Urban areas remain important for milk powder producers but small cities and rural areas have significant potential, according to market researchers Nielsen.
In the 12-month period ending June 30, sales of milk powder reached approximately 14,700 tonnes in six key cities in Vietnam - Hanoi, Ho Chi Minh City, Hai Phong, Da Nang, Nha Trang, and Can Tho - a decline of 11 per cent compared to the previous 12-month period, according to a recent report from global market researchers Nielsen.
Under Nielsen’s definition, milk powder includes adult milk powder (Complete & Balance, Healthy Living, and Pregnancy) and baby milk powder (Starter, Follow-On, Growing Up and Specialty). Products for babies account for 70 per cent while products for adults accounted for the remainder, primarily targeted at pregnant women.
Its research also reveals that although Hanoi and Ho Chi Minh City are still the most important cities for milk powder sales, smaller cities and towns as well as rural areas are considered markets of potential. According to the General Statistics Office and Nielsen Vietnam, over 70 per cent of the population is located in small cities and towns and rural areas. Moreover, there are 3.6 million children under three years old living in small cities and towns and rural areas and about 2 million use milk powder. Meanwhile, these figures are 550,000 and 400,000 in Hanoi and Ho Chi Minh City combined. The number of milk powder retailers in small cities and towns and rural areas stands at 34,000, or four times higher than in Hanoi and Ho Chi Minh City.
Nielsen’s research into rural consumers found that their income has been improving and health is one of their key concerns. Indeed, the research found that rural parents have a particular desire to improve the lives of their children.
However, despite the overwhelming size of the prize, many foreign manufacturers have mainly invested their business in urban areas, with only domestic manufacturers fully expanding their scope into Vietnam’s secondary cities and rural areas. “Stores in rural areas tend to be smaller and more dispersed, with an average number of 33 products per store, nearly half of the 59 products per store in big cities,” Associate Director of Retail Measurement Services at Nielsen Vietnam, Mr. Le Huu Minh Quan, said.