Vinamilk and Kido Group form beverage joint venture

Vinamilk and Kido Group will launch their first products of their joint venture in April 2021

The joint venture – Vibev – will produce ice cream and healthy non-carbonated soft drinks. The total initial investment of the joint venture is estimated to be around VND400 billion ($17.4 million), with Kido holding 49 per cent and Vinamilk 51 per cent.

Accordingly, the wide range of Vibev’s products are slated to be officially launched to serve consumers in April 2021. Moreover, Vibev will enjoy the nationwide and worldwide distribution channels of Kido Group and Vinamilk.

Commenting on the potential of the joint venture, Kido Group’s representative emphasised this is a new business trend, especially as foreign businesses are ramping up their presence in the Vietnamese market.

Since the beginning of the year, the Politburo has also encouraged domestic businesses to co-operate with each other to consolidate their strength, take advantage of domestic customers’ appetite, thereby enhancing their power, while resisting take-over attempts by foreign players.

"We all have a very optimistic outlook on the vast potential of our cooperation. Vinamilk is one of the largest players in the dairy industry, while Kido Group is currently taking the lead in the ice cream landscape and holding the second position in the Vietnamese cooking oil industry. Hence, we expect the tie-up will help us capitalise on the Vietnamese beverage market,” noted Kido Group.

In Vietnam, the current value of the beverage market is estimated at around VND123.558 trillion ($5.37 billion), up 8.4 per cent from 2015.

This number is expected to increase by more than 6 per cent in 2020-2023, with the expected scale reaching VND134.302 trillion ($5.84 billion).

The beverage landscape is made up by six product groups, of which the largest proportion is held by non-carbonated soft drinks with 41 per cent, carbonated soft drinks rank second with 22 per cent, followed by energy drinks (17 per cent), nutritional water (9 per cent), and functional water (5 per cent). The non-carbonated beverage segment witnessed a sharp increase, from VND29.694 trillion ($1.29 billion) in revenue in 2014 to VND50.782 trillion ($2.2 billion) in 2019. In contrast, carbonated soft drinks decreased sharply, with market share decreasing from 24 to 22 per cent in five years.

"The proportion of each group is changing significantly over time, especially from 2014 to 2019. Demand for carbonated soft drinks has dropped significantly – this is also the general consumption trend in the world," said a Kido Group representative.