Vietnam’s economy is currently experiencing rapid development, and the quality of life for its citizens is continually improving. Alongside this progress, the demand for nutrition to enhance health and foster generational growth has garnered increased attention.
There are numerous methods for supplementing the body with nutrients, and the use of powdered milk is one of the popular and trusted approaches. This has made the powdered milk market in Vietnam vibrant, leading to the emergence of diverse powdered milk products and brands, offering consumers a variety of choices.
In this article, GMA will provide you with a general overview of the powdered milk market in Vietnam.
Given the current situation, the powdered milk market in Vietnam is experiencing swift fluctuations and intense competition. This competition is not only driven by domestic powdered milk brands but also by the diverse range of imported brands and those produced locally with imported ingredients. Meanwhile, milk prices in the market are escalating and continuously changing, particularly within the segment of powdered milk for children.
I. Which Channels Are Children’s Powdered Milk Products Distributed Through?
In the Vietnamese market, products within the children’s powdered milk industry are distributed through three main channels: traditional trade (GT), modern trade (MT), and e-commerce.
1) Traditional Trade (GT)
Among these, the GT channel is the dominant one, accounting for up to 85% of the sales volume. In my assessment, the sales distribution within the GT channel follows the 80-20 rule, meaning that 20% of stores contribute to 80% of the sales volume. Therefore, most products are usually distributed to larger-scale stores. This is the primary playing field for all major players in the dairy industry.
The GT channel accounts for up to 85% of the sales volume.
Over the past five years, the battle at the point of sale in the dairy industry has become increasingly fierce, as more and more milk brands enter the market while the retail space remains unchanged. Moreover, apart from milk, stores are also being occupied by products catering to the mother and baby segment, such as diapers and baby food.
2) Modern Trade (MT)
Milk products are typically distributed through specialized stores like mother and baby retail chains. Large supermarket chains are not prioritized as distribution points. Supermarkets aim to cater to a wide range of shopper needs, including groceries and household items, and their price competition is not as strong as in other distribution channels. However, consumers of milk products tend to be sensitive to pricing.
Lately, the dairy industry has witnessed a robust development of e-commerce channels (such as Shopee, Lazada, Tiki…) and mother and baby retail chains (Con Cưng, Kids Plaza, BiboMart…). Although the growth rate of these two channels is not enormous, they do present significant challenges to the traditional trade channel.
II. Each Distribution Channel Plays A Distinct Role In The Dairy Industry
Firstly, the e-commerce channel serves a crucial role in consumer outreach. Prior to purchasing milk products, young mothers tend to search for product and brand information online. They often access e-commerce platforms and brand websites to gather information, reviews, and evaluations about the products. With clear and persuasive information, brands can encourage them to try the products.
Secondly, mother and baby retail chains are essential channels for accelerating market penetration. Typically, these chains have a nationwide network of stores. As a result, within a few days after successfully partnering with a chain, products can be available across their stores.
Lastly, the traditional trade channel remains the primary driver of sales for brands.
III. The Distinctive Insights Of Shoppers In The Infant Formula Industry
If we talk about the insights of shoppers, we need to mention the product’s specific characteristics. The product must simultaneously meet the needs of two groups: the buyers – mostly mothers, and the consumers – the babies.
For babies, product quality and sensory experience are crucial factors. Besides having a delightful taste, the product quality must align with the digestive system and nutritional requirements of children at various developmental stages.
In the case of mothers, the majority of buyers in the industry today are from the 90s generation. They can be considered smart consumers as they have the habit of thoroughly researching and studying product information before making purchases. Therefore, businesses need to establish a unique and distinct approach to attract this demographic.
For example, VitaDairy approaches shoppers based on scientific foundations and practical experience. Specifically, VitaDairy collaborates with the Ministry of Health to organize Scientific Workshops on Immune Nutrition and partners with systems like BiboMart and Kids Plaza to conduct Q&A sessions with nutrition experts and provide guidance on scientifically-based child weight gain methods. Approaching customers from a scientific perspective increases trust in the product. Furthermore, they implement various free trial programs and discounted trial offers. Through these initiatives, the brand can convince shoppers to return based on their personal experience rather than relying on feedback from others.
