Sweden's Arla foods has today revealed it plans to enter Vietnam's dairy market in October to boost its presence in the dynamic emerging markets of Asia.
Following an extension of its presence into China earlier this year, the group will now turn its attention to Vietnam, which it believes offers the next most prolific market to launch its Milex brand of powdered milk products in.
With a customer base of 84m people, Arla is confident that there is sufficient demand in the country for the development of branded powdered milk, despite a large number of its rivals already operating there.
"In view of the enormous growth, we believe that Vietnam continues to offer great potential," stated Frede Juulsen, head of Arla's milk powder business. "In the first year, for instance, we expect to achieve sales of around USD 10.5 million,"
The products will be marketed through Arla Foods Vietnam with the cooperation of local distributor Asian Dragon. The partnership is expected to allow Arla to better adapt to the challenges of entering the dairy local market.
Headquartered in Ho Chi Minh City, the new subisdiary will create 8 new positions for Arla itself, whilst Asian Dragon expects to take on 50 staff to meet expected demand.
If expectations regarding the growing strength of dairy products in Vietnam hold true, Arla's strategy to brings its brands to the country could prove prudent for its operations.
According to analyst Euromonitor International, the dairy sector is one of the fastest growing sectors in Vietnam's packaged food category, with estimated 2006 sales (in current value terms) of VND 5375.1 billion (€267 million). Milks make up the majority of these sales.
The dairy market is forecast to reach VND9560.7 billion in 2010. Distribution improvements and economic growth will also contribute to growth in dairy consumption.
