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South Korea's CJ attempts to set up ‘food empire’ in Vietnam

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Well-known Vietnamese names in the food industry have fallen into the hands of the world’s largest conglomerates.

The Vietnam food sector is attractive to investors because of its annual growth rate of 12 percent. CJ, an investor from South Korea, has step by step been taking over Vietnamese food companies, one after the other. 

Korea Herald reported that CJ CheilJedang, a subsidiary of CJ Group, has spent $13.44 million to acquire a 64.9 percent stake of Minh Dat Food, considered the biggest Vietnamese private meatball company with revenue of VND270 billion in 2016.

The deal reportedly was made in secret in late 2016 and was only wrapped up officially in May 2017. The company has changed its name to Minh Dat CJ Food and it is recruiting workers for the new development stage.

CJ buys Minh Dat because it believes that fish and meatballs are popular dishes in SE Asia in general and Vietnam in particular, and that Vietnam is a market with stable growth rate. The group plans to sell ready-made food, including meatballs in SE Asia through Minh Dat.

A CJ representative said the policy on penetrating markets through local companies will help CJ minimize the business risks that it may face if using its own brand.

That was why CJ collected another 20 percent stake of Cau Tre Export Goods Processing JSC in late April and early May after acquiring a 51 percent stake in the company.

Cau Tre, specializing in making frozen food from seafood and meat, and tea products, has a long development history since 1982. However, the company has repeatedly reported losses since 2012. However, it is still attractive in CJ’s eyes.

Analysts said the large production premises of 80,000 square meters alone would be attractive to any investor. Besides, it also has other advantages.

Cau Tre and Hiep Phuoc Industrial Zone JSC signed a contract to develop a project on a food processing complex on an area of 7 hectares, capitalized at VND1.2 trillion. Cau Tre also has a large distribution network and has large export markets. More importantly, Cau Tre is a familiar brand to consumers. 

To date, CJ has acquired a stake in many Vietnamese food companies, namely Satra, Cau Tre and Minh Dat. 

CJ is taking full advantage of Satra’s sale network to distribute the food products it makes. 

Its subsidiary, specializing in food - CJ CheilJedang – will cooperate with Satra to develop new food products based on the existing products of the two sides. 

Meanwhile, CJ Freshway, another CJ subsidiary, has officially become Satra’s exclusive supplier of South Korean fruits.

 

 

Source: VietNamNet

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