'Tripod' strategy a Vinamilk cash cow

By Phat Dat   August 7, 2020 | 05:00 pm PT
Quality raw materials and modern production technology, alongside a strong domestic foundation have helped dairy giant Vinamilk navigate Covid-19 impacts.

Vinamilk has recently been named among the top 50 most effective businesses in Vietnam by Nhip Cau Dau Tu, a leading local business magazine. This marks the ninth consecutive year the company has been honored for its success.

Previously, Vinamilk was named among the top 50 best listed companies in 2020 by Forbes Vietnam.

Both rankings highlight the stability of Vinamilk operations despite unprecedented Covid-19 challenges.

Vinamilk has been in the top 50 most effective companies in Vietnam for 9 consecutive years.

Vinamilk has featured among the top 50 most effective companies in Vietnam for nine consecutive years.

Maintaining growth via "tripod" strategy

Vinamilk has shown superiority in all criteria of business and corporate governance capacity in the last three years, according to the Nhip Cau Dau Tu evaluation board. The firm has shown a strong growth in scale, market capitalization and brand reputation in the market.

In the second quarter of 2020, with both global and national economies hit by the Covid-19 pandemic, Vinamilk still recorded a consolidated revenue increase of 6.1 percent year-on-year and increase of 9.5 percent quarter-on-quarter, reaching VND15.49 trillion ($688.8 million).

Domestic sales and exports of the parent company in the second quarter grew by 12 percent and 26 percent respectively against the first quarter.

In the first six months, consolidated revenue and profit after tax were estimated to increase by 7 percent and 3 percent year-on-year.

Vinamilk revenue from 2017 to 2020.

Vinamilk revenue from 2017 to 2020.

Despite market challenges, the company has fulfilled its growth targets thanks to its "tripod" strategy. This includes investing in modern production infrastructure, being proactive in raw material procurement and maintaining a strong domestic ground for overseas expanding. On this premise, the leading dairy enterprise in Vietnam has set a positive growth target for 2020, regardless of the Covid-19 impact on the local economy.

Besides positive domestic results, Vinamilk has made a clear impression on the international market by continuously expanding its export scope. Currently, it is the only Vietnamese dairy company that licensed to export to Russia and countries of the Eurasian Economic Union (EAEU). Previously, it had signed a series of million-dollar export contracts with partners in the Middle East, China, and South Korea.

Vinamilk constantly expands export markets. Lately, the batch of high-grade grain milk has been exported to the Korean market.

Vinamilk's soy-based nut drink is being exported to South Korea.

Consolidating brand position

General Director of Vinamilk, Mai Kieu Lien, acknowledged the domestic market was its "breadwinner" as international business is greatly affected by the novel coronavirus. In fact, building a solid domestic foundation over the years has created momentum for the company to reach out to the world. This approach is bolstered by effective farming practice, quality raw materials and modern technology.

"We will continue to develop and increase our market share. All plans remain on target," she said.

Supplying more than 220 types of products via diversified distribution channels across the country, Vinamilk has been voted a High-quality Vietnamese Goods enterprise for 24 consecutive years. In this period, the company has beaten many domestic and foreign rivals to become the most chosen brand by Vietnamese consumers in the past eight years, according to the Brand Footprint report released in June 2020 by consulting firm Kantar Worldpanel.

The Kantar Worldpanel evaluation board said this thriving domestic manufacturer has reached over 80 percent of Vietnamese households thanks to advertising and communication activities emphasizing the nutritional value of its consistently innovative product range.

Vinamilks business scale up to December 31, 2019.

Vinamilk's business scale up to December 31, 2019.

Targeted development of products like liquid milk, baby formula, drinking yogurt and condensed milk has helped Vinamilk lead the domestic market in both volume and sales over consecutive years. The market research results not only show the enterprise's strength amid increasingly fierce competition, but also prove building consumer trust is key to helping businesses stand firm during fluctuations and maintain growth, according to Kantar Worldpanel.

For 2020, Vinamilk has set a revenue target of VND59.6 trillion ($2.57 billion), and earnings after tax of about VND10.69 trillion, corresponding to 5.7 percent and 1 percent growth compared to 2019.

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