Masan MEATLife steps up restructuring to accelerate Feed-Farm-Food platform

On September 10, the Board of Directors of Masan MEATLife JSC (MML) submitted the company's restructuring plans to the general meeting of shareholders. Accordingly, MML will be restructured into independent businesses (Feed - Farm - Food). As separate and more focused operating platforms, the business units are expected to become better positioned to develop into best-in-class companies compared to global peers.

Masan MEATLife launched its meat supply chain by merging two leading feed companies, ANCO and Proconco, in 2015. The company invested in the rest of the supply chain (farms, processing plants, retail chains) in 2017-2018 and completed the 3F chain with the launch of the MEATDeli chilled meat brand.

Masan MEATLife is restructuring its animal feed business to accelerate its Feed-Farm-Food platform

The proposed restructuring plan may include the spin-off of the animal feed unit. This adjustment would simplify distribution and build a strategic partnership suitable for the animal feed business.

The move will support MML to improve productivity in the feed and farm sectors to generate inputs for MEATDeli production. The ultimate goal is to provide Vietnamese consumers with traceable meat products at high quality and reasonable prices.

This internal restructuring does not change the commercial conditions the company has signed with agents/distributors. It also does not affect the interests of employees, partners, and shareholders.

The potential of MML's feed industry

The output of the Vietnamese animal feed industry is constantly increasing. With an estimated output of 20.5 million tonnes in 2020, Vietnam has become the 10th in the world and the first in ASEAN in terms of industrial animal feed output. Its products now not only meet the growing demand of domestic livestock producers but also those in global markets.

According to the Vietnam Poultry Association, Vietnam's demand for animal feed ingredients is forecast to reach about 28-30 million tonnes a year in the next five years, worth $12-13 billion with an average growth of 11-12 per cent. The country will rely heavily on imports to satisfy this demand. Therefore, feed producers need to maximise the sourcing of domestic raw materials to gradually reduce reliance on imports and cut feed costs.

Statistics from the Ministry of Agriculture and Rural Development show that Vietnam is home to about 265 animal feed production factories. 85 of them are operated by foreign enterprises while the other 180 factories are domestically run. However, the foreign enterprises hold 65 per cent of the market share, outperforming local competition.

With 13 feed mills and a total production capacity of 3.78 million tonnes of animal feed a year, MML is one of the two largest enterprises and the largest domestic firm on the scene.

Proconco's Con Co brand is one of the oldest and most prestigious brands in the Vietnamese animal feed market

In its extensive system of factories across the country, MMLproduces a wide range of goods from cattle feed (swine, cow) and poultry (chicken, duck, quail) to seafood (fish, shrimp) and other long-standing brands. The high market share of these products is due to intensive research and development to enhance the benefits that come with these products. for instance, MML's Bio-zeem range of products include proprietary enzymes to strengthen a pig’s immune system and improve feed conversion ratio.

Meat – a sizeable standalone business of Masan MEATLife

With a population of nearly 100 million people with rising incomes, the demand for clean, traceable meat in Vietnam has been increasing significantly. The pork market, valued at more than $10 billion, is the largest segment in Vietnam's F&B industry.

However, it is a fragmented market as more than 90 per cent of pork products on the market are unbranded – but consumers are increasingly focusing on traceability. This gives MML's MEATDeli clean meat brand great growth potential.

Nearly three years after market launch, MEATDeli owns a distribution system of more than 2,700 points of sale in Hanoi, Ho Chi Minh City, and surrounding areas with a customer base of millions. With its significant market share, the processed meat segment contributes significantly to MML's revenue. In 2020, it accounted for 15 per cent of the group's total revenue with VND2.07 trillion($90 million) in revenue and VND163 billion ($7.1 million) in earnings before interest, taxes, depreciation, and amortisation (EBITDA), including 3F. However, MML's work is cut out for it to reach the $1 billion revenue target in 2022.

The next milestone would be to deliver positive net profit, which MML's management believes will occur by the end of the year when its meat processing plants are expected to reach about 25-30 per cent of capacity utilisation.

MEATDeli chilled meat is produced using state of the art European technology