Vinamilk's Business Strategy - The Recipe for Success

In 2022, Vinamilk held about 44% of the dairy market share in Vietnam and achieved revenue of VND 60 trillion. These figures clearly demonstrate Vinamilk’s leading position in the dairy industry today. Let’s explore Vinamilk’s business strategy in the following article!

*Vinamilk Dominates the Dairy Market in Vietnam in 2022*

Introduction to the Vinamilk Dairy Brand

The Vietnam Dairy Products Joint Stock Company, commonly known as Vinamilk, is a company specializing in the production and business of milk and dairy products.

Vinamilk was established in 1976 with three milk factories: Thong Nhat, Truong Tho, and Dielac. After more than 48 years of development, this brand has become the leading dairy company in Vietnam. Moreover, Vinamilk has repeatedly been listed among the top dairy brands in the world.

Some of Vinamilk’s achievements in 2022 include:

Receiving the First-Class Independence Medal awarded by the Party and State.
Ranked among the “Most Potential Dairy Brands Globally” by Brand Finance, UK.
Ranked among the “Top 10 Sustainable Development Enterprises in the Manufacturing Sector in Vietnam” for the 7th consecutive time.

Vinamilk is a reputable dairy brand widely trusted by consumers

Analysis of Vinamilk’s SWOT Model

Not only Vinamilk but also analyzing SWOT is one of the 5 important steps for a business to develop its production and business strategy. Here is the SWOT analysis model of Vinamilk:

Strengths

Vinamilk is the first milk brand that Vietnamese consumers have trusted for the past 48 years.
Product quality is emphasized from ingredient selection to production processes. This ensures that all products meet international standards.
Vinamilk has a wide distribution network, with over 250,000 sales points nationwide. The brand’s products are available in most grocery stores and supermarkets.
Employees are regularly trained and nurtured to enhance their capabilities and ensure professionalism in the workplace.
Vinamilk has strong financial capabilities, with abundant capital resources for investing in production and business activities.

Weaknesses

Vinamilk’s product prices are often higher than some other milk brands in the market.
Vinamilk still depends on importing a large amount of milk ingredients from abroad. This affects profitability and makes the company rely on the international milk ingredient market.
The milk product portfolio is not yet truly diverse and needs to be expanded to better meet the diverse needs and preferences of consumers in different segments.

Opportunities

The milk consumption demand in Vietnam is about 28L per person per year and tends to increase every year (according to Research and Markets).
The Vietnamese milk market still has a lot of potential for development, proportional to the increasing per capita income.
The EVFTA and CPTPP agreements bring opportunities for Vinamilk to expand its exports to new markets.

Threats

The Vietnamese milk market is becoming increasingly competitive with the emergence of many foreign milk brands such as Abbott, Nestle, Dutch Lady, etc.
Fluctuations in milk ingredient prices in the global market affect Vinamilk’s profitability, potentially forcing the company to increase product prices, affecting consumer purchasing power.
Economic downturn has impacted Vinamilk’s business activities as many consumers tighten their spending.

Overview of Vinamilk's SWOT Analysis Model — *Overview of Vinamilk’s SWOT Analysis Model*

Overview of Vinamilk’s Business Strategy

Before delving into detailed analysis of Vinamilk’s business strategy, let’s summarize some basic information:

Vinamilk’s Product Development Strategy

Vinamilk’s product development strategy focuses on the following specific objectives:

Product diversification: Continuously research and develop new products to expand the market and attract more potential customer groups.
Improving product quality: Emphasize enhancing product quality to ensure customer safety and maintain trust. Consequently, the brand can develop sustainably.
Developing premium products: Develop premium milk products with high nutritional value to build a reputable brand image and attract high-income customers.
Meeting market demand: Continuously research the market to develop product lines suitable for the needs and preferences of consumers. This flexibility helps Vinamilk maintain its competitive position in the industry.

*Vinamilk always emphasizes milk quality and consumer demand*

These strategies have helped Vinamilk succeed in developing many popular milk product lines such as fresh pasteurized milk, yogurt, powdered milk, ice cream, and cheese. Moreover, Vinamilk’s position is consolidated not only in Vietnam but also in the international market.

