Growth fulcrum for Vinamilk28/04/2022
Exploiting internal advantages and looking for opportunities outside the industry is how the “big man” of the dairy industry in Vietnam promotes growth in the coming time.
Creating momentum from the potential of the dairy industry
In the short term, when life returns to normal, consumer businesses are expected to benefit from improved consumer income, and purchasing power is no longer under as much pressure as during the Covid-19 period. outbreak.
The pandemic also changed consumer behavior with a sharp increase in demand for healthy food and drinks. According to Vietnam Report’s August 2021 report, the trend of consuming immunity boosting products is expected to increase by about 36% until there is herd immunity. According to Vinamilk’s representative, these factors are opportunities for development and expansion of the scale for Vinamilk – an enterprise that currently has the advantage thanks to its overwhelming domestic market share.
In the medium – long term, the dairy industry still has a lot of room to exploit, when the per capita consumption is still quite far from other countries in the region (23.2 kg per person per year compared to 31,200 kg per capita per year). 7 kg in Thailand and 43.7 kg in Korea).
Euromonitor said that 13 million of Vietnam’s population will be over the age of 65 by 2030, their purchasing power is forecast to grow the fastest of all age groups (growing even higher than Gen Z) with an average of 5% per year. year in the period 2018-2030. Combined with the increasing interest in caring for and protecting the health of this group of people, this will be a significant growth engine for the dairy industry. In addition, the trend of consuming nutritious foods in general, including other products such as nut milk, fruit juice… recorded a positive growth momentum.
Ensure supply capacity, production in all markets
Since its establishment until now, Vinamilk has continuously increased its internal strength by investing in production capacity, namely factories and farms. A system of 13 farms spread across the country connected to 13 factories forming a tight production chain across the country. This strategy also helps Vinamilk to flexibly coordinate and avoid supply chain disruptions during the period of social distancing in 2021.
All factories and farms at Vinamilk are oriented to strict global standards, including: global good agricultural practice standards, European organic standards (for farms), FDA Organic China , ISO 9001 (for factories)… This facility allows the group to meet the needs of exporting to many markets, recording a double-digit increase in revenue even in the difficult 2021 due to the pandemic.
Despite possessing a large production capacity, the enterprise still invests in new projects such as the super project of a dairy farm complex in Laos with a total scale of two phases up to 100,000 cows. Vinamilk is studying a complex project including a large factory and warehouse in the North or projects on farms and factories with its member company Moc Chau Milk.
From these directions, Vinamilk shows its efforts to expand the scale of the domestic dairy industry, while promoting the exploitation of export markets.
Signals from new business activities
In 2021, Vinamilk announced two new joint ventures. Domestically, the unit cooperates with Kido to attack the fresh drink market. In the Philippines, the company partnered with Del-Monte to expand the market for milk and dairy products.
With positive business results from Vinamilk’s overseas companies in the past year such as AngkorMilk (Cambodia) or Driftwood (USA), the joint venture in the Philippines is also expected to achieve good results. According to this enterprise, the Philippines is a densely populated market with a dairy industry equivalent to Vietnam, of which the target customer group is children under 15 years old, accounting for about 33%. The joint venture representative said that, after launching in November 2021, the product is currently distributed at nearly 50,000 retail points in three main islands of the Philippines.
Extending its influence, Vinamilk has begun to expand investment in other fields to diversify business activities. A typical example is the beef business project in cooperation with Sojitz (Japan). Sojitz is one of the large and fast-growing multi-industry corporations in the country of cherry blossoms. This unit imports and distributes beef from North America and Australia on a large scale. The scale of cooperation is expected to reach 500 million USD. In particular, the first phase of the project is expected to go into operation in 2023 with a capacity of about 30,000 beef cattle annually, estimated first year revenue of 2,000 billion VND.
According to the assessment, the beef segment will help Vinamilk make good use of its existing advantages and bring in new sources of revenue for the business. This is still considered a potential segment when it has a stable growth rate but is still quite fragmented and has no market leader. Vietnam Bank for Foreign Trade Securities (VCBS) believes that beef production is considered the most potential segment to boost Vinamilk’s double-digit growth from 2023-2024 onwards.