Vinamilk's dream of globalizing its brand

(Baonghean.vn) - By contributing capital and buying shares of foreign milk companies, Vinamilk is gradually realizing its goal of bringing products to many continents...

From a sluggish business unit when it was first established, sometimes suffering losses and falling into crisis due to lack of raw materials and finance, Vietnam Dairy Products Joint Stock Company (Vinamilk) now holds an overwhelming market share in the liquid milk segment. Its products are present in 43 countries around the world, contributing greatly to total annual revenue.

Vinamilk's overseas trip began nearly 20 years ago, with 300 tons of powdered milk and 2,000 tons of full-fat milk successfully shipped to Iraq in 1998, paving the way for Vinamilk products to be present in 43 countries.

"This was the first export contract, we were so happy we couldn't eat or sleep," General Director Mai Kieu Lien recalled the period when she and her colleagues created one of the important milestones of the enterprise. Later, when she had experience doing business with foreign partners, Vinamilk did not stop at exporting, but became a shareholder of many dairy companies on many continents.

One of the deals that took the Vietnamese dairy company's name further than expected was New Zealand - the first stop on the journey of "bringing the bell to strike foreign lands".

Vinamilk products are now available in 43 countries around the world. Photo: PV

To establish a presence in this country, in 2010, Vinamilk contributed 12.5 million NZD (equivalent to 19.3% of shares) to build the Miraka powdered milk factory specializing in producing whole milk powder with a capacity of 32,000 tons per year. By 2015, Vinamilk had increased its capital contribution to 19.68 million NZD (equivalent to 22.81%). This is also a facility specializing in purchasing fresh milk from farmers, creating high-quality products for export to many international markets.

Three years later, Vinamilk's new Twin Cows sterilized fresh milk brand produced in New Zealand was officially launched in the Vietnamese market - a move that was considered quite surprising to investors and domestic consumers at that time.

Explaining the phenomenon of "importing self-produced goods", Ms. Lien shared that the demand for milk of Vietnamese people is increasing but domestic raw materials only meet 30%, the rest is imported. In the context of strong fluctuations in world raw milk prices, businesses take advantage of available sources to bring back to the country for production. With this deal, Vinamilk maximizes the benefits from New Zealand's abundant and high-quality fresh milk source. The dividends that this unit has received from Miraka since 2012 to date total more than 2 million NZD.

Dominating the domestic market share in the fresh milk and yogurt segment, combined with the goal of only developing the dairy industry and saying no to investments outside the industry, helps the company's finances to be strong. This is an important premise to help the business have enough strength to accelerate the globalization process of the Vinamilk brand.

Also in 2013, the company spent another 7 million USD to buy 70% of Driftwood shares, which means becoming an existing shareholder of the largest school milk supplier in Southern California, USA. The ambition to take over the business was quickly completed when Vinamilk spent another 3 million USD, increasing the total investment capital to 10 million USD and achieving 100% ownership of Driftwood in 2016. In just a short time, the dairy company in Vietnam completed the complete holding of shares of a brand with a 90-year history in the state of California.

Vinamilk's Angkor Milk factory is located in the Phnom Penh Special Economic Zone, with a total area of ​​nearly 30,000 m2, and is the first and only 23 million USD milk factory in Cambodia at this time. Photo: PV

Sharing with shareholders, Ms. Mai Kieu Lien said that this move is part of the plan to increase revenue to 44,500 billion VND in 2016. The merger and acquisition strategy in the coming time will be promoted, especially for units with many new, good products and modern technology.

In the US, Vinamilk focuses on promoting and expanding the Driftwood brand. As a result, each year, the US subsidiary contributes about 2,000 billion VND to Vinamilk's revenue.

Although achieving certain successes in conquering European and American consumers, Vinamilk is making slow progress in the market right next to it - Cambodia.

At the end of May, the Angkor Milk factory in Phnom Penh was inaugurated. Located in the Phnom Penh Special Economic Zone, with a total area of ​​nearly 30,000 m2, this is the first and only 23 million USD milk factory in Cambodia at this time.

"We really wanted to enter the Cambodian market sooner, but conditions did not allow it, even after 10 years of research," the Vinamilk captain recounted. Upon receiving support from the two governments, on July 24, 2013, Vinamilk and BPC - the distributor signed a joint venture contract to establish Angkor Milk Company Limited, in which partner BPC holds 49% of shares and Vinamilk holds 51%.

According to Ms. Lien, Cambodia is a potential market with a young population and increasing demand for milk and dairy products over time, along with a good policy to attract foreign investment.

"Angkormilk has just been inaugurated so it is still too early to evaluate the project's success, but the factory will be a solid foundation for the company to develop in the Cambodian market," she hopes. Currently, the company is focusing on promoting the Angkomilk brand, "Angkor milk for Angkor people". The main product is sweetened condensed milk under the Best Cow & Captain brand.

In addition to 3 factories abroad, Vinamilk currently has 13 factories in the country, including 2 super factories worth nearly 5,000 billion VND with its own capital in Binh Duong province. Photo: PV

In addition to New Zealand, the US, and Cambodia, Vinamilk is currently implementing a project in Poland with an investment of more than 3 million USD specializing in wholesale of agricultural materials as well as wholesale and retail of milk and dairy products. She assessed that when operating stably, the project will be a bridge for Vinamilk to explore European markets.

"It is undeniable that thanks to overseas expeditions, Vinamilk brand is known to many international friends. Vinamilk's export revenue more than 10 years ago in 2015 was 88 million USD, then in 2015 it was 250 million USD, a three-fold increase," said Ms. Lien.

In addition to 3 factories abroad, Vinamilk currently has 13 factories in the country, including 2 super factories worth nearly 5,000 billion VND with its own capital in Binh Duong province. Last year, the company produced and launched nearly 6 billion dairy products of all kinds to serve consumers nationwide, with a total revenue of nearly 40,222 billion VND.

The company is aiming for a revenue target of about 3 billion USD and to be in the top 50 largest dairy companies in the world in the next few years. "At the same time, brand coverage in many countries and continents continues to be a focus, always included in our short-term and long-term strategies," General Director Mai Kieu Lien emphasized.

PV