Vinamilk seeks greener pastures in US
VOV.VN - Vinamilk, Southeast Asia’s largest dairy in terms of market value, has unveiled ongoing talks to acquire a second US company as it steps up the pace of growth in its quest to drive top-line revenue.
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The company, which already possesses a 100% stake in California-based Driftwood Dairy, is looking to add small and medium sized dairies in the US to its portfolio as it targets global annual gross revenue of US$3 billion by the end of 2017, she noted.
The US is a highly competitive market, Ms Lien told the reporter, but establishing a toehold in it is a big feather in our cap, as it provides bargaining leverage in gaining access to other foreign markets.
The shift away from the local retail dairy market comes about in recognition of the lack of potential for growth in Vietnam. The domestic retail market is in large part stagnant, particularly in the dairy segment.
Dairy consumption per capita in Vietnam was 19 litres per year in 2015, compared with an average of 34 litres in Thailand and 51 litres in Malaysia, according to market research by Saigon Securities, she said.
Our internal forecasts for sales in the Vietnam local market of a few years ago were wildly off the mark, acknowledged Lien, and it really came down to a choice between throwing in the towel or going global.
Vinamilk’s most optimistic spreadsheet analyses show the company’s average annual growth for the Vietnam domestic market could reach 7-9%, but even that is far below expectations, she quipped.
She said Vinamilk budgeted US$179.3 million for mergers and acquisitions in 2015, much of which remains unexpended. With that and future allocations, the company is flush with cash and looking to go on a global spending spree to shore up its growth strategy.
Ms Lien, didn’t rule out, however, a foray into non-dairy markets in the Vietnam local retail market.
Meanwhile in a move that affirms Vinamilk’s assessment that there are greener pastures outside of Vietnam for dairy products, French Danone Dairy has announced it is pulling up stakes and exiting the market.
In connection with the departure, Martin Hoelscher, CEO of Danone Vietnam, was widely reported as saying that the demand in the retail market is such that doing business in the country just isn’t worth the effort.
He said the market also suffers from complicated governmental regulations that make it much too problematic to continue operations.
