Vietnam - a competitive market for infant formula products

The research shows that strong competition in the market brings benefits to consumers in terms of both wide products ranges and price points that are available for consumers.

According to the report, the infant formula market in Vietnam is relatively small in terms of demand but quite large in terms of supply in comparison with other markets in the region. There are 28 companies with 50 different brands in product segment for infants between 0-6 months and 27 companies with 53 different brands in product segment for infants between 6-12 months. The report also shows that infant formula product prices in Vietnam are in line with similar products in other markets.

Contrary to public concern that infant formula was foreign-dominated, the report shows that domestically-produced infant formula products have gradually increased their market shares in recent years, from 49.3 per cent in 2009 to 56.3 per cent in 2011 (by volume).

The report also points out that price of infant formula products depends on various factors, especially investment in research and development. Price fluctuations in Vietnam not only depend on prices of imported skimmed milk powder (SMP) but are also significantly affected by foreign exchange rates.

Additionally, high taxes (for example, import tariff of 10 per cent) applied for this product segment are among the highest in the region. Furthermore, milk prices have also been influenced by high domestic inflation in recent years. In fact, the increase in prices of milk powder products in Vietnam has been lower than the price increase of most other packaged foods in 2009 -2011.

At the launch, Pham Que Anh, director of Hanoi Office of CUTS International said: “In theory, a competitive market should bring a lot of benefits to consumers, such as competitive prices that are in line with product quality and freedom of choice for consumers among products that are continuously improved in terms of quality, designs, etc. However, the Vietnamese consumers have not been able to fully enjoy these benefits, because of the lack of information about prices and product quality. The distribution system here is still fragmented and unorganised.”

Dr. Vuong Ngoc Tuan, deputy general secretary of Vietnam Standards and Consumers Association (VINASTAS) added: “We are pleased to see that competition in the formula market is going strong. A healthy and competitive market is a good way to ensure that consumers’ have access to high-quality products at competitive prices.”  He also suggested that “there should be a mechanism to make sure that product information could reach consumers in more convenient channels” to help promote informed consumer decisions based on product prices and quality.

CUTS International is a non-profit, non-government organization that focuses in research and advocacy on a wide range of public interest issues such as trade &economics, competition & investment, consumer protection &development, etc. CUTS International has its Headquarter at Jaipur, India with branch offices in and out of India such as New Delhi, Chittorgarth, Calcutta (India), Nairobi (Kenya), Lusaka (Zambia), Geneva (Switzerland) and Hanoi (Vietnam).