In economic crisis, food industry still can grow strongly
In economic crisis, food industry still can grow strongly
The Vietnamese market is large enough to receive more food producers, especially dairy producers. In crisis, people have to cut the budget on traveling and entertainment, but they still have to spend money on food.
It was late in the afternoon. But Dominic Scriven, Chief Executive Officer of Dragon Capital, an investment fund management company, was still seen working in his office, on the 19th floor of a building in HCM City that faces the Saigon River.
Dominic said he could count 8 billboards on the other side of the Saigon River. Two of them were blank with just the contact addresses and phone numbers. The other four were propaganda posters.
Where have the panels with brilliant lighting, advertising consumer goods, from footwear to clothes and electronics to cars all gone?
Dominic is not the only businessman who has realized that the billboards have disappeared. Those, who go on the highway from the Noi Bai Airport in Hanoi to the central area of the city, would see a lot of blank billboards.
This seems to be the most evident proof that shows the current difficulties of the national economy and of enterprises. Local newspapers, quoting competent agencies, have reported that hundreds of thousands of businesses have dead or on the verge of bankruptcy.
However, bright parts still can be found in the picture of the gloomy economy. In the economic recession, a capital flow still has been moving towards the drink and food sector. This can be explained by the fact that even though the national economy suffers the crisis, people still have to drink and eat every day.
Some foreign businessmen, who work for Vietnamese companies, understand this well.
Mahdur Maini, General Director of Masan Group, a consumer good manufacturer, recalled the years of 2008 and 2009, when 60 percent of Vietnamese businesses poured their money into the real estate sector.
At that time, foreign investors also flocked to Vietnam to develop real estate projects. Meanwhile, Masan decided to gather its strength on processing food.
Masan, which then made and distributed soya sauce, instant noodles, decided to make fish sauce as well. It also bought the Bien Hoa Coffee Company, Proconco, an animal feed manufacturer, Vinh Hao mineral water and Phu yen Brewery in its plan to jump into the potential drink sector.
Just within 3 years, Masan successfully mobilized $1.2 billion worth of capital from domestic and foreign partners. This includes the $359 million worth of capital from KKR, a huge investment fund, to Masan Consumer which would be poured into the domestic projects.
Meanwhile, Vinamilk, the leading dairy producer, has been following another way. As soon as realizing that the coffee and brewery projects would fail because Vinamilk could not compete with the other big guys in the fields, it decided to sell the two projects, accepting the modest profit.
The decision was enigmatic to many shareholders. However, Vinamilk made a right decision. Vinamilk’s Mai Kieu Lien, a famous Asian businesswoman, decided to focus on making dairy products.
The dairy producer has always been making high profits, despite the economic recession. In the darkest days of the national economy, Vinamilk quarter’s profit growth rate was never lower than 20 percent.
Vinamilk’s success has prompted many investors to jump into the market. Long Thanh, Ba Vi and TH True Milk brands have hit the market.
Analysts say they can be sure that Vietnamese consumers would still welcome more dairy producers and spend more money on dairy products, if the new comers can help force the dairy products’ prices down in the domestic market.
vietnamnet
