French milk brand to quit Vietnam after failing to gain market share

By Toan Dao   October 10, 2016 | 10:51 am GMT+7
French milk brand to quit Vietnam after failing to gain market share
A woman choosing a Dumex product at a milk shop. Photo courtesy of the Ho Chi Minh City Law news site

The market is controlled by dominant brands such as Vinamilk and TH True Milk.

Danone Vietnam, a subsidiary of French multinational food company Danone, is in the process of withdrawing its popular milk brand Dumex from Vietnam.

A representative from Danone Vietnam has confirmed the exit, attributing it to the limited market share it has been able to gain in the Southeast Asian nation, the Phap Luat Thanh Pho Ho Chi Minh (Ho Chi Minh City Law) news site reported on Saturday.

“Therefore, we have decided to gradually put an end to sales of Dumex in Vietnam,” the representative said, adding that the company’s decision is merely a business matter and has nothing to do with Vietnamese government regulations.

Some milk agents in Ho Chi Minh City said prices for Dumex products have plunged in recent days and they are trying to sell off their stocks as soon as possible.

The prices for the Dumex Gold 3 and Dumex Gold 1 products have been cut by 20 percent to VND440,000 ($19.8) per can and VND290,000 ($13) per can, respectively, said Minh, a milk agent in Ba Hoa Market in Tan Binh District. She had also heard that Dumex will not be sold in Vietnam soon.

The exit of Dumex may surprise many as Danone was one of the first foreign milk producers to penetrate Vietnam's market. Moreover, Vietnam is considered a lucrative market for milk companies, Phap Luat said.

Hoang Tung, a local brand expert, said that Dumex is not competitive in Vietnam. “In reality, the dominant milk brands in Vietnam at present are Vinamilk, NutiFood, TH True Milk and Dutch Lady. They have all covered the domestic retail channels such as supermarkets, convenience stores and milk agents. TH True Milk and Vinamilk have even set up their own retail networks,” Tung said.

Apart from Dumex, Abbot and Mead Johnson, two other popular milk brands from the U.S., are also competing fiercely for market share in the developing country of more than 90 million people.

Ly Truong Chien, chairman of the board of directors at local consulting firm Tri Tri Group, said Danone might have adopted a development strategy for Dumex that was not suitable for Vietnam. It is a lesson in market development for other milk companies, he added.

The average annual growth of Vietnam dairy industry hit 17 percent during 2011-2015.

Vietnam produced an all-time high of 97,000 tons of powdered milk in 2015, according to data from the General Statistics Office.

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