Iconic Hanoi ice cream feels the heat from milk tea

According to the latest financial report of the ice cream brand's owner Ocean Hospitality and Service JSC (stock code: OCH), its revenue from food in 2018 registered at VND633.7 billion ($27 million), up 14 percent over the previous year.

The company currently operates in three main areas: food, hotels, and real estate. In the food setor, OCH owns Givral, a confectionary business, and Trang Tien ice cream, a familiar name for generations of Hanoians.

Despite rising revenue last year, OCH claims that the biggest threats to its future food revenue are foreign brands of confectionery, ice-cream, and milk tea.

"Milk tea is attracting young people in big cities across the country and affecting the consumption of OCH’s consumer products, including cakes," the report said.

OCH also sees tougher competition from confectionary sellers. Although it predicts its total revenues from the Vietnam confectionary market will rise by 8 percent in 2019, OCH said it will be affected by the rise of domestic and foreign brands like Dai Phat, Sweethome, ABC Bakery, TousLes Jours, and Paris Baguettes.

These brands have strong financial capabilities to invest in outlets in prime locations, offer a diverse range of confectionery, and are able to accept losses to gain market share, the report says.

OCH achieved consolidated revenues of VND1.16 trillion ($49.63 million) up 6.4 percent, and after-tax profits of VND44 billion ($1.88 million) in 2018, up from a VND3.7 billion loss a year prior.

However, the company has lowered its revenue targets and pre-tax profit targets to VND1.15 trillion ($49.19 million) and VND17 billion ($727,200) for 2019 as it foresees rising competition in its food business, according to the report.