Catalyst for economic growth: Food and beverage firms take three of most valuable brand spots in Vietnam
According to the recently-released Top 50 Brands report by Forbes Vietnam, the country’s top spot fell to dairy giant Vinamilk at US$2.24bn, whereas Vietnam’s biggest brewer Saigon Beer Alcohol Beverage Corp (Sabeco) came in third at US$486mn, and privately-owned FMCG firm Masan Consumer came in fifth at US$305mn.
State-owned mobile network operator Viettel and real estate firm Vinhomes came in second (US$2.16bn) and fourth (US$411mn) respectively.
According to Forbes Vietnam: “[In total], 20 Vietnamese enterprises were found to be worth US$100mn or more, [within] which food and beverage companies took ten spots, or 50%.”
Overall, the value of all Top 50 Brands hit US$9.3bn, within which the Top 10 alone were worth US$6.9bn.
Food and beverage brands in the Top 10 spots were valued at a total of US$3.03bn, taking up some 44% of the Top 10 Brands’ value, and 32.6% of the entire Top 50 Brands’ value.
Other F&B companies in the Top 50 list included the family-run Tan Hiep Phat beverage company at US$105mn, most famously known for turning down Coca-Cola’s US$2.5bn offer of purchase; and dairy company Nutifood at US$85.2mn which recently made headlines for its joint venture with Asahi to launch Japan-quality infant and maternal products into the country.
State-owned and private companies that declined to reveal their financial data were not included in the rankings.
F&B and Vietnamese economy
According to the Vietnam’s Ministry of Industry and Trade, the country’s annual F&B consumption was estimated to take up some 15% of total GDP, with the country as a whole expected to leap into the Top Three Asian countries with highest F&B growth by 2020.
Food and non-alcoholic drink spending is forecast to grow some 11.6% from 2018 to 2022, said British Business Group Vietnam.
“[However], due to the growing household income, consumer preference is likely to shift towards higher-value products, [as] Vietnamese consumers of different income levels are especially careful about the safety, and quality of products,” said the business consultancy.
“In this sense, they are increasingly willing to pay a higher price, especially to buy products from foreign brands.”
It has also been speculated that as a whole, Vietnam’s economy might that of Singapore, the region’s current most-developed nation, in 10 years.
DBS Bank Senior Economist Irvin Seah stated via the report Understanding Vietnam: The rising star that this is because Vietnam is likely to benefit from US-China trade disputes, economic policies centred on long-term growth, and a conducive demographic profile.
“Vietnam recorded a remarkable GDP growth of 7.1% in 2018. This makes it the second fastest amongst Asian economies (7.2%),” said Seah.
At present, the Vietnamese economy stands at US$224bn, about 69% of the size of Singapore's US$324bn.
“If Vietnam is able to maintain [its] growth pace of about 6% to 6.5% in the coming years, and Singapore continues to grow at a matured pace of about 2.5%, then the real GDP of these two economies will intersect by 2029,” he added.
“Simply put, the Vietnam economy will be bigger than the size of the Singapore economy in ten years’ time.
“[This] implies tremendous growth opportunities for companies and investors looking to get a slice of the action.”
More financials on the leading F&B brands
Earlier this month, Vinamilk announced some VND27.7tn (US$1.2bn) in revenue via its H1 2019 financial report, an increase of 7.61% year-on-year over the same period last year.
After-tax profits for Q2 2019 hit VND2.9tn (US$125mn), a 8.4% increase year-on-year over the same period.
Vinamilk added that these results mean it has fulfilled almost 50% of its revenue targets and 54.4% of the profits assigned by shareholders as of August 1 2019.
According to Vinamilk External Director Do Thanh Tuan, exports will be an important focus for the company moving forth
“[The] projects implemented by Vinamilk in overseas M&A are bringing very positive revenue and an increasingly important position in Vinamilk's total revenue, he told the Vietnam News Agency.
Vinamilk owns and operates 13 dairy factories and ten cow farms in Vietnam, Cambodia, New Zealand, and the United States according to Vietnam Advisors, in addition to an upcoming plant being constructed in Laos.
Sabeco also recently announced its Q2 2019 results, reporting post-tax profits of some VND1.53mn (US$66.0mn), an increase of 19%year-on-year.
VnExpress reported that this was highest quarterly profit that the company had seen in the past three years.
According to H1 2019 reports from the ThaiBev group, which owns Sabeco, the group said Sabeco was its ‘main growth driver’ in the South East Asian region.
The Ho Chi Minh City Securities Corporation stated that Sabeco’s share of the Vietnames beer market stood at 42.8% as of last year.
Masan Consumer is owned by Masan Group, which financial year runs from April to March. The company recently released its Annual Report 2018, where it reported VND3.5bn in post-interest net profit, a 57.1% increase year-on-year from 2017.
Masan Consumer was cited as the ‘key growth driver’ for the company, growing in revenue by 28.2%.
The company’s Chairman of the Board Nguyen Dang Quang added that Masan Consumer was targeting US$2 billion in net revenue and US$400 million in net profit by 2022.
