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Dairy importers promote sales by freezing prices
Foreign milk firms have launched milk promotion programmes, aimed at freezing current high prices levels, according to Nguyen Anh Tuan, Deputy Director of the Ministry of Finance's Pricing Department.
After the recent investigation of milk prices in the market, the Price Watch Department requested milk production enterprises to cut costs to reduce prices. To date, only Nestle has decreased the price of some their products.
Nestle Viet Nam cuts prices by 4-5 per cent on four powdered milk products for children. Prices of Lactogen 3 have dropped from VND131,000 to VND125,000 per 900g can, while Lactogen 1 has dropped from VND69,000 to VND66,000 per 400g can.
Other foreign dairy producers have implemented promotional programmes instead of decreasing prices as requested by the department.
Mead Johnson, American milk company, offers dairy products as gifts to lure more consumers. When buying Enfagrow A+ and Enfakid A+, consumers receive a free 200g can.
In a similar move, Friso increased the weight of its cans to 1.5kg while maintaining their original price, estimating this provides savings of up 20 per cent.
As dairy producers had lowered prices by launching promotional campaigns to lure more customers, it had been difficult for the authorities to intervene, said Tuan.
"We cannot intervene in these cases. We cannot ask them to reduce prices instead of launching promotions".
As the result, the Ministry of Finance is expected to issue new price management regulations in the coming time which regulates the price of some products, including milk.
Under the new circular, price stabilisation measures will be taken based on input costs.
The new circular is also expected to regulate that all dairy firms will have to register the prices of products being sold in Viet Nam to ensure more stable retail prices for consumers. Currently, only milk firms in which the State holds more than 50 per cent stake are required to register their prices.
According to the Viet Nam Dairy Association (VDA) which was established in March, imported milk prices are unreasonably high, and State management agencies are working to solve the issue. In their first meeting, the association noted that if the current situation could not be improved, consumers would suffer.
Major foreign dairy companies have factories in Thailand and Malaysia allowing them to sell products to Southeast Asian countries in order to enjoy preferential tariffs under ASEAN.
"It should open doors to all foreign producers, with no discriminatory treatment for ASEAN producers. If so, dairy producers will have to compete with each other and the competition will force prices down", said Nguyen Tuan Khai, Deputy Chairman of the VDA.
Meanwhile, the Viet Nam Trade and Information Centre has forecast that the milk prices will continue to increase in the second quarter of this year, especially in June due to the rising world prices, while the country has to import 70 per cent of materials for milk production.
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