Large corporations compete for market share in food sector
The long-term demand of the market has prompted large corporations to spend trillions of dong making food, although 2017 is expected to be a tough year.
Kido Group has announced a plan to launch chili sauce, its new product, in August. The group, formerly a sweets manufacturer, sold the sweets production facilities to Mondelēz International last August and jumped into the food sector.
It has acquired vegetable oil, spices and frozen food production companies, moves that helped it join the food market in the quickest way.
In 2016, PAN Group, a business operating in many fields, decided to withdraw capital from two of its subsidiaries to gather strength in two major fields – agriculture and food.
Within one year, PAN increased its ownership ratio in Ben Tre Seafood (ABT), Long An Food Processing (LAF) and Bibica (BBC) and established PAN Food with charter capital of VND1 trillion. All the moves are a part of a strategy to develop business in the food sector.
Other large corporations, whose core business fields have no relation with the food sector, have also expressed their willingness to invest in food production projects.
These include Vingroup (real estate development), FPT (information technology), Hoa Phat (steel manufacturing) and Thaco (automobile).
The growing tendency of investing in the food sector and fast-moving consumer goods, plus the wave of foreign groups taking over Vietnamese enterprises, shows the great potential of the Vietnamese food market.
A report from Stoxplus shows that Vietnamese average spending on food increased from $28.1 a month in 2011 to $61.3 in 2015.
In 2016 and the first months of 2017, Kido obtained the controlling stakes in two large vegetable oil companies – Tuong An and Vocarimex.
A Kido senior executive said Kido would wrap up the procedures to acquire a 50 percent stake in Dabco Food in some days.
As for Masan Consumer, known for its meat, spice and fast-moving consumer goods, has set the target of $2-3 per consumer each month in the next three years.
In 2009, one consumer paid $0.2 a month for Masan products. The figure rose to $0.7 in 2016 and is expected to increase to $2-3 by 2020, which means sales of $2-3 billion.
According to EIU, the total consumption of individuals and households in Vietnam in 2015 reached $128 billion. Of this, the spending on food, drinks and tobacco was $55.3 billion, or 43.3 percent.
The amount of money was equal to spending on four fields – housing & building materials; entertainment & education; transport & telecommunication; and on healthcare services.
Kim Chi, VNN