Embarking on Southeast Asia’s new growth frontier
01 August 2017
Often dubbed one of Southeast Asia’s new growth frontiers, Vietnam is one of the most rapidly expanding emerging economies in the world. GDP growth in Vietnam reached six per cent last year, and dairy consumption is project to keep growing at 5 per cent each year, the fastest rate in South East Asia and second in absolute growth volume after Indonesia. Demand far outstrips increase in local dairy production.
Vietnam is an important market for the Co-op and one where we have a long history. We’ve been supplying ingredients to Vietnamese customers for around 40 years and have been operating our consumer brands business in the country for more than two decades.
Our business in Vietnam focuses on three main areas: ingredients, consumer and foodservice, with the latter through Fonterra Brands Vietnam (FBV), which employs 100 staff directly and close to 1,000 indirectly in sales and merchandising staff support roles.
Global Ingredients South & East Asia Sales Director Hamish Gowans says Fonterra exports over 300 containers of dairy ingredients into Vietnam each month, largely skimmed milk powder (SMP) and whole milk powder (WMP) used in products such as UHT milk, sweetened condensed and evaporated milks, and paediatric powders.
“Our NZMP business has a strong exclusive distribution partner on the ground to capture the growing demand for high quality dairy ingredients – enabling us to grow ingredients sales into Vietnam by 50 per cent over the last five years. We also supply directly to multinational companies and local leaders.
“As a wealthier, more urban population drives domestic demand, the country will continue to remain an important market for us to maintain a strong presence,” Hamish says.
With our Foodservice business, now repositioned as Anchor Food Professionals, currently accounting for a whopping 57 per cent of market share in Vietnam, Fonterra is also a trusted source of dairy products for professional chefs which are used in 1,500 bakeries, hotels, and restaurants nationwide.
Anchor Food Professionals Director Brian T. Juan says our volume has doubled in past five years, and generates one of the highest value per litre in Asia, a growth supported through close cooperation with our customers and holding one-to-one technical training sessions.
“One of our key strategies is to encourage bakeries to convert from non-dairy fat buns and cakes to more indulgent ones using butter and cream. A new innovation we’re using to help our team achieve this is through an iPad butter app, which is used during customer visits to reference relevant consumer trends, evaluate the needs of our business partners’, and create unique solutions and menu ideas.
“We began this strategy in April this year, and we’ve successfully converted eight Anchor Food Professionals customers, with whom we’ve been developing better butter solutions,” Brian says.
But our growth story doesn’t end at supplying food professionals. Vietnam’s large and increasingly affluent population has a fast-growing appetite for high-quality dairy nutrition.
FBV General Manager Arnaud Renard says that every month in Vietnam people enjoy over eight million serves of our Anlene high-calcium milk, while hundred thousands of expecting mums rely on Anmum Materna every year to get the right nutrition for their pregnancy.
Our people are focused on driving growth in our consumer branded businesses by making sure our brands reach Vietnamese consumers through a range of activity – from mass movement events across major cities, street engagement with bone scans and mobility tips, to nurturing like-minded communities on digital channels.
For example, our Anmum Materna brand moved from number three in 2014 to holding the number one position today in the maternal milk category, trusted by 60 per cent of expecting mothers. This success is largely thanks to our launch of the liquid single serve format last year, great-tasting flavours to fend off taste boredom, and reaching out to consumers with mobile apps designed to add value to expecting mums.
The Anmum Materna app reaches 800,000 Vietnamese mothers, with an average user visiting the app five days a week.
“We want our Vietnamese consumers to see our brands such as Anlene or Anmum Materna as partners in their journeys to strong and healthy lives, and preparing them for significant stages of their lives.
“Looking ahead, we are excited by the opportunities across this rapidly expanding market. Fonterra is well-placed to expand our offerings to the Vietnamese – with our high-quality products, innovative solutions, and fantastic taste, we will continue to strive to be the country’s most trusted source of dairy nutrition,” Arnaud says.