Vibrancy in Vietnam’s Food Processing Industry: Mergers and Acquisitions on the Rise
The food processing industry in Vietnam is currently witnessing a dynamic wave of mergers and acquisitions (M&A), signaling robust growth potential. As enterprises within this sector explore new opportunities, investment activity is ramping up, drawing attention from both local and international players.
A Noteworthy Acquisition by Nutifood
A significant recent development includes Nutifood, a prominent nutritional foods corporation, successfully completing the acquisition of a 51% stake in Kido Foods. This move positions Nutifood as the parent company of Kido, which is known for its beloved ice cream brands, Celano and Merino. The acquisition not only enhances Nutifood’s portfolio but also allows it to venture deeper into the health-oriented nutrition segment.
With this new ownership, Nutifood gains control over an expansive distribution network comprising numerous ice cream freezers across the nation. These facilities are strategically placed in traditional retail outlets, modern grocery chains, restaurants, hotels, and entertainment venues, enabling Nutifood to strengthen its market presence significantly.
KIDO Group’s Strategic Moves
KIDO Group is making waves in the M&A arena as well. The company has successfully acquired a 51% stake in the popular steam bun brand, Thọ Phát, marking another strategic expansion. By the end of the third quarter of 2023, Thọ Phát was officially a subsidiary of KIDO, linked to an investment of approximately VNĐ810 billion (about $31.9 million).
In a bold move, KIDO further increased its stake in Thọ Phát to 68% in early October 2023 by injecting an additional VNĐ269 billion. This brings KIDO’s total investment in the steam bun enterprise to nearly VNĐ1.1 trillion, highlighting the company’s aggressive acquisition strategy.
The Surge in Foreign Investment
The trend of foreign investment in Vietnam’s food distribution market is also noteworthy. By the end of 2023, several significant buyouts occurred, particularly involving Japanese companies acquiring stakes in Vietnamese food distribution firms. For instance, New Viet Dairy, recognized as Vietnam’s largest wholesale food trading company, transferred all its shares to the Sojitz Group and its affiliates. While details of the sale price remain undisclosed, this transaction exemplifies the growing interest from foreign investors.
Moreover, Sojitz is not stopping at distribution. They are collaborating with leading local entities like Vinamilk and Vilico to invest in livestock farming, processing, and distributing beef products, with a projected investment scale reaching $500 million (approximately VNĐ11.5 trillion). This cross-border collaboration aims to establish Vietnam as a significant player in the international beef market.
Marubeni’s Strategic Stake
Adding to the international interest, Marubeni, a Japanese trading company, has acquired a minority stake in AIG Asia Components. This company is recognized as one of the leading food ingredient suppliers in Vietnam, indicating a strategic move by foreign firms to diversify their portfolios and tap into Vietnam’s growing food sector.
Growing Interest from Foreign Investors
The international boom in Vietnam’s agricultural sectors is expected to continue, attracting more foreign investors seeking partnerships and acquisitions. G.C Food JSC, for example, reported a remarkable 31% revenue increase and an impressive 84% surge in profit after tax in the third quarter. The Chairman, Nguyễn Văn Thứ, noted an influx of investment interest, particularly from strategic partners in Singapore.
The company is even considering moving its listing to the Hồ Chí Minh Stock Exchange (HoSE) to gather additional capital for expansion, all while maintaining strong management and long-term strategies.
Opportunities and Challenges
Vietnam’s agricultural processing sector is increasingly captivating foreign investors, with many seeking to forge strategic partnerships. Companies like Sa Kỳ Food JSC are actively pursuing investment offers and assessing compatibility for future negotiations.
However, while the influx of foreign investment brings opportunities for collaboration, job creation, and technology transfer, it also necessitates that Vietnamese businesses innovate continuously. To thrive, they must enhance their capabilities and improve product quality to compete effectively in this evolving industry landscape.
In this age of convergence, as M&As forge new pathways for growth, the evolution of Vietnam’s food processing sector promises to be both exciting and transformative.