IV. What Challenges Do Brands In The Infant Formula Industry Face?
1) Ensuring Product Presence At The Point Of Sale
The product itself serves as an effective ‘self-advertisement,’ carrying the brand’s message. Additionally, investing in the product’s presence at the point of sale increases access opportunities and shopper conversion.
2) Meeting The Diverse Needs Of Store Owners
The increasing number of milk brands intensifies the competition at the point of sale. This requires Trade Marketers to balance benefits for store owners and develop various policies to enhance their competitiveness in the market.
3) Consumers In The Infant Formula Sector Tend To Be Loyal To Brands
Parents prioritize their children’s health. Once they find a product suitable for their child, they remain loyal to that brand for an extended period. Furthermore, their shopping behavior typically occurs within a 60-second window: they arrive at the store, ask for a specific product, interact with the staff, and make the payment.
The challenge for brands is convincing them to switch from other brands to their own. Therefore, any scientific and logical basis used must be tightly and rigorously constructed.
V. How To Maintain Customer Loyalty In The Dairy Industry
Typically, dairy companies opt for offering gifts with the purchase of a certain quantity of products. In addition to that, brands should develop a loyalty program application. Customers can scan QR codes on milk cans and utensils to accumulate points for each purchase. Later, they can select suitable rewards based on their preferences and needs within the app. There can be three reward options:
- Exchanging points for corresponding baby products
- Converting points into mobile phone credit
- Exchanging for new products.
This approach addresses the issue of traditional mismatched gift offerings with customer usage needs.
Furthermore, the application serves as an effective tool for directly surveying and engaging consumers. Based on their feedback, companies can understand customer evaluations and preferences regarding products and services. This information enables companies to adjust marketing activities or enhance products to better meet their customers’ needs.
VI. A Case Study Of Successful Marketing Campaigns
After being recognized as the number one partner in Vietnam by the American colostrum milk company PanTheryx, VitaDairy is determined to become a pioneering colostrum milk company and lead the domestic market. To achieve this goal, the Marketing team launched the campaign ‘Building the Number 1 Colostrum Milk Shop’ to enhance product recognition in customers’ minds. As a result, when consumers need to buy colostrum milk formula, they will choose VitaDairy’s products.
VitaDairy has a significant advantage in the differentiated positioning of its products. This helps participating stores attract new customers and enhance their competitive edge. However, limited display space is one of the major challenges. Therefore, in the ‘Building the Number 1 Colostrum Milk Shop’ campaign, VitaDairy organized a contest to encourage stores to create the most visually appealing product displays possible. Additionally, VitaDairy placed extra point-of-sale materials (POSM) at various points of sale to further enhance product recognition.
With a new product ColosBaby, the brand focused on investing and executing activities across all three channels: the product awareness channel (e-commerce), the fast penetration channel (mother and baby store chains), and the sales promotion channel (traditional stores).
In the e-commerce channel, VitaDairy utilized programs such as Flash Sales and special offers to reach consumers and provide them with trial experiences, thereby creating and increasing product awareness.
Next, VitaDairy intensified product distribution within the mother and baby store chain system to enhance penetration and visibility at points of sale.
Lastly, the traditional channel played a pivotal role in boosting sales and establishing VitaDairy’s position. Here, the Marketing team launched the ‘Impressive Display’ contest. Participating stores that creatively and uniquely displayed the products would receive rewards from VitaDairy. This was followed by in-store purchase incentives activities such as customer appreciation events and special promotional gifts, attracting consumers to visit the stores and purchase the products.
Furthermore, the indirect impact channel was the company’s website and sales app. Here, VitaDairy sent e-vouchers to customers participating in the program to encourage them to return for shopping.
By employing this multi-channel interaction, the company effectively enhanced the purchasing power for the new product.
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