HO CHI MINH CITY -- Vietnam Dairy Products, or Vinamilk, announced late last week that it has acquired the other 49% of its Cambodian joint venture, Angkor Dairy Products, for $10 million from BPC Trading, its local partner.
The move is part of an ambitious foreign expansion program with Vinamilk chasing annual revenue of $3 billion in 2017 from $2 billion last year. The company told the Nikkei Asian Review that it is on track and market conditions are favorable.
The 51% interest in Angkor Dairy was Vinamilk's first investment in Cambodia when it started a joint venture with BPC after years of studying the neighboring market. A 30,000-sq.-meter dairy plant was opened in Phnom Penh last year. Vinamilk said that the plant was built mainly to meet the demand of the Cambodian market, but also expects to supply markets such as Thailand, Laos and Myanmar in the future.
The Angkor Dairy plant's initial phase is designed with annual output of 19 million liters of milk, 64 million snack-size cups of yogurt, and 80 million cans of condensed milk -- generally packaged in 380ml containers. Cambodian revenue is expected to hit $54 million in 2017.
Vinamilk's gross sales in the first quarter are estimated to have increased 15-20% year on year. The ministry of finance plans to lift price caps on powdered milk products for children under six in April to "bring flexibility" to dairy companies wanting to adjust retail prices, especially in the light of rising input costs, according to Saigon Securities Research. Vinamilk said the liberalization is "reasonable" and "encourages fair competition in the market."
In Vietnam, per capita consumption of milk is expected to hit 27 liters by 2020 and 34 liters by 2025 from 20 liters at present. Growth is being driven by the relatively young population -- of 93 million people, more than 24% are under 14.
Vinamilk is also keen to tap other foreign markets, including Bangladesh, Myanmar, and Thailand. Yogurt products have already been offered on the Thai market at Lawson convenience stores, The Mall Group outlets, and Foodland supermarkets through a local distributor, Topmost Enterprise.
A representative office has also been set up in Bangkok with ambitious growth projections for 2017. Earlier this year, Vinamilk went into partnership with a Bangladeshi partner, Bigbiz, to gain access to a South Asian market with over 170 million consumers. In Myanmar, it is working with Synchro World.
Vinamilk expects to conclude another deal in the U.S. this year, after spending $3 million to acquire the remaining 30% of Driftwood Dairy last year. It paid $7 million for 70% of the California company in late 2013. In 2015, Driftwood generated $119 million in revenue -- 6.5% of Vinamilk's total revenue of $1.7 billion.