Mar 17, 2013

Vietnam - Foreign investors keep pouring money into consumer goods sector

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VietNamNet Bridge – Despite the economic recession and the gloomy stock market, the shares of consumer goods enterprises have always been attractive in the eyes of foreign investors.

Ming Lu, Asia-Pacific Director of KKR, an US investment fund, said that when seeking the investment opportunities in the region, the fund’s managers paid attention to many markets and many business fields, but they finally decided to pour money into the consumer goods production in Vietnam.

He said that KKR has been convinced by what the Vietnamese market has – a large market with 90 potential consumers, the rapid urbanization speed, and the young population with increasingly high income. All that factors have made Vietnam a brilliant point in the regional investment map.

KKR has decided to funnel $200 million into Masan, a big consumer goods group, after it inked the $159 million investment deal in 2011.

It’s obvious to everyone that the Vietnamese stock market is now gloomy with the stock prices having fallen dramatically. But the US-based fund does not think this is a big problem.

Ming Lu said that investors always need to keep long term vision when investing in newly emerging markets. Meanwhile, KKR does not follow monthly or quarterly business strategy, but its business plans last for several years.

Other investors have the same viewpoint as KKR’s, which explains why food and consumer goods have always been leading the merger and acquisition deals in terms of the number of affairs and the value of each deal.

Toshiaki Muramoto, Deputy General Director of Technopia Vietnam, which makes Jumpo brand mosquito repellent products, said in the eyes of Japanese investors, the consumer goods industry in Vietnam is like a budding flower which is very attractive.

“Vietnam’s economy has been developing strongly; the consumption level has been increasing steadily. Especially, Vietnamese like new products,” he said, adding that Fumakilla group spent eight million dollars to buy the factory from the Malaysian partner. The group plans to launch new products into the market, while having installed more machines and equipments at the factory in Vietnam.

The latest report by Nielsen released in January 2013 showed that the Vietnamese consumer goods market is the fastest growing market in the region with the growth rate of 23 percent, surpassing India with 18.8 percent and China with 13 percent.

Ly Truong Chien, a well-known economist, said the Vietnamese consumer goods market has been growing even in the economic recession, because it has just been developing in the last few years, while the demand from people is really very high.

A survey by Kantar Worldpanel Vietnam showed that Vietnamese are willing to spend twice as much for FCMG on Tet holiday, and that the economic difficulties have only led to the changes of the consumption behaviors of people, while they have not reduced the demand for shopping and buying things to give others as presents.

The high demand explains why consumer goods enterprises still have been living well, while others have got dissolved, or have been on the verge of bankruptcy.

Vinamilk, the dairy producer, has reported the total turnover of VND27,300 billion in 2012, an increase of 23 percent over the year before. NutiFood, also a dairy producer, has reported the 30 percent increase in the turnover. Analysts believe that the milk market would see higher growth in 2013, when more and more Vietnamese at different ages use dairy products. Kinh Do Group, a sweets manufacturer, has reported the 52 percent increase in turnover in 2012.

Nguyen Tan Phong, Public Relation of Tan Hiep Phat Group, affirmed that the demand for drinks is always high. If noting that every of the 90 million Vietnamese people drink three bottles of water a day, one would see how big the market could be.


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