Vinamilk to consolidate foothold in US as key to global markets

September 12, 2016 | 11:48

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Vietnam Dairy Products Joint Stock Company (Vinamilk) is in talks to buy another US dairy company as it accelerates mergers and acquisitions (M&A) deals as well as consolidate foothold in the US to expand globally and drive its revenue, according to newswire Bloomberg.com.

The company expects to complete the purchase in early 2017, however, it has declined to disclose the name of its US partner or the deal value.

Chief executive officer Mai Kieu Lien said that the US is the most difficult market, thus if Vinamilk can set a firm foothold there, it will likely be able to penetrate other markets and boost its growth.

Lien added that Vinamilk is intensifying efforts to acquire foreign dairy companies, as the Vietnamese dairy market is less developed than that of neighbouring countries. Notably, according to Saigon Securities Inc. (SSI)’s statistics, in 2015, the annual dairy consumption in Vietnam is 19 litres per person, much lower than the 51 litres in Malaysia and the 34 litres in Thailand.

Besides, Vinamilk will increase its funds for M&A deals in order to reach $3 billion in revenue by the end of 2017. It is also aiming for an average annual growth of at least 10 per cent.

Earlier in May, Vinamilk completed the $3 million sale of its remaining shares in US dairy and food company Driftwood Dairy Holding Corporation, after spending $7 million on buying 70 per cent of the company in December 2014.

Outside of Vietnam and the US, Vinamilk has operations in New Zealand, with a 22.8 per cent stake in Miraka, and a 51 per cent holding in a $23-million dairy processing plant in Cambodia.

The company plans to build a new milk-powder factory in Vietnam next year and expand production at its New Zealand factory.

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