In parallel with developing the domestic market, Vietnam's leading dairy company actively exploits opportunities to expand its business in international markets, through investment in foreign branches and exports.
Promote the activities of foreign branches
Despite the difficult and complicated post-Covid-19 economic situation, in order to expand revenue and achieve the set goals for the period of 2022 - 2026, Vinamilk continues to promote investment in foreign branches such as Driftwood (USA), Lao-Jagro Development (Laos), Angkormilk (Cambodia) and the joint venture Del Monte - Vinamilk (Philippines).
Driftwood became a subsidiary of Vinamilk in December 2013. By May 2016, Vinamilk increased its ownership in this company to 100%. Driftwood is one of the long-standing dairy producers in Southern California (USA) with a product portfolio including fresh milk, yogurt, ice cream, and fruit juice. The Company's customers include schools, restaurants, hotels, distributors, etc. in the Southern California area. In 2022, Driftwood recorded double-digit revenue growth, contributing positively to the Group's consolidated revenue results.
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| Driftwood is Vinamilk's second foreign investment deal. |
After Driftwood, in January 2014, Angkormilk - a 100% owned subsidiary of Vinamilk was granted an investment license to build a dairy factory in the capital Phnom Penh. Two years later, Vinamilk and Angkormilk inaugurated the factory with the most modern international standards on technology, environment and food safety. This is also the first dairy factory in Cambodia with a total area of nearly 3 hectares, initial investment capital of 23 million USD, designed capacity of 59 million liters of sterilized fresh milk/year, 144 million units of yogurt and condensed milk products/year. Every year, the factory produces about 50 million liters of various types of milk, creating jobs for more than 500 workers in Cambodia.
In November 2022, Angkormilk announced that it would increase the total investment capital for projects in Cambodia to 42 million USD. Accordingly, Vinamilk - Angkormilk will invest in a dairy farm using the world 's advanced technology, aiming to produce milk in the next 2 to 3 years, with a raw milk output of over 4,000 tons/year. This will be a typical farm for the high-tech dairy farming industry in the Kingdom of Cambodia.
The company is also planning to expand the factory area at Angkormilk factory, increasing production capacity to 90 million liters of various types per year, to meet the growing demand for milk in the Cambodian market.
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Prime Minister Pham Minh Chinh visits Angkormilk's booth at the Investment and Trade Promotion Forum Vietnam – Cambodia 2022. |
For Lao-Jagro, Vinamilk officially became the parent company in July 2018 and created a new turning point with the development of the Dairy Farm Complex project in Laos on a planned area of 5,000 hectares, with a herd of 24,000 cows. The long-term orientation is to develop a farm complex of 20,000 hectares with a herd of 100,000 cows. This is the result of cooperation between enterprises from Laos, Vietnam and Japan, aiming to form an international standard fresh milk material area to supply the Vietnamese market and the Asian region.
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| Lao Jagro super farm in Laos with a scale of up to 100,000 cows. |
The Del Monte - Vinamilk Joint Venture is the newest member of Vinamilk's system of member companies. In August 2021, Vinamilk and its partner Del Monte Philippines, Inc. announced the Del Monte - Vinamilk Joint Venture with a total initial investment capital of 6 million USD, with Vinamilk and its partner contributing 50% each. Currently, Del Monte products are available at more than 100,000 retail outlets in the Philippines.
These projects are considered new milestones in the development of Vinamilk and its subsidiaries and affiliates abroad, as well as enhancing the comprehensive, sustainable and long-term cooperative relationship between Vietnam and other countries, contributing to bringing great strides to the dairy and dairy farming industry in the Southeast Asian region.
In 2022, foreign branches will continue to be the growth engine for Vinamilk's international business. For Driftwood, revenue will record a growth rate of over 30% thanks to the diversification of distribution channels to compensate for the main school channel that has not yet recovered to pre-Covid-19 levels. In addition, Driftwood will maintain the introduction of some Vinamilk products to the US market. For Angkormilk, revenue will record a growth rate of over 10% in 2022 thanks to the development of new products and increased distribution activities.
By the end of the first quarter of 2023, net revenue of foreign branches reached VND 1,203 billion, continuing to grow by 11.3% over the same period thanks to the stable performance of Driftwood in the US and AngkorMilk in Cambodia with revenue growth of 7% and 11% respectively compared to last year.
Maintain and proactively seek export opportunities
In addition to investing in foreign branches, Vinamilk is also active in export activities. The company has explored the dairy export sector since 1997 with the main market being countries in the Middle East. Currently, this region is contributing nearly 85% to Vinamilk's total revenue from export business activities.
“We have been cooperating with Vinamilk for more than 6 years and importing products from Vinamilk to distribute at the Foodstuff Supermarket chain, New Zealand. We always trust in the quality of service, facilities and quality of products produced by the company. All of them meet not only the regulations of the importing country but also the high requirements on delivery time and quantity of the retail chain system”, Mr. David Swain - Remarkable Foods Limited - New Zealand.
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At Gulfood, customers from the Middle East know Vinamilk through international rankings. proactively seek business opportunities with businesses. |
In addition to the Middle East, Vinamilk also promotes business activities in major markets such as Japan, Canada, Korea, Australia, China... and is present in most Southeast Asian countries... Up to now, Vinamilk products have reached 58 countries and territories, with the total accumulated export turnover to date exceeding 3 billion USD.
Up to this point, Vinamilk has completed most of the orders under contracts worth more than 100 million signed at the beginning of the year and expects more growth in the last 6 months of 2023.
“Although challenges due to major fluctuations in 2022 still remain, Vinamilk has achieved positive results in early 2023, with dozens of contracts worth up to 100 million USD being implemented. This is especially economically significant in the context of general export difficulties, not to mention that dairy products are not Vietnam's strong agricultural products,” said Mr. Vo Trung Hieu, Director of International Business at Vinamilk.
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| Production line of condensed coconut milk for export to the Japanese market. |
It can be said that these export contracts are not only valuable in terms of economy but also show the flexibility and correct strategy of enterprises in identifying potential markets and investing in focused areas, especially in the dairy industry - an industry with less advantages compared to other agricultural products of Vietnam.
Vinamilk representative added that Vinamilk also actively participates in trade promotion events in traditional and potential regions and markets such as Gulfood Dubai Fair, Foodex Japan, FHA Singapore Fair, Thaifex... In addition to seeking opportunities to expand and exploit export markets, these are also activities to contribute to enhancing the country's brand in the dairy industry.
Thanks to that, the company recorded revenue from the Foreign market in the first quarter of 2023 increasing by 9.4% compared to the same period in 2022, reaching VND 2,428 billion. Of which, net export revenue increased by 7.5% compared to the same period, reaching VND 1,225 billion in the first quarter of 2023.
Article and photos: DANG UYEN
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