set foot in the powdered milk market with the launch of the Anka Milk brand in cooperation with Ireland’s Kerry Group. The milk, produced at Kerry Group’s Anka farm in Ireland, is imported then distributed at supermarkets and Nova’s 36 agents. The company has promised to keep the price of their products unchanged for two years.

According to Nguyen Huu Liem, deputy chairman of Nova Group and chairman of Anova Milk, the group’s subsidiary in charge of its milk operations, their primary target is to raise the market share to 5 per cent within the first three years. Powdered milk is only the first step and will be followed by liquid milk and milk-based dietary supplements.

Liem is confident that Anova will be able to expand its distribution network as Novaland, the real estate arm of Nova Group, is an investor in many large real estate projects with tens of millions of residents in the future.

Nova Group started the powdered milk project three years ago. In Vietnam, the price of powdered milk is rather volatile but has shown an upward trend over the years. The market is abundant with foreign brands.

“We picked the children’s powdered milk segment because it is sensitive and prices tend to fluctuate the most here. We want to create the most suitable product to Vietnamese children,” Liem said.

Anova Milk chose not to build a production and packaging plant in Vietnam because the investment and production costs are high, which would have resulted in a high price for the product. Moreover, Vietnamese people have a preference for foreign brands. Therefore, Nova has invested over $50 million in the production line of the Anka Ireland farm, to produce the Anka-branded milk formula in Europe.

The cans that the milk comes in have traceability codes that enable consumers to look up all information on each Anka product, from the origin of fresh milk material to the quality verification process, manufacturing, the nutrition formula, the manufacturing packaging date, as well as nutrition verification and transport.

A recent survey by Ipsos Vietnam on customers with children more than two years of age in Ho Chi Minh City and Hanoi showed that 80 per cent of them are at a loss the first time they buy milk for their children, 66 per cent do not know what the criteria for good powdered milk are, 74 per cent say the information on the label is not enough to determine the quality of the milk, 78 per cent say they will be more confident if the product has a traceability code.

Competition is tough on the powdered milk market with foreign brands making up 75 per cent of the more than 300 brands. Abbott has 120 products in Vietnam, holding a 30 per cent market share. Vinamilk ranks second with a 24.6 per cent market share. In the children’s powdered milk segment, Vinamilk ranks first with a 25.8 per cent share.

Nova Group, formerly Thanh Nhon Ltd, was established in 1992 and has been producing and trading veterinary medicine, aquaculture chemicals, and pharmaceutical materials as well as building villas for rent. In 2007, the company changed its name to Nova Group with two major fields of operation, namely agriculture, with Anova Corporation, and real estate, with Novaland.