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Business deals

Vietnam's Nutifood takes aim at US market with baby formula

Fast-growing company looks to base production in America, targeting Latino households

Nutifood Chairman Tran Thanh Hai, left, shakes hands with Delori Foods Chairman Jaime Brown at a signing ceremony in Ho Chi Minh City on Thursday.

HO CHI MINH CITY -- Nutifood, Vietnam's leading private diary company, on Thursday signed a contract with an American distributor to sell its Pedia Plus infant formula line in the U.S., in an effort to tap one of the world's most challenging markets for nutritional supplements.

Privately held Nutifood will be the country's first dairy to export a special nutritional supplement for anorexia to the U.S., said Chairman Tran Thanh Hai, adding that he expects the first product under the partnership to be available next April. The company is currently preparing different packaging for the American version of the Pedia Plus brand.

Entering the most advanced market for nutritional supplements is the most difficult challenge facing the Ho Chi Minh City-based company, if it is to grow overseas. Nutifood has to follow strict procedures to meet the requirements of the U.S Food and Drug Administration. Hai told reporters that quality will be the key element in competing against existing producers in the market.

Nutifood targets $20 million in U.S. sales the first year, growing to $100 million in the next five years. It plans to enter specialty channels that cater to the Hispanic market -- such as supermarket chains Superior, Vallarta, Northgate, El Super and Krogers -- as well as hypermarket channels including Wal-Mart and 99 Cents Only Stores.

The company intends to build factories in the U.S. to produce dairy products such as fresh milk and yogurt. This is partly motived by President Donald Trump's emphasis on creating U.S. jobs, but mainly based on demand and potential of the market, Hai told the Nikkei Asian Review. Delori Foods Chairman Jaime Brown said the partnership will study the demands of the market in order to develop additional products, focusing on the old as well as the young.

Nutifood will be the second Vietnamese dairy operating factory in the U.S. market, after Vietnam Dairy Products, or Vinamilk, which fully acquired an American company in 2016 to provide milk products there.

Asian companies are becoming increasingly keen to invest in the U.S. as the world's largest economy launches looks to attract investment from abroad. Boonchai Opas-iam-likit, U.S. business chairman of Thai conglomerate Charoen Pokphand Group, said Thursday that there is "good sentiment" for doing business in the U.S., citing the growing confidence of consumers there, as well as the recent tax reform.

Fast growth

Nutifood was converted into a private dairy company in 2000 from a nutrition study center dating back to the 1980s. On the back of its strong national distribution network, successful branding and reputation for quality products, the company has grown to become the third-largest dairy in Vietnam, with a 10% market share. It trails local leader Vinamilk and Netherlands-based FrieslandCampina, known for the Dutch Lady brand. Nutifood has increased revenue at a pace of more than 250% annually since 2003, according to its corporate website. The company claims it holds the highest market share in full-cream milk powder.

Pedia Plus, a supplement specifically targeted toward children lacking proper nutrition, has been available in Vietnam since 2011 and is widely sold through commercial channels as well as nutritionists.

Nutifood products are exported to Asian markets including the Philippines, Laos, Cambodia, Myanmar and China. The company expects to reach 13 trillion dong ($570 million) in sales, with overseas sales hitting $30 million.

As of 2016, there were more than 140 U.S. projects invested in by Vietnamese companies, valued more than $572 million.

(Nikkei)

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