Vũ Thảo Hương

Topic: Macro analysis of Vinamilk

I. Economic Environment

Economic means human population such as ages, genders, size, economy and occupation.
This factor is very significant because it helps company divide the market into different
marketsegments and target market. In the last years, Vietnam has undergone significant
economic modernization. According to General Statistics Office of Vietnam, Vietnam’s GDP
in 2019 increased by 7.02%,this is the second consecutive year that Vietnam's economic
growth has reached over 7% since 2011. Thanks to the economic prosperity, the per capita
income will be about 3,000 USD / year (according to the new GDP method). However, the
General Statistics Office estimates that Vietnam's labor productivity is still very low
compared to other countries in the region. It is noteworthy that the absolute gap gap
continues to increase.

Healthy market, higher income and stronger consumption confidence lead to significant
changes in consumption trend. According to Nielsen (2013), customers nowadays are deeply
concerned about health and inclined to purchase health products. Statistically, when it
comes to health products, 32% tend to purchase milk (Nielsen 2013). Indeed, liquid milk is
the second fastest growing section in the nutritional products (Appendix 9). With increasing
demand for high-quality milk, Vinamilk, certified by British Retail Consortium standard for
food safety (Viet Nam News 2013), has great opportunities to grow sales and expand its
market.

II. Cultural Environment

There are several cultural patterns that matter to Vinamilk. Vietnamese people do not have
the habit of drinking milk, the average milk consumption of Vietnamese people is only about
12 liters/ person/year, less than 1/2 of Thailand, 1/3 of Singapore and far behind European
milk consumption. Consuming less milk may not meet the calcium needs for people with
high calcium needs such as children, adolescents, pregnant women and nursing mothers.
According to the results of the National Institute of Nutrition, the average height of
Vietnamese people is 164.4cm for men and 153.4cm for women, much lower than Japanese,
Korean, and Chinese. , Thailand and Singapore. The main reason is due to unreasonable
nutrition, especially a low calcium diet of Vietnamese people. In addition, regarding brand
choice, Vietnamese consumers tend to favour foreign brands (Sacombank 2012). However,
at the same time, they usually purchase trusted brands and tend to be loyal consumers
(Nielsen 2009).

But with the population growth rate, especially the urban population growth rate is higher
than the countryside, the awareness of health protection is increasingly focused. Since then
gradually formed the habit of drinking milk for all ages. According to statistics of the
National Institute of Nutrition, current Vietnamese dairy consumption has increased
 significantly (29.9g / day). In addition, the policy programs to encourage drinking milk in
schools, providing free or low cost for kindergarten and elementary students are also
mentioned by the government in the national development project. This is an opportunity
to promote the image of Vinamilk quality milk to consumers

III. Demorgraphic Enviroment

Vietnam is the third most populous country in Southeast Asia (after Indonesia and the
Philippines) and the 15th in the world. After 10 years, the size of Vietnam's population
increased by 10.4 million. The average annual population growth rate in the period of 2009 -
2019 is 1.14% / year, a slight decrease compared to the period of 1999-2009 (1.18% / year).
Vietnam is a very young country with roughly 54.1% of total population under 30 years old
(GSO 2010). In particular, about 24.1% of the population are children under 15 (CIA 2015).
This population receives better education and earns higher income than their ancestors 20
years ago (World Bank 2014). Vietnam is in the rapid urbanization stage (World Bank 2011),
with an increasing rate of 2.95% per year (CIA 2015); After 30 years, the urban population
rate will increase by 14.3 percentage points, from 20.1% in 1989 to 34.4% in 2019. The
average urban population growth rate in the 2009-2019 period will be 2 , 64% / year, lower
than the urban population growth rate in the period 1999 - 2009 (3.4% / year). Vietnamese
people are still mainly in the lower middle class (Foreign Affairs, Trade and Development
Canada 2015).

These statistics have significant implications for dairy businesses such as Vinamilk. As the
majority of Vietnam’s population is middle-income (Foreign Affairs, Trade and Development
Canada 2015), Vinamilk boasts a large market share with this segment. the young
population is more educated, more receptive towards Western cultures, they are more
inclined to consume dairy products. Smaller household pattern means that parents pay
more attention to their children (Nguyen 2011). As children is the targeted segment of
Vinamilk, this scenario implies more demand from the market of the company. Traditional
milk consumers are typically urban citizens, who have more spending power and more
concerns about healthy products.