Professional Documents
Culture Documents
Teacher : Binh Do
GROUP 2 : Analyze Industry Context Of A Vinamilk Company
I. Introduction
Vinamilk is the largest dairy company in Vietnam. Based on the UNDP 2007 Top
200 largest firms in Vietnam report, it was also the 15th largest company in
Vietnam and formerly the most valuable public company listed in Vietnam.[2] In
2010, it is the first company in Vietnam to be included in the Forbes Asia's 200
Best Under A Billion list that highlights 200 top-performing small- and mid-sized
companies with annual revenue under US$1 billion.[3]
The company was established in 1976 as the state-owned Southern Coffee-Dairy
Company, to nationalize and take over the operations of three previously private
dairy factories in South Vietnam: Thống Nhất (belonging to a Chinese company),
Trường Thọ (formerly owned by Friesland Foods, best known for its production of
condensed milk that was widely distributed across the South) and Dielac (Nestlé).
It was renamed United Enterprises of Milk Coffee Cookies and Candies in 1978. It
became the Vietnam Dairy Company, formally established in 1993. In 2003,
following its IPO to the Ho Chi Minh Stock Exchange, the company legally
changed its name to Vietnam Dairy Products Joint Stock Company (Vinamilk). The
principal activities of the Vinamilk are to produce and distribute condensed milk,
powdered milk, fresh milk, soya milk, yogurts, ice-cream, cheese, fruit juice, coffee
and other products derived from milk.
Vinamilk products such as powdered milk and condensed milk are also exported to
the Middle East, Cambodia, the Philippines and Australia. Exports accounted for
$180m in 2012.[4] Vinamilk's main competitors are Dutch Lady Vietnam (a division
of Friesland Foods), Nestlé Vietnam, Abbott, Mead Johnson, Friso and Nutifood.
In September 2016, Vinamilk signed a strategic cooperation agreement with Chr.
Hansen to develop probiotics
Major brands
- Vinamilk
- Dielac
- Vfresh (juice and soya milk)
- Angkormilk
- Ong Tho (condensed milk)
II. Supply and demand statistics
Consolidated net revenue reached VND14,153 billion in Q1 2020 (“Q1/2020”),
growth of 7.3% over the same period in 2019, in which:
- Domestic business segment recorded net revenue of VND 12,092 billion,
increased 7.9% over the same period in 2019 and contributed 85.4% to the
combined net revenue.
- Foreign branch segment recorded net revenue of VND 980 billion, increased
0.8% over the same period in 2019 and contributed 6.9% to the combined net
revenue. The low single-digit growth rate due to the business activities of
Driftwood subsidiary in the US (100% owned by Vinamilk) was affected, though
not significantly, when schools in California state - Driftwood's main customer
group – has been closed since mid-March 2020 when the Covid-19 flu outbreak
started in this area. Revenue of subsidiary Angkor Milk in Cambodia (Vinamilk
owns 100% of capital) still achieved positive growth. In particular, Angkor Milk's
domestic sales recorded double-digit growth thanks to the low consumption of
dairy products in this market.
According to Vinamilk's announcement, in the second quarter of 2020, Vinamilk's
consolidated net revenue reached VND 15,495 billion, up 9.5% compared to the
first quarter of 2020 and up 6.1% over the same period in 2019. - Domestic
business activities recorded a net revenue of 13,364 billion VND, up 10.5%
compared to the second quarter of 2020 and up 7.6% over the same period in 2019,
accounting for 86% of the consolidated net revenue. . - The "export" activity during
this period recorded positive results such as: exporting milk to the Middle East with
a contract worth 20 million USD; export condensed milk to China; The export of
nut milk and milk tea to the Korean market… directly contributed to the net
revenue of VND 1,370 billion in the second quarter of 2020, an increase of 26.8%
compared to the first quarter of 2020 and an increase of 7.1% over the same period.
