The plant, to cost around €17 million, will be situated in Phu Ly in the northern province of Ha Nam and is scheduled to start operating in January 2008. "The construction of a second production facility became necessary due to the rapid growth in sales of Friesland Foods' dairy products in Vietnam," said Friesland in a statement. Sales of Friesland's dairy products in Vietnam have grown by around 25 per cent annually in the last few years, driven by strong economic development in the country and a large young population. Under-20s account for 60 per cent of the country's 80 million people.
A government school milk programme has also encouraged dairy consumption among Vietnamese children. "Parents in Vietnam are ready to invest in good food for their children and teenagers are also consuming more and more dairy products," said Rob van Dongen, a spokesman for the company. Friesland Foods, whose Vietnamese operations are known as Friesland Foods Dutch Lady Vietnam, produces a range of dairy products under the Dutch Lady and other brands. The new factory will concentrate on ready-to-drink products. The company will hire an additional 225 people, adding to its current staff of 1,200.
Friesland Foods opened its first factory in Vietnam in 1968 and now supplies products to approximately 80,000 sales outlets from three distribution centres. The company, which vies with national group Vinamilk for the leading position in the market, declined to reveal its turnover in Vietnam but says the south-east Asia region is 'very significant' for the company.
Asia -including Malaysia, Singapore, Indonesia and Thailand - is still a small market for the company however, accounting for only €729 million of its €4.4 billion turnover last year.
But acording to industry analysts Euromonitor, 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.