Masan Nutri-Science turns into Vietnam’s leading animal feed platform

Masan Group Corporation (HOSE: MSN) on April 27, 2015 announced it successfully acquired a 52 per cent and 70 per cent equity interest in Vietnam French Cattle Feed JSC (Proconco) and Agro Nutrition Company JSC (Anco), respectively, with the purchase of 99.99 per cent of the shares of Sam Kim Co. Ltd. The Group has subsequently renamed the Company Masan Nutri-Science (MNS).

The acquisition is a key step to increasing the productivity of Vietnam’s protein sector

With deep local insights and a unique business model, MNS is committed to becoming the Vietnam’s feed champion and creating value for the Vietnamese farmers. The company will invest in its product innovation, research and development capabilities and human resources with a mission to enhance Vietnam’s protein productivity, providing Vietnamese consumers with affordable and quality protein products.

The acquisition is a key step to increasing the productivity of Vietnam’s protein sector – Vietnam’s GDP per capita is one tenth of the US, but Vietnam’s protein price per kilogramme is 1.5-2 times more expensive due to the prevalence of small scaled households which have limited access to good and affordable feed products and genetics. As aresult, Vietnamese pig farmers require 3.5kg of feed to produce 1kg of pig meat on average against 2.5 kg in the US. Animal feed is an integral component of the protein value chain and innovation in this space will be critical to close the productivity gap between Vietnam and the developed world.

The acquisition and establishment of MNS instantly provides the group a leading platform to serve the growing $6 billion animal feed sector. Proconco and Anco, as a combined business, is the number one external pig feed and second overall animal feed player in Vietnam, supplying farmers with over 1.7 million metric tonnes of animal feed products in 2014 and is well on track to deliver revenue of $1 billion in 2015.

The group plans to transform MNS by bringing the best practices of the FMCG industry to further strengthen the company’s operating platform. In particular, Masan’s aim is to build “power brands”, develop the leading distribution network in terms of coverage and effectiveness and produce innovative products that conform to international standards. The combined animal feed and FMCG platform will create significant synergies and will be critical in achieving MNS’s 2020 objective: a market share of 50 per cent in Vietnam’s animal feed market.

“We saw a big unmet need years ago in the food and beverage space, and today we see a similar big unmet need in Vietnam’s animal protein sector. I am confident that we can fulfill this big unmet need as we did in the food and beverage space, because we have a team that has the same passion, dedication, and capability to create value,” said Danny Le, CEO of MNS,

Farming is a crucial part of Vietnam’s agriculture, accounting for 25 per cent of the agriculture sector in 2014 and is expected to make up over 40 per cent in the next five years. Feed plays a critical role in the whole farming value chain, making up over 70 per cent of farming production cost. However, the farming value chain, especially the animal feed link, has been controlled by foreign players with 60-70 per cent of the market shares. Major foreign players include CP, Cargill, Hope Group and ANT.