in the period of 2019, accounting for 9% of consolidated net revenue. -
Accumulated in the first 6 months of 2020, Vinamilk's consolidated net revenue
reached VND 29,648 billion, up 6.7% over the same period in 2019 and completing
50% of the year plan. In which, net sales of domestic business reached VND
25,456 billion and direct export reached VND 2,451 billion, corresponding to the
growth rate of 7.7% and 7.3% respectively over the same period in 2019; net
revenue of foreign branches reached VND 1,741 billion, down 6.8% over the same
period in 2019. - In the third quarter of 2020 (“Q3/2020”), consolidated net revenue
reached VND 15,563 billion, up 8.9% over the same period in 2019, of which: -
Domestic business recorded net revenue of VND 13,264 billion, up 8.9% over the
same period in 2019 and accounted for 85% of consolidated net revenue thanks to
the following growth drivers: - Export activities recorded a net revenue of VND
1,576 billion, an impressive growth of 19.5% over the same period in 2019 and
accounted for 10% of consolidated net revenue thanks to stable demand and
efficient business operations. fruit. Strategy of close cooperation with international
business partners in foreign markets of Vinamilk has effectively promoted during
this Covid-19 period when they became an "extension arm" to help Vinamilk
maintain the brand's presence in the international market even though the global
supply chain was greatly affected. In addition, the revenue of Angkor Milk -
Vinamilk's subsidiary in Cambodia - continued to grow by over 20% over the same
period in 2019.
Political factor:
Vinamilk is a one of the largest in Vietnam. But now Vinamilk is deveploy
abroad to USA, Russia, India… so Vinamilk is not only local company but
also international.
Vietnam is agricultural. So to milk producing, there are polities that
gorverment encourage milk company developing. Therefore vinamilk can be
easily produce and sale their product. According to the Law, milk and almost
kind of produce from agricultural or heath for social have just paid 8% tax.
1.Illustration
Economic Factor
The economic is developing and increase. that make
positive impact on purchasing power in the country
Social factor
People's living standards are increasing.
3. Illustration
.
Most people in Vietnam do not have the habit
of drinking milk.
Technology factor
Rapid high temperature sterilization technology.
4. Illustration
Environment factor
Hot and humid monsoon climate.
Legal factor
Vinamilk must ensure the production, which are safety and health for
customer by using modern system. Company should follow the rule of food
safety not only in Vietnam but also others organization in global.
ANALYSIS OF VINAMILK'S INDUSTRY ENVIRONMENT: PORTER'S
5 FORCE
Currently, Vietnam has about 54 companies producing, importing and trading milk,
not to mention hundreds of milk distribution agents, in which. Including liquid milk
market is milk market Vietnam enterprises are competitive, the majority of the
powdered milk market is still dominated by milk imported as: Abbott, Mead
Johnson, Nestle, ...
liquid milk market value about 1 billion USD. If a few years ago only a few names
like Vinamilk or Dutch Lady dominated most of the market, now dozens of brands
from Vinamilk, Dutch Lady, TH True Milk, Moc Chau, Ba Vi, Dalatmilk,
Lothamilk, Vixumilk, Nutifood , Hanoi milk joined with the price difference is not
much. In recent years, TH True Milk has emerged so amazingly that all the
established brands in the industry must be wary.
Vinamilk also has coffee, sugar, and cheese products, but it is unsuccessful because
it is difficult to compete with big brands in the industry and does not share the same
identity with other products as well as the company's brand. .
Looking at the data table, it can be considered that Friesland Campina is Vinamilk's
biggest competitor in the domestic market. However, Vinamilk and Friesland
Campina are not strong enough to dominate the industry, which is increasingly
affected by foreign enterprises. At the same time we see the fierce level of
competition in the industry.
Vinamilk currently holds a relative market share and some products are in an
overwhelming position such as yogurt and sweetened condensed milk, but in some
segments such as fresh milk and powdered milk, it is still limited. Specifically,
Vinamilk holds 82.4% market share of condensed milk, 53.8% market share of
yogurt, 41.7% market share of fresh milk and about 25.8% market share of
powdered milk in Vietnam
.
Competition in the dairy industry tends to become increasingly fierce when large
companies expand through M&A (2020, the market has recorded a number of big
deals such as Vinamilk's acquisition of Moc Chau Milk, or IDP acquired by Blue
Point and acquired by VietCapital).
3. NEGOTIALITY OF SUPPLIERS:
– Cost of entering the industry , generally not high but must be large enough for
advertising, research / development needs. However, for liquid milk and yogurt
products, it is quite high.
