The state-run Dairy Farming Promotion Organization of Thailand (DPO), maker of the Thai-Danish milk brand, is moving into other Asean markets with the hope of developing regional recognition.
‘‘The taste has already been accepted by neighbouring consumers, especially sweet milk in Cambodia. Customers don’t even want us to print the local language on packaging. They love it the way it is,’’ says Mr Noppadon. Such confidence is supported by aDPO study indicating Thailand’s milk industry has a wide competitive edge if the market becomes liberalised under the AEC.
The DPO is confident its production, which uses 100% fresh milk and no powdered milk, is a strength that can lure consumers.
Thai-Danish milk has been widely available in Cambodia, Laos and Myanmar for a long time via border trade and local traders, but demand is on the rise thanks to improving economies and more tourists.
"We plan to use the formation of the Asean Economic Community (AEC) in 2016 to accelerate sales throughout Asean such as in Vietnam or maybe even extending to China," said acting director Noppadon Tunvichien.
He said more distributors will be appointed and the marketing budget expanded.
The DPO does not need to build brand awareness, as the two-red-cow logo is already known by neighbouring consumers, said Mr Noppadon.
"The taste has already been accepted by our neighbours, especially sweet milk in Cambodia," said Mr Noppadon. "Customers don't even want us to print the local language on packaging. They love it the way it is."
Such confidence is supported by a DPO study indicating Thailand's milk industry has a wide competitive edge if the market becomes liberalised under the AEC, which will open a market of 601 million people.
The DPO dismissed fears about China and Vietnam, noting their lower efficiency and higher production costs.
Mr Noppadon said only Vietnam is active in supporting its milk industry, but he believes 51 years of experience will give the DPO an edge.
An efficient supply chain, from breed development to dairy farm promotion and raw milk processing into dairy products, helps to differentiate the DPO from dairy farms in neighbouring countries, he said.
With the support of the Danish government, the first herd of Red Dane cows was imported from Denmark in 1962, and since then the agency has promoted dairy farming and bought raw milk from farmers.
It buys 500 tonnes of raw milk a day from 2,500 farm households for its five processing plants, in Saraburi's Muak Lek, Prachuap Khiri Khan's Pran Buri, Khon Kaen, Sukhothai and Chiang Mai.
A new 700-million-baht plant in Lampang province is under construction and expected to be completed in two years.
The facility will allow the DPO to increase its purchases of raw milk to 30% of total supply, which stands at between 2,700 and 2,800 tonnes a day.
Production from the Lampang plant will be aimed at serving Vietnam and China, where local traders have approached the DPO for distribution rights.
Even though it uses 100% raw milk, sales of Thai-Danish lag far behind Foremost, particularly in the 10-billion-baht UHT market.
Thai-Danish grosses about 30% from the segment even though it has a few items in it due mainly to slow product development.
To increase its market share, Thai-Danish will offer more products, starting with drinking yoghurt next month after testing the market at the Thai-Danish farm in Muak Lek district for a while.
"The drinking yoghurt market has only a few players despite its 10-billion-baht value," said Mr Noppadon.
But he said that value excludes another 10 billion baht from pasteurised milk and 20 billion from soy milk.
The DPO is upbeat that business expansion can help it achieve sales of 10 billion baht by 2016.
Last year, it earned 6 billion baht in sales, two-thirds of which came from commercial sales and the rest from the school milk project.
The state-subsidised milk project gives one free milk carton per day to 8.6 million pupils from kindergarten to Prathom 6 at a cost of 12 billion baht in fiscal 2011.
Some 14 billion baht is slated for this year's school milk budget, with 79 milk firms and dairy cooperatives including the DPO joining together to process 1,252 tonnes of raw milk for the project each day.
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- Writer: Walailak Keeratipipatpong