Ice-cream market competition is scorching hot

Vietnamese brands are still dominating the domestic ice cream market, but foreign companies are following hard on their heels.

ice-cream market competition is scorching hot hinh 0

A report shows that Kido Foods (KDF), a subsidiary of Kido Group, is leading the ice cream market with 40.2% of market share, leaving its rival in the second position far behind with only 9.1%.

In 2017, KDF’s growth rate reached 16%, higher than the average growth rate of the ice cream industry of 14.7%, according to Euromonitor, a market analysis firm.

At the annual meeting ,shareholders decided that KDF should obtain net revenue of VND1.7 trillion this year, higher than the VND1.493 trillion in 2017, pre-tax profit of VND195 billion (it was VND174 billion in 2017). Ice cream will be still the biggest contributor to the company’s revenue.

After taking over Walls brand from Unilever, KDF now owns a modern ice cream factory that meets international standards, and thousands of retail points. However, it is the way KDF is developing the market that has determined its success.

According to Tran Le Nguyen, deputy chair of KDF, instead of defining the selling price based on the production cost, KDF sets the retail price levels in a way so that they are affordable to consumers.

KDF, for example, sets the price for its Merino ice cream at a level which ensures modest profit margin to make it fit the majority of consumers. However, as the products are favorable, the brand brings 55% of KDF’s revenue and profit.

According to Euromonitor, 70% of ice cream in Vietnam is sold through retail points, while 30% is through cafes and restaurants.

 Meanwhile, KDF’s retail network is very large with 70,000 retail points, which brings a great advantage to KDF over its rivals.

 KDF has opened its factory in Bac Ninh province, which will help reduce the cost of transporting ice cream from the south. Euromonitor estimates that with the new factory, KDF’s market share would be expanded to 43.84%.

 However, KDF has been warned that its rivals are also strong.

 Mai Kieu Lien, CEO of Vinamilk, a dairy producer, said Vinamilk is considering developing ice cream products. 

 It recently launched Nhoc Kem brand, which competes fiercely with similar md-end products which have been bringing good profit margin to KDF. 

 Walls brand of Unilever has returned to Vietnam and is among the top 3 ice cream products. However, Walls is not a threat to Kido, because it has to spend a lot to carry ice cream from Thailand to Vietnam.

 Milo and Kit Kat of Nestle, imported from Thailand, are also welcomed by Vietnamese. 

 According to Euromonitor, the ice cream market will have CAGR of 7% annually.

Vietnamnet

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