French nutritional food producer Danone, which sells the children’s formula Dumex in Vietnam, is to leave the country due to low sales.  

In response to questions from VET, Mr. Martin Hoelscher, CEO of Danone Vietnam, said the market share held by Dumex in Vietnam is not enough for the company to continue its investments here.

“We therefore decided to gradually withdraw from Vietnam,” he toldVET. “Danone’s activities in Vietnam will continue as normal for the next few months. Dumex will be available until early next year.”

Danone has already sold Dumex China due to a significant fall in market share following a food safety scare that later proved to be a false alarm. The sale of Dumex China to the Yashili International Group Ltd. was finalized on May 31 for €150 million ($159 million).

Danone was one of the first formula milk producers to arrive in Vietnam, in the mid-90s. Its key markets are China, Thailand and Malaysia.

Besides Dumex, popular formula for children under six years of age in Vietnam include Pediasure and Similac from the US company Abbott, Enfagrow from US’s Mead Johnson Nutrition, Friso from the Netherlands’ Friesland Campina, Aptamil, also from Danone, and Meiji from the Japanese company Meiji.

Dumex and other formulas for children face many difficulties as the State is encouraging mothers to breastfeed and issued provisions prohibiting the advertising of milk for children under two years of age early last year. The provisions are said to have had an impact on raising awareness.

The application of price ceilings on formula for children under six years of age have also been problematic for formula producers. In May this year, Minister of Finance Dinh Tien Dung said he expected to float the price of milk products for children under six years of age by the beginning of next year after the price ceilings are eliminated.

Management agencies have been established to ensure the market remains stable. In the future, producers can maintain stability through the use of improved management and economics measures, he added.

He said previously that by the end of this year the decision to put in place price ceilings for milk products for children under six years old would expire.

Economists agree that the use of price ceilings for some products relating to health and nutrition for children should not be maintained over a long period. Mr. Cao Si Kiem, Chairman of the Vietnam Association of Small and Medium-sized Enterprises, believed price ceilings should be removed when the market has abundant supply.

The price ceilings were put in place in May 2014 under Decision No. 1079 from the Ministry of Finance. At the end of the second quarter of 2015 the ministry issued Decision No. 758 extending the price ceiling to the end of this year.

VN Economic Times