Baby Food in Vietnam

PROSPECTS

Breastfeeding habits determine the consumption of milk formula

In recent years, breastfeeding was a frequent discussion topic on social media in Vietnam, and was promoted by the media as beneficial to babies’ development. With an increasing emphasis on health and wellness and the consumption of products that are organic and safe to eat, breastfeeding was increasingly popular over the review period.

New product development needs to offer more value to Vietnamese consumers

In addition to the threat of being rendered obsolete by breast milk, milk formula and other baby food products are expected to have to reposition themselves in the market to meet ever-changing consumer demands, and to have a competitive advantage in the market. Previously, Vietnamese mothers were keen to ensure that their babies developed physically, with chubby babies considered healthy.

Differing needs in urban and rural areas

Whilst the birth rates in key cities such as Ho Chi Minh city and Ha Noi have slowed, the birth rate in rural areas is still growing, and represents potential demand for baby food. Relevant nutrition to target specific target consumers will be necessary over the forecast period, as consumers in rural and urban areas in Vietnam will have differing needs, and manufacturers will need to adjust to tap into this demand.

COMPETITIVE LANDSCAPE

Increasing saturation in baby food

Baby food is becoming increasingly saturated, with the entry of numerous international players over the review period. Only a few domestic manufacturers stand out, such as Vietnam Dairy Products (Vinamilk), Nutifood Nutrition Food and the recently emerging Saigon Food.

Domestic players understand consumer preferences

Conversely, Saigon Food may not share similar advantages of economies of scale to Vietnam Dairy Products, but has used its knowledge of the market to drive effective business growth. Its fresh porridge offering is disrupting prepared baby food, and its knowledge of Vietnamese taste preferences and habits allowed its products to be successful over the review period.

The competition is set to increase

Over the forecast period, the competition in baby food is expected to intensify, as international players continue to enter the market and as domestic players fight for their share of sales. Although local knowledge can provide domestic manufacturers with the edge to succeed, knowledge without good execution and the necessary operations to support products will not be enough to succeed in Vietnam, and manufacturers which have expertise in both areas are likely to succeed over the forecast period.

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