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|illustration photo, source:Baocongthuong|
According to data released by market research company Kantar Worldpanel, formulas for children under 6 saw slowing growth throughout the country. The statistical evidence compared the period between September 2015 and the end of August with the previous year, showing a marked drop in growth rates.
In rural areas, growth was positive at 6 per cent, despite economic difficulties caused by natural disasters and environment pollution since the start of this year. Meanwhile, in urban areas, meaning four big cities of Hanoi, Ho Chi Minh City, Danang, and Can Tho, formula producers experienced straight-out fallback.
Most notably, there seems to be a gradual change in the dynamics of competition between domestic and foreign brands.
In urban areas, foreign brands still dominate. Three of the top five players in the four key cities are international, namely Abbott, Friesland Campina and Mead Johnson, ranking first, second, and fourth in terms of market share. Local players Vinamilk and Nutifood rank third and fifth respectively. However, during the period, international players were forced to give up part of their combined market share to domestic counterparts. As the bigger cities showed negative growth in sales, foreign brands were hit heavier.
In rural areas, meanwhile, domestic brands captured a combined market share above 50 per cent, with Vinamilk and Nutifood ranking first and second on the chart while Abbott, Friesland Campina and Mead Johnson take up the remaining positions. While both domestic and foreign producers achieved growing sales, domestic brands grew faster.
In Vietnam, foreign formulas cost much more than domestic products. Many Vietnamese think anything bearing a brand from developed countries, such as the US, Europe or Japan is better. The same goes for formula.
Earlier this month, French company Danone S.A. announced its decision to withdraw from Vietnam, explaining that the market share held by Dumex in Vietnam is not enough for the company to continue its investments here. Martin Hoelscher, CEO of Danone Vietnam, told Vietnam Economic Times that Danone’s activities in Vietnam will continue as normal for the next few months. Dumex will be available until early next year.
Starting June 1, 2014, there has been a price ceiling issued on formula for children under 6. Between June 1, 2014 and August 29, 2016, the Ministry of Finance (MoF) and the provincial Departments of Finance published the current price and the upper limit for 877 formulas for children under 6. According to the Price Management Department under the MoF, the retail price of these formulas decreased by between 0.1 and 34 per cent since the government started enforcing price management measures.
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