Saturday , February 24 2024

Dairy firms increase product prices as input costs surge

Customers are paying more for milk and milk products as Vietnamese dairy companies increase prices amid a global surge in input costs.

Hanh in Ho Chi Minh City’s District 3 said the price of Australian organic milk products has risen by 10 percent in a week and is often out of stock.

District 5 resident Minh Anh said that a 48-pack TH True Milk carton box was now priced VND380,000, up 10 percent from last year.

Vietnamese companies have increased prices by around five percent on average in the first six months as input and manufacturing costs rise, according to a report by the Vietnam Dairy Association.

Dairy product prices are also increasing all over the world.

Full-cream milk in Europe hit a new peak of EUR5,100 per ton in the second quarter, up 14 percent from the first, according to a report by Rabobank.

In the third quarter, Europe milk prices will continue to hover around the new peak, while prices in Oceania and South America will continue to rise by around 10 percent, the report said.

Vietnam’s dairy giant Vinamilk has said it has seen prices of ingredients rise by 70 percent in the first six months, some of them by 100 percent.

Other dairy companies like TH True Milk, Nutifood and VPMilk have also raised prices citing rising input costs.

The price increment, however, is not enough to cover the surging costs, and therefore companies have set modest earnings targets for this year.

Vinamilk targets a year-on-year increase in post-tax profits of 7 percent to VND12 trillion.

International Dairy Products expects a 45 percent drop in profits to VND452 billion.

Nguyen Quang Trung, chairman of the Vietnam Dairy Association, said Vietnamese dairy companies are set to come under greater pressure in the third quarter as ingredient prices continue to rise.

Around 60 percent of ingredients are imported and therefore their prices depend on global rates, he added.

But Trung also said that there were opportunities for dairy companies to expand their market share during this time as it is estimated that dairy ingredients production in Vietnam only meets 40 percent of domestic needs.

Vietnam’s dairy demand remains low at 26-28 liters per person per year, compared to Thailand’s 35 liters and European countries’ 80-100 liters.

Local companies are striving to ensure more sustainable supplies.

Bui Thi Huong, executive and foreign affairs director of Vinamilk, said that the company has put three Green Farms into operation, which help increase production by 5-6 million tons a day. This will increase even further when its factory in the central province of Quang Ngai reaches maximum capacity, she said.

The global dairy market is set to experience compound annual growth rate of 5.09 percent from 2022 to 2027, according to a report by market research group IMARC.

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