The dairy firms and their distributors, including Dutch Lady, Vinamilk and Dumex, pledged Friday to sell their products to Saigon Co.op, which runs the Co.op Mart supermarkets, at stable prices at least until the end of May, the retailer said.
Hoang Tho Xuan, head of the Ministry of Industry and Trade’s domestic market department, said he supported the move by Saigon Co.op to negotiate prices with dairy producers for the benefits of consumers.
“At a time [of economic downturn] like this, it is necessary that producers and retailers share their difficulties and profits in order to stabilize dairy prices in the domestic market,” Xuan told Thanh Nien.
The move came after US-based dairy Abbott increased retail prices of its 37 products in Vietnam by four percent starting last Wednesday, raising concerns among consumers that other companies would follow suit.
Abbott, like many other foreign dairy firms in the country, imports all its products. Its distributor, 3A Pharmaceutical Company, said the price hike was necessary as the dong had dropped by more than 5 percent against the dollar compared to a year earlier.
Prices of dairy materials imported from Europe have dropped by 50-60 percent from a year ago. Many popular dairy producers, including Milex and Nestlé, said they would not raise prices in the coming months.
Dairy shops around Ho Chi Minh City, however, have increased prices on many milk products other than Abbott’s. Small retailers in District 1, for example, have already raised the prices of Friso brand products although the producer, Dutch Lady, has not announced any price hike.
Vu Vinh Phu, chairman of the Hanoi Supermarket Association, said so far there have been no measures initiated to control prices in the dairy market, which enables firms to set prices at whatever rates they want.
“Vietnamese consumers can’t keep paying too much for dairy products, twice the prices in Malaysia and 1.5 times higher than in Thailand,” Phu said.
“Saigon Co.op is brave when pioneering price negotiations with dairy producers, and I appreciate that,” he said, noting that his association would ask its members to do the same thing or choose new business partners who offer better prices.
“Milk is an essential product that consumers can’t do without, and supermarkets need to be flexible in negotiating prices so that no one will be affected.”
Duong Thi Quynh Trang, the public relations manager of the Big C supermarket chain, said any price hike now would have negative impacts, not only on producers but on retailers as well.
“All price hikes must be justified by the producers. Big C will take appropriate measures against those who increase prices without reason.”
Nguyen Thai Dung, deputy director of the Big C Thang Long Supermarket in Hanoi, said his supermarket is always strict in dealing with distributors.
“If negotiations with any dairy distributors fail, the supermarket will stop purchasing their products. This will help create competition among dairy distributors.”
Bui Hanh Thu, deputy director of Saigon Co.op, said to encourage dairy producers and distributors to offer better prices, her supermarket chain will give them the best places for displaying their products.
At the same time, Co.op Mart supermarkets will limit the display and sales of other products, she said.
Dairy sales at the chain have been growing rapidly in recent months, she noted.
Thu said under a long term plan, Saigon Co.op has submitted a proposal to the HCMC government to include milk products in the list of 10 products whose prices need to be stabilized.
“We have also worked with the two largest producers in Vietnam – Vinamilk and Dutch Lady – to see if we can make dairy prices in Co.op Mart supermarkets 3-5 percent lower than prices outside.”
Statistics from Vinamilk show that the domestic dairy market was worth VND8 trillion (US$458 million) last year, with foreign producers holding an 80 percent market share.
Reported by Nguyen Hang-Thu Hang
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