What made Shark Binh decide to invest a record 1 million USD in a type of instant noodles that only Vietnam has?

Participating in the 7th season, episode 13 of Shark Tank Vietnam, Ms. Phan Thi Na - General Director and co-founder of Caty Food Joint Stock Company - shared the journey of creating dragon fruit instant noodles: “Caty Food is a member of the Binh Thuan Dragon Fruit Association, and we have always been concerned and eager to find a market for dragon fruit in the Binh Thuan growing region in particular, as well as Vietnamese dragon fruit in general. After two years of research with the University of Industry and Trade and the Saigon Institute of Economic Sciences, Caty Food has successfully developed nano-technology dragon fruit instant noodles.”

Accordingly, the instant noodles contain 12% dragon fruit. Dragon fruit noodles have been certified as a product of a science and technology enterprise in Binh Thuan province. Immediately after appearing on the market, with a media campaign on social media platforms, Caty Food's dragon fruit instant noodles created a "positive crisis," with supply not meeting demand.

Ms. Phan Thi Na - General Director and co-founder of Caty Food Joint Stock Company and Tran Danh, Marketing Director, introduced the dragon fruit instant noodle product.

Regarding the product, according to the Caty Food team, dragon fruit noodles are a breakthrough product because, for the first time in the world , Vietnamese people have successfully incorporated dragon fruit into noodles. This is also a unique competitive advantage of dragon fruit noodles. To date, Caty Food has obtained patents for the technology and registered exclusive rights in the US, China, and several other countries.

The product has obtained certifications such as FDA, HACCP, and GlobalGAP and is exported to the US and Chinese markets. By the end of 2024, Caty Food's dragon fruit instant noodles had also been exported to Russia, Indonesia, and Australia. In the domestic market, the product is available at 10,000 points of sale, including in Emart and Co.opmart supermarket chains.

Regarding the overall instant noodle market, in 2023, Vietnam recorded consumption of over 8 billion packets of instant noodles. Besides the major players, smaller noodle brands accounted for 27% of the market share. Caty Food aims to capture 5% of the entire market by 2026. The Caty Food team also stated that although the instant noodle market is a "red" market, considering the fruit-flavored instant noodles, dragon fruit noodles have no competitors and enormous growth potential.

In fact, Caty Food has sold over 3 million packets of instant noodles after the success of its campaign "Dragon fruit in instant noodles for the first time." The company has expanded to over 10,000 sales points, achieving revenue of 46 billion VND in 2023, with a net profit margin of 8%. Ms. Na stated that Caty Food aims to achieve revenue of 250 billion VND this year and expand to over 50,000 sales points next year. On Shark Tank, Caty Food sought $1 million USD for 5% of its shares.

The sharks expressed their delight after tasting the dragon fruit instant noodles.

Realizing that the success of the communication campaign "For the first time, dragon fruit is in instant noodles" is a boost for the development of Caty Food, Shark Minh Beta asked the question "was the success of the campaign due to the Caty Food team's calculation or luck"?

Responding to the Shark, Mr. Tran Danh - Marketing Director of Caty Food - said, "Luck was only one factor in the campaign. Caty Food's marketing team is very young, very knowledgeable about popular culture, understands trends, and calculated that after launching this campaign, it would have a certain level of virality. Caty Food was very confident and measured 50-60% of the situation. However, the actual appeal was greater than expected, creating a 'positive crisis' when the campaign succeeded."

Faced with the confidence of the Caty Food team, Shark Minh Beta asked whether Caty Food could continue to produce similar communication campaigns. In response, Tran Danh said that Caty Food is nurturing another explosive campaign in the last months of 2024.

Shark Nga asked about the form of exporting the upcoming goods to the US and Russia. Caty Food team said that they have currently successfully signed contracts with 2 major partners, the US and China. Of which, with the US, they have successfully signed 5 containers. With China, they have successfully signed 7 containers and are negotiating to sign 10 containers with Russian customers and 8 containers with Indonesia. Each container of instant noodles ranges from 700-800 million VND in value.

With the unique advantage of dragon fruit as an ingredient in its instant noodles, Caty Food representatives stated that the company aims to achieve a revenue of 250 billion VND in 2024.

Shark Phi Vân questioned the product's unique selling proposition: "What makes customers keep buying Caty Food after their first purchase?" In response, the founding team explained that incorporating fresh dragon fruit into the noodles reduces starch content, creates a refreshing taste, boosts immunity, aids digestion, and still maintains the delicious flavor of the noodles.

Caty Food's Marketing Director, Tran Danh, stated that Caty Food doesn't actually want to compete with traditional instant noodle brands, but rather aims to create instant noodles with fruit ingredients. And in fact, the startup has proven this by exporting to the US and Chinese markets, where many customers appreciate it because incorporating fruit into instant noodles is very difficult.

Meanwhile, Shark Le My Nga believes that Caty Food's good business results are only temporary, thanks to the support of customers "rescuing dragon fruit" and does not see a bright picture of the market both internationally and in Vietnam in the future, so she does not invest.

Shark Tank Vietnam has set a record for closing deals, with Shark Binh agreeing to invest 25 billion VND in the dragon fruit instant noodle brand from Binh Thuan.

As the last person to offer his opinion before closing the deal, Shark Binh shared his valuation of Caty Food: “In this industry, I researched in the US and found that for food processing companies on the stock exchange, the P/E (price-to-earnings ratio) is only around 15 times. But for a startup like Caty Food, the valuation is only a maximum of 10 times. With a profit of 20 billion VND this year, the valuation would only be around 200 billion VND.”

With this valuation, Mr. Nguyen Hoa Binh offered a deal of $1 million for 11.1% of the shares.

After consulting with the company's President, the Caty Food team received a deal of 1 million USD (equivalent to 25 billion VND) for 10% of Shark Binh's shares and successfully closed the capital calling deal.

Source: https://danviet.vn/dieu-gi-khien-shark-binh-chot-muc-dau-tu-ky-luc-1-trieu-usd-cho-loai-mi-tom-chi-viet-nam-moi-co-20241022164116756.htm