Vinamilk’s International Business Strategy

In addition, Vinamilk has implemented many international business strategies to expand its vision and enhance its brand position in the global market. You can see this strategy through the following activities:

Building an international brand: Vinamilk aims to be among the top 30 largest dairy companies in the world, asserting its position in the global dairy industry. This not only reinforces customer trust but also brings sustainable value to the brand.
Expanding export markets: The brand is currently focusing on expanding export markets to the US, EU, Japan, etc. The goal is to increase sales and open up new development opportunities for the company.
International cooperation: Vinamilk also engages in international cooperation to leverage resources, technology, and experience from foreign partners. Through this, milk quality will be improved, while also creating new cooperation opportunities and expanding the market.

*Vinamilk has ambitions to conquer the international milk market*

With the goal of global development, Vinamilk has had many successful international business strategies. This has made the brand the first Vietnamese dairy company to export products worldwide. Currently, Vinamilk’s products are available in more than 50 countries and territories.

Analyzing Vinamilk’s Business Strategy

Surely through the information above, you have somewhat envisioned the business strategy of Vietnam’s leading dairy brand. To understand more about the strategy, let’s delve into the analysis of Vinamilk’s business model as follows:

Business Philosophy of Vinamilk

Vinamilk always emphasizes providing high-quality, safe milk products to ensure health and consumer satisfaction. This philosophy is specifically manifested through the commitment to quality and confidence in its products with the following statement:

“Vinamilk aims to become a beloved product in every region and territory. Therefore, we believe that quality and innovation are Vinamilk’s companions. Vinamilk regards customers as the center and commits to meeting all customer needs.”

Vinamilk's business philosophy is closely tied to 3 important criteria — *Vinamilk’s business philosophy is closely tied to 3 important criteria*

Vision and Mission of Vinamilk

Vinamilk’s vision is to become one of the leading dairy companies globally, while creating value for the community and society. In addition, the brand’s mission is to provide high-quality milk products, meet nutritional needs, and promote sustainable development.

*Vinamilk has a vision and mission to develop high-quality milk*

Strategic Business Goals of Vinamilk

Vinamilk sets its business strategy goal to enhance its position in the domestic and international markets. To achieve this, it needs to expand its product range and services. Moreover, Vinamilk needs to optimize production and distribution processes to enhance efficiency and profitability.

The Vinamilk Board of Directors has set a long-term strategic vision:

“To maintain the number 1 position in the Vietnamese market and aim to become one of the Top 30 largest milk companies in the world in terms of revenue.”

To achieve this goal, the brand has oriented its development strategy with three main pillars:

Leading in innovation with high applicability.
Consolidating its leading position in the dairy industry in the Vietnamese market.
Becoming the milk production and distribution company that creates the most value in the Southeast Asia region.

Vinamilk's business strategy aims for a global position — *Vinamilk’s business strategy aims for a global position*

Competitive Advantages of Vinamilk

Based on the SWOT analysis above, you can easily see Vinamilk’s competitive advantages as follows:

A reputable brand with over 48 years of establishment and development in the Vietnamese milk market.
Product quality is always emphasized from ingredient selection to production processes.
A widespread distribution network across the country with over 250,000 sales points.
A professional workforce with rich experience due to regular training and nurturing.
Strong financial capacity helps Vinamilk ensure stability and sustainable development in the dairy industry.

*Vinamilk always emphasizes milk quality from farming*

Scope of Vinamilk’s Business Strategy

Vinamilk not only focuses on the domestic market but also expands to the international market. Some potential markets and high-demand milk product regions such as the US, EU, Japan, etc., are the brand’s targets. Vinamilk’s strategy includes: diversifying products, improving quality, and expanding distribution networks to meet the increasingly diverse needs of consumers.

Support Activities for Vinamilk’s Business Strategy

In addition to developing appropriate plans, Vinamilk also implements various activities across different aspects including:

Research and Development

Vinamilk is asserting its position in research and development through a spirit of continuous improvement and innovation in products/services. Vinamilk’s products always meet top-quality standards and cater to the diverse preferences of potential customer groups.

Furthermore, Vinamilk’s team continuously updates market knowledge to seek opportunities and development ideas for products. For example, Vinamilk has introduced various natural beverage product lines, fruit juices, and vegetable juices to meet the increasingly popular trend of healthy living.