– Product characterization: The Vietnamese dairy market has so far present most
of the major dairy companies in the world, in which the large dairy firms have
owned a certain market share and have little change in recent times. Therefore, new
competitors who want to enter must have a strong investment to entice and change
the market's loyalty to existing milk companies.
Company: Vinamilk
Product quality
Diverse products, there are many leading dairy products in Vietnam (Ong Tho
condensed milk, Phuong Nam Star, Dielac, Yogurt Vinamilk....) to meet the needs
of all audiences. With prices suitable for consumers of each segment. Especially,
the condensed milk product line "Ong Tho and Phuong Nam Star" is a cheap
product, suitable for the needs and tastes of the majority of Vietnamese people
today
High quality products but lower prices than imported products of the same type
and owns the largest market share in Vietnam among suppliers of similar products.
Wide distribution network
Vinamilk's dairy product distribution network stretches across the country and
also exports to foreign markets, combining many modern and traditional
distribution channels:
- Vinamilk now has a wide distribution network across 64 provinces, more than
250 distributors and more than 135,000 points of sale nationwide. This large
network helps Vinamilk capture a large number of customers and ensure the
introduction of new products and effective marketing strategies across the country.
Invest in modern, high-quality equipment and technology
All Vinamilk's dairy factories are invested in modern and advanced technology,
imported from European countries such as Germany, Italy, and Switzerland to
apply to the production line. Vinamilk is the only company in Vietnam that owns a
system of machinery using spray drying technology developed by Niro of
Denmark, ensuring quality dairy products to consumers.
Quality natural milk source, international standard farm
The company invests in building organic dairy farms according to international
standards, supporting dairy farmers to be proactive about input materials. In
addition, the company also has a dairy project in New Zealand (the country that
exports the most raw milk to the Vietnamese market).
Vinamilk's milk factories are located at strategic locations near the farm,
allowing Vinamilk, in addition to maintaining and strengthening relationships with
suppliers, also ensures the purchase of fresh milk of good quality. (image)
Vinamilk consumes more than half of domestic raw milk production, this is also
a business capable of navigating the price of milk in the Vietnamese market.
(image)
Professional and methodical marketing strategy
With a large corporation with a long history of achievements like Vinamilk, the
advertising, PR, and Marketing programs are all very methodical and professional,
highly humane, touching the hearts of users, such as programs "School milk",
"Growing Up Vietnam Dairy Fund", the campaign "One million green trees in
Vietnam"...
Besides, Vinamilk has a strong product research and development department.
Vinamilk attaches great importance to market research and understanding user
tastes, as well as sales activities of distributors, listening to consumer feedback in
many aspects, making good use of the media. social network to make a brand and
thanks to that, Vinamilk provides the best and most suitable dairy products to
consumers.
Financial strength
While many businesses are facing difficulties because of loan interest rates,
Vinamilk has a fairly safe capital structure and good financial autonomy. In
addition, the indirect acquisition of Moc Chau milk also contributes to improving
and expanding the company's financial capital.
"Top 5 brand values in Vietnam” in 2020.
The first challenge to mention is the increasingly fierce competition with domestic
and international dairy brands. Vietnamese consumers have more and more choices
about dairy products when big brands such as Nestle, Dutch Lady, Abbott, etc.
"landed" in Vietnam.
Vietnam has many "open door" policies, cutting taxes on many products, including
dairy products. Reduced tax on powdered milk from 20% to 18%, condensed milk
from 30% to 25%. This is a great opportunity for foreign businesses to penetrate
the Vietnamese market, opening up many choices for consumers.
3. Customers: the export market has many risks, customers prefer to use
foreign milk:
90
% of Vinamilk's export profit comes from exporting to the Iraqi market. However,
this is one of the most unstable regions in the world, so its export profit to this
market is not as much as expected.
On the other hand, Vinamilk's main business product is fresh milk: food has a
direct impact on consumers' health, so the quality and nutritional content of the
product is always what users care most about. The "foreigner" mentality of
Vietnamese consumers, preferring to use portable foreign goods over domestic
products is also one of the challenges of Vinamilk in particular as well as the
domestic dairy industry in general.