Once iconic Vietnamese brands that have fallen to hard times

Thuong Dinh Footwear has been relying too much on its prime land plots

Chuong Duong Beverages JSC, “the King of saxi” has just reported losses in the first quarter of 2018, continued a bad 2017. This company used to be among those dominating the soft drink market, but has fallen behind due to outdated production lines and the competitive pressure from global brands.

In the first quarter, the company’s revenue hit VND74 billion ($3.3 million), decreasing by 25 per cent on-year, while pre-tax profit was negative VND400 million ($17,620).

Meanwhile, accumulated revenue hit VND339 billion ($14.93 million) in 2017 and pre-tax profit was a negative VND2.2 billion (nearly $0.1 million). They were very far from the targeted VND494 billion ($21.76 million) of revenue and VND38 billion ($1.67 million) of pre-tax profit.

In the 2013-2017 business plan of Chuong Duong Beverages, revenue growth was targeted at 10-15 per cent per annum. However, this target was decreased due to competition with foreign beverage brands.

Against this context, the 40-year-old beverage brand reduced selling price and increased discounts for distributors. These only brought positive results in the short-term to hit targets in quantity and profit, but could not ensure stable and sustainable development.

According to the 2017 financial report of Thuong Dinh Footwear Company, business results were not positive due to a loss of VND14 billion ($0.62 million). Several years ago, this leading footwear brand was running annual profits of VND1-2 billion ($0.44-0.88 million). Moreover, this report was also rejected by auditors due to many unclear statements.

Instead of focusing on core business segments, the company has laid on its only advantage, real estate. Thuong Dinh Footwear owns prime land plots, including a 36,000sq.m factory in Thanh Xuan district, Hanoi. The company’s GTD ticker has fallen by 80 per cent since listed on the stock exchange, along with continuous losses of liquidity.

The two famous Vietnamese ice-cream brands Trang Tien and Thuy Ta can now only be found on the streets around Hoan Kiem Lake. Although not in the red, Thuy Ta Ice-cream JSC has not grown in recent years. While the average growth of this sector is over 10 per cent annually, no growth means that the brand is losing market share.

“In 2010-2011, Thuy Ta Ice-cream planned to build an ice-cream processing factory with an investment of VND150 billion ($6.6 million). This project was evaluated to be feasible, but it had to be cancelled as the company was lacking resources,” Bui The Tru, head of the Planning Division of the company, told Vnexpress.

Thuy Ta Ice-cream also wanted to raise charter capital to expand operations, however, it failed to attract investors. The firm is now managed by Hanoi Trade Corporation (Hapro), holding 51 per cent of total shares.