Some of Vinamilk's fruit beverage product lines include — *Some of Vinamilk’s fruit beverage product lines include*

Technology

Vinamilk produces fresh pasteurized milk through modern equipment and technology. Accordingly, the company’s milk factory is equipped with a fully automated closed production line from input materials to output products.

All Vinamilk member units must adhere to quality standards such as ISO 9000-2000 and HACCP. Additionally, the brand invests in building advanced wastewater treatment systems to comply with Vietnam’s environmental standards for BOD, COD, and TSS.

*Vinamilk owns a fully automated closed-loop production line*

Human Resource Management

To create favorable conditions for business objectives, Vinamilk focuses on developing human resources through training and skills enhancement. The company sends officers and workers to study in developed countries on milk production technology, automated production process automation, food production machinery and equipment, and management in the dairy industry. This helps create a positive and innovative working environment.

*The personnel are professionally trained to meet job requirements*

Marketing Management

One of Vinamilk’s strengths is building a strong brand. This is achieved through effective marketing activities such as advertising on television, newspapers, the internet, organizing promotional programs, participating in fairs, exhibitions, etc.

Read more: Analysis of Vinamilk’s Marketing Strategy from A to Z

*Vinamilk has many humanistic advertisements that resonate with customers*

Financial Management

Vinamilk is one of the best-performing businesses in Vietnam. The company’s net revenue in 2022 reached over 60,000 billion VND, with after-tax profits of nearly 8,600 billion VND. Additionally, the company’s total market capitalization exceeded 159,000 billion VND at the end of 2022. These indicators help Vinamilk maintain its growth momentum and better development potential in the future.

*The company achieved a significant total revenue in 2022*

Successful business strategies of Vinamilk

Thanks to the implementation of effective business strategies, Vinamilk has achieved numerous successes such as:

Low-cost strategy

Vinamilk has successfully applied a low-cost strategy in the competitive Vietnamese dairy market. This strategy has enabled the brand to produce products at lower prices compared to foreign companies, while maintaining consistent quality.

The key factors that have helped Vinamilk effectively implement the low-cost strategy include:

Optimizing modern production processes, high automation, while reducing labor costs and increasing productivity.
Establishing concentrated milk source areas to ensure stable supply and reasonable costs.
Setting up an efficient distribution system to reduce transportation and storage costs.
Utilizing online sales channels to directly reach customers, reducing intermediary costs.

*Vinamilk establishes online sales channels to reduce costs*

Quality-focused product sales strategy

Thanks to the product sales strategy focusing on quality, Vinamilk has achieved significant success. The brand prioritizes product quality from selecting the best raw materials to production processes and final quality inspection. As a result, the company can build and maintain trust from customers.

Before the “melamine crisis” in 2008, when many milk producers faced difficulties, Vinamilk continued its operations and affirmed product quality. Consequently, the company confidently sent all raw material samples and finished products for testing, showing that none of the samples were contaminated with melamine. This helped Vinamilk succeed in building and protecting its milk brand at that time.

Read more: Learn about Vinamilk’s product development strategy

*Melamine scandal has caused many milk brands to suffer*

Rebranding strategy of Vinamilk

In 2023, Vinamilk decided to change its logo and brand identity to create innovation in customers’ minds. This event sparked a media storm by bringing a youthful, dynamic, and modern look to the brand.

Applying the new identity helped Vinamilk reposition and affirm its position as the leading dairy company in Vietnam. This created a significant turning point in their brand development and market expansion.

*Rebranding strategy and packaging change is a big success*

Human resource management & training strategy

Vinamilk implements a rigorous human resource strategy by providing training programs to develop and achieve employees’ career goals. Specialized training courses and skills are regularly organized, not only domestically but also internationally.

Vinamilk’s working culture focuses on creativity and passion. Thus, they create a friendly and professional working environment. This is where every employee has the freedom to develop creative abilities and the potential to make a difference.

*Vinamilk cares about human resource training*

Conclusion

Above are all the business strategies of Vinamilk. Hopefully, this article provides you with useful information to build a suitable strategy for your business. Stay tuned for the Business Case Study section to learn about more successful project examples!

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