Vinamilk 'paves the way' to export Vietnamese milk to the Russian market and the Eurasian Economic Union countries

Ready to take on challenges

On June 15, 2020, under the authorization of the countries of the Eurasian Economic Union (EAEU), the Russian Federal Service for Veterinary and Phytosanitary Supervision issued a notice that Vinamilk is allowed to export dairy products to the territory of the EAEU under the supervision of the Customs authorities of the union.

Since 2015, Vinamilk has conducted product introduction and trade promotion activities in Russia. Photo: PV

The EAEU is a common market of five countries including the Russian Federation, Belarus, Armenia, Kazakhstan and Kyrgyzstan and is an economic region with good growth rates. With a gross domestic product (GDP) of 1,900 billion USD and 183 million people (2018), the EAEU union, although only established in 2015, is a region with great development potential.

With the guidance of the Department of Animal Health, Ministry of Agriculture and Rural Development, along with careful preparation and large production potential including a system of 13 modern factories, 12 large-scale high-tech dairy farms meeting international standards, Vinamilk has passed the surveys, met the strict standards of the countries in the Eurasian Economic Union and become the first Vietnamese dairy enterprise licensed to export dairy products to 5 countries in this alliance.

Modern production lines at Vinamilk factories. Photo: PV

Many years ago, Vinamilk made the first approaches and introduced to consumers in Russia and Kazakhstan soft drinks made from tropical fruits, which are Vinamilk's strengths. This is also a step to survey the market and consult consumers' tastes very systematically by Vinamilk.

The markets of the EAEU countries are assessed to have a great demand for Vietnam's key products, including agricultural products. Moreover, the Free Trade Agreement between Vietnam and the Eurasian Economic Union, which took effect at the end of 2016, has opened up great trade opportunities between the countries. According to statistics, in 2018, the import and export turnover between Vietnam and the EAEU reached 4.9 billion USD. In the first 9 months of 2019, this figure reached 3.7 billion USD and is estimated to reach 5 billion USD for the whole year, of which the Russian Federation accounts for the largest proportion at more than 90%.

Therefore, it can be said that the event of the first Vietnamese dairy enterprise being licensed to export to the EAEU is not only meaningful for Vinamilk but also for the Vietnamese dairy industry in general, as it opens the door for Vietnamese milk to enter a new market full of potential.

Vinamilk participated in the Gulfood Dubai Fair and successfully signed a milk export contract worth 20 million USD there. Photo: PV

However, on the other hand, Russia and the EAEU countries are countries with a very developed and long-standing dairy farming industry, so along with opportunities, there are still many challenges that require businesses to come up with the right strategy to effectively exploit the market.

Mr. Mai Hoai Anh - Executive Director of International Business said: “Vinamilk has more than 20 years of experience, exporting to 53 countries and territories. In many markets, dairy products are always competitive, so there will certainly be many difficulties at first. However, Vinamilk will prepare carefully to come up with appropriate approach strategies using its strong products to effectively exploit this market.”

Continuously expanding foreign markets

In 2019, Vinamilk's direct export revenue reached VND5,175 billion, up 14.8% compared to 2018, contributing to total revenue of VND56,318 billion. In the first quarter of 2020, overcoming common difficulties caused by the Covid-19 pandemic, Vinamilk's export segment recorded net revenue of VND1,081 billion, up 7.5% compared to 2019 and contributing to total revenue of VND14,153 billion in the first quarter of 2020.

A batch of Ong Tho condensed milk was exported by Vinamilk to China in April 2020. Photo: PV

This result comes from Vinamilk's continuous exploration of export opportunities from potential markets. Specifically, at the beginning of 2020, Vinamilk signed a contract to export milk worth 20 million USD to the Middle East. Then, under the conditions of social distancing, the company successfully exported the first batch of condensed milk to China and many other countries. Recently, Vinamilk's nut milk and milk tea products have been available in Korea through major e-commerce sales sites there with good expectations of the reception of consumers in this country.

Vinamilk's soy milk and milk tea products reach Korean consumers. Photo: PV

With an effective business strategy and great momentum in the first months of 2020, in the context of the domestic and global economies being affected by the Covid-19 pandemic, Vinamilk has been rated by Forbes Vietnam as one of the Top 50 Best Listed Companies in Vietnam 2020 for the 8th consecutive year. Currently, Vinamilk is also the only Vietnamese company in the Top 50 largest dairy companies in the world in terms of revenue and is very close to the Top 30 according to the set strategic goals.