There is much to do for Vietnam’s dairy industry to meet domestic demand, grow exports, and boost quality and consumption.

Vietnam’s
dairy industry has a strategic role to play: driving sustainable agriculture, powering
modern food processing, and boosting the global competitiveness of local products.
According to data released by the Ministry of Industry and Trade at the “Development of Vietnam’s Dairy Industry to 2030, Vision
to 2045” seminar, held on August 5 in Hanoi and August 12 in Ho Chi
Minh City, the country’s dairy sector has made significant strides forward over
the past decade, with industry revenue rising from around $4.4 billion in 2017 to
$5 billion in 2022 and then more than $5.03 billion in 2023.

Potential
remains but also concerns

The country’s dairy cattle herd has grown at an average of some 4.6 per cent
each year in recent times, from 228,000 heads in 2014 to approximately 335,000 in
2024. Raw fresh milk output has also increased, by nearly 8.4 per cent annually,
from 550,000 tons in 2014 to over 1.2 million tons in 2024, with the country meeting
about 40 per cent of its fresh milk needs.

The industry has also seen a marked shift in product structure, particularly
in liquid milk. The share of reconstituted milk powder has fallen sharply, from
92 per cent in 2008 to 48.6 per cent in 2020 and then to 32.3 per cent in 2023.

Forecasts from statistics portal Statista show that Vietnam’s dairy market
will be worth around $4.59 billion this year and post a compound annual growth rate
(CAGR) of 8.2 per cent between 2025 and 2030, indicating strong potential for stable
and sustainable growth if market opportunities and government support policies are
fully used.

One key issue raised at the seminar was the dairy industry’s heavy dependence
on imported raw materials. According to Mr. Nguyen Xuan Duong, Chairman of the Vietnam
Livestock Association, domestic fresh milk production currently meets only about
38 to 40 per cent of consumer demand, with the rest imported, mainly in the form
of milk powder.

This situation means that many domestic consumers do not have access to the
nutritional benefits of fresh milk. At the same time, importing milk powder and
reconstituting it into liquid dairy products reduces the incentives for domestic
dairy farming to grow, leaving Vietnamese farmers excluded from the industry’s value
chain in their own country.

“We have only 3.3 dairy cows per 1,000 people; far lower than Thailand, Japan,
and South Korea and not commensurate with our natural and workforce potential,”
Mr. Duong said. “By 2030, without timely and decisive policies, Vietnam’s dairy
industry will struggle to reach its target of 60 per cent self-sufficiency in raw
milk.”

Domestic fresh milk output meeting just 40 per cent of production needs
pushed import costs for milk and dairy products to over $1.1 billion in 2024. This
reality affects not only the economy but also consumers and national nutrition goals.
Achieving self-sufficiency in fresh milk supply would yield dual benefits: giving
consumers access to high-quality, traceable fresh milk products that improve health
and nutrition, especially for children, while easing the import burden, creating
hundreds of thousands of jobs, increasing the value per hectare of farmland, boosting
export earnings, and enabling farmers to join high-tech production chains, thereby
reducing poverty and fostering sustainable prosperity.

According to Mr. Ngo Minh Hai, Chairman of the TH Group, the goal of self-sufficiency
in fresh milk from domestic dairy cattle is not only feasible but should be considered
a national priority. With a clear national strategy, Vietnam could raise its domestic
supply from the 40 per cent today to 70 per cent by 2035, with milk consumption
per capita reaching some 54 liters a year.

To achieve this, TH has proposed two scenarios. In the first, if dairy cattle
were raised in concentrated, high-tech farms like TH’s, with productivity of 35
liters per head per day, Vietnam would need to expand its herd to 700,000 heads.
In the second, under smallholder farming models, herd growth would need to accelerate
much faster. Since productivity is lower, the total herd would have to nearly double,
by about 1.7 times, reaching an estimated 1.2 million heads. “Expanding the dairy
cattle herd is the key condition for a breakthrough in the dairy industry’s development
strategy, moving towards self-sufficiency in domestic fresh milk,” he said.

Mr. Duong emphasized that Vietnam’s dairy cattle heads remain far below potential.
Given the country’s natural and socio-economic conditions, it actually has more
available space for dairy farming than Japan or Israel. “We could expand our dairy
cattle heads to four or five-times the current level by the 2030s, which would mean
1.3 to 1.5 million heads and fresh milk output of 4.3 to 5 million tonnes,” he added.

Winning hearts one glass at a time

Reducing dependence on imports is not the only challenge facing Vietnam’s dairy
industry, as it also continues to struggle to win over consumers. Associate Professor
Tran Quang Trung, Chairman of the Vietnam Dairy Association, said Vietnamese people
consume about 26 to 28 liters of milk per person per year; a level much lower than
many countries in the region and the world, such as Thailand, with 35 liters, Singapore
with 45 liters, and Europe with up to 100 liters. “Domestic raw milk meets only
about 40 per cent of demand, with the rest still imported,” he noted. “Our system
of standards and regulations has not been updated for 15 years, and testing methods
lag behind new technologies.”

Beyond supply and demand, the industry also faces barriers rooted in consumer
perceptions. Mr. Duong said many Vietnamese still view milk as a drink for children,
the elderly, or the sick, whereas it is actually a source of nutrition for all ages.
He added that purchasing power has fallen since the Covid-19 pandemic, while the
market has overheated and has hundreds of products. At the same time, counterfeit
and poor-quality milk have eroded consumer trust.

From a business perspective, Mr. Nguyen Quang Tri, Executive Director – Production
at Vinamilk, said another factor is that a relatively high proportion of Vietnamese
people are lactose intolerant. Lactose is a natural sugar in milk that can cause
bloating, indigestion, or diarrhea in some people. This condition is common in communities
without a long tradition of consuming animal milk, leading part of the younger generation
to gradually shy away from such products.

To retain consumers, many companies have shifted to developing lactose-free
milk, plant-based milk, and fermented yogurt products that ensure nutrition while
reducing digestive discomfort. According to Mr. Tri, this strategy helps expand
the domestic market and creates export opportunities to regions with similar consumption
patterns.

Another pressing concern is product quality and traceability. Mr. Duong emphasized
that without clear, enforceable standards, particularly for powdered milk aimed
at pregnant women and the elderly – where no specific regulations exist – counterfeit
products will continue to slip through. He called on authorities to take a hard
look at shrinking dairy cattle herds and sluggish growth, warning that inaction
could undermine the industry’s future.

To move forward, he suggested a blended approach: combining high-intensity
farming with smallholder operations of 20 to 50 heads, following successful models
in South Korea and Taiwan. He also called for a unified management system, coordinated
from the central government down to local authorities and framed as a national priority
program.

-Diep Linh