Vinamilk’s products at an exhibition in Moscow, Russia. (Photo vnmedia.vn)
Hanoi, (VNS/VNA) – Vietnam’s biggest dairy firm Vinamilk is eyeingforeign markets in the hopes of offsetting the declining growth in the localmarket.
Dairy products recorded negative growth for the last three quarters: 3.3 percentin the fourth quarter of 2017, 7 percent in Q1 2018 and 5.3 percent in Q2 2018,according to the Quarterly Market Pulse report on fast-moving consumer goods(FMCG) released by Nielsen Vietnam in August.
Such declines have partly reflected the change in consumption trends ofVietnamese people, who have become more concerned about their health and whatthey consume, switching to high-nutrient and healthier beverages with morestringent quality requirements.
Vinamilk and other dairy firms are struggling to reach their business targets.
In its second-quarter financial statements, Vinamilk reported net revenue of 13.7trillion VND (588 million USD), up 2.6 percent on-year, but its after-taxprofit declined 8.2 percent to 2.68 trillion VND.
As of the end of June, Vinamilk’s revenue increased 1.7 percent but profitdeclined 8.3 percent, far behind its yearly target of 8.5 percent for totalrevenue gains and 4.6 percent for net profit.
“The company is seeking opportunities for investing in foreign markets viaeither joint ventures or M&A agreements,” the company’s management boardtold its 2018 shareholders’ meeting on March 31.
Vinamilk has been actively expanding its reach to new markets through a mergersand acquisitions (M&A) strategy in recent years.
It paid millions of US dollars to establish a joint venture with Angkor DairyProducts in Cambodia in 2014 and acquired a full stake in 2017.
Dairy products recorded negative growth for the last three quarters: 3.3 percentin the fourth quarter of 2017, 7 percent in Q1 2018 and 5.3 percent in Q2 2018,according to the Quarterly Market Pulse report on fast-moving consumer goods(FMCG) released by Nielsen Vietnam in August.
Such declines have partly reflected the change in consumption trends ofVietnamese people, who have become more concerned about their health and whatthey consume, switching to high-nutrient and healthier beverages with morestringent quality requirements.
Vinamilk and other dairy firms are struggling to reach their business targets.
In its second-quarter financial statements, Vinamilk reported net revenue of 13.7trillion VND (588 million USD), up 2.6 percent on-year, but its after-taxprofit declined 8.2 percent to 2.68 trillion VND.
As of the end of June, Vinamilk’s revenue increased 1.7 percent but profitdeclined 8.3 percent, far behind its yearly target of 8.5 percent for totalrevenue gains and 4.6 percent for net profit.
“The company is seeking opportunities for investing in foreign markets viaeither joint ventures or M&A agreements,” the company’s management boardtold its 2018 shareholders’ meeting on March 31.
Vinamilk has been actively expanding its reach to new markets through a mergersand acquisitions (M&A) strategy in recent years.
It paid millions of US dollars to establish a joint venture with Angkor DairyProducts in Cambodia in 2014 and acquired a full stake in 2017.
It also invested in Driftwood Dairy in the United States and Miraka Limitedin New Zealand.
After two years of investment, Driftwood Dairy contributed 6.5 percent toVinamilk’s total revenues, while the project in Cambodia generated 54million USD revenue in 2017.
According to BIDV Securities JSC, expanding overseas markets to increase exportturnover is one of the three main growth drivers for Vinamilk by 2020. Atpresent, the company is focusing onthe Philippines, Cambodia, Myanmar, Indonesia and China,expecting an export growth of about 15 percent per year.
It is seeking opportunities to buy some local companiesin Myanmar and Indonesia, where there is high potential fordairy producers. They all have big and young populations which have high demandfor dairy product consumption.
At the same time, per capita milk consumption in these two countries is verylow compared to other countries in the region, only around 10-11 litres perperson per year, compared to 22 litres in the Philippines and 45 litres inSingapore.
Vinamilk signed a memorandum of understanding with a Chinese partner in Maythis year, facilitating its exports to China in the near future. Thecompany is looking forward to the soon-to-be-signed China-ASEAN free tradeagreement to gain more advantages when exporting to this 30 billion USD market.
“Vinamilk is highly interested inthe Myanmar and China markets. At present, Vinamilk isexporting to these markets, but if the company wants to do it big, it mustexecute a perfect chain of suppliers and do it with major partners,” Vinamilk’sexecutives said.
It said it is working with F&N to study the markets and find suppliers atthese markets. It also revealed that in the upcoming time, a group of Chineseauthorities will come to Vietnam to inspect facilities and other aspects beforegranting an export licence to China.
The company is expected to increase exports by 8 percent in 2018.-VNS/VNA
After two years of investment, Driftwood Dairy contributed 6.5 percent toVinamilk’s total revenues, while the project in Cambodia generated 54million USD revenue in 2017.
According to BIDV Securities JSC, expanding overseas markets to increase exportturnover is one of the three main growth drivers for Vinamilk by 2020. Atpresent, the company is focusing onthe Philippines, Cambodia, Myanmar, Indonesia and China,expecting an export growth of about 15 percent per year.
It is seeking opportunities to buy some local companiesin Myanmar and Indonesia, where there is high potential fordairy producers. They all have big and young populations which have high demandfor dairy product consumption.
At the same time, per capita milk consumption in these two countries is verylow compared to other countries in the region, only around 10-11 litres perperson per year, compared to 22 litres in the Philippines and 45 litres inSingapore.
Vinamilk signed a memorandum of understanding with a Chinese partner in Maythis year, facilitating its exports to China in the near future. Thecompany is looking forward to the soon-to-be-signed China-ASEAN free tradeagreement to gain more advantages when exporting to this 30 billion USD market.
“Vinamilk is highly interested inthe Myanmar and China markets. At present, Vinamilk isexporting to these markets, but if the company wants to do it big, it mustexecute a perfect chain of suppliers and do it with major partners,” Vinamilk’sexecutives said.
It said it is working with F&N to study the markets and find suppliers atthese markets. It also revealed that in the upcoming time, a group of Chineseauthorities will come to Vietnam to inspect facilities and other aspects beforegranting an export licence to China.
The company is expected to increase exports by 8 percent in 2018.-VNS/VNA
VNA
