VIETNAM Dairy Products JSC (Vinamilk) and leading food corporation KIDO Group are entering the beverage industry via a joint venture (JV) to further capitalize on the 96-million-people strong Vietnamese market, according to a recent announcement. Under a memorandum of understanding signed by the two sides, Vinamilk will hold a 51% stake in the new business, named Vibev or Vietnam Beverage, and KIDO 49%.

The new JV’s investment capital has not been disclosed, however, KIDO deputy CEO Mai Xuan Tram told the corporation’s AGM held on June 9 in Ho Chi Minh City, where both KIDO and Vinamilk are headquartered, that the focus of Vibev would be on beverages and ice cream. 

Tram said Vibev would make healthy drinks, tea and milk tea, but not carbonated drinks, and that it would also produce and trade ice cream and frozen foods. Its first products are set to be introduced in the third quarter, however, which products Vibev would initially introduce to market was not revealed.

Tram added Vinamilk and KIDO are operating their own strong distribution channels with more than one million collective points of sales for beverages nationwide, not to mention additional points of sales for other products such as vital commodities and frozen foods. In addition, Vinamilk’s export network in 30 countries across the world is expected to bear more fruit for the new business in terms of both market access and material supply, he said.

The two partners share a vision that Vibev would look to a 50% share in the domestic ice cream market, he disclosed.

KIDO was popularly known in the ice cream sector back in 2003 following the food group’s takeover of the Wall’s ice cream brand and Vietnam plant from multinational giant Unilever. The deal has been referred to as a typical case in which a local corporation bought an entire business from an international one. KIDO then set up KIDO Foods as a member company to operate the new business, and established new ice cream brands Merino and Celano. In 2016, the young company entered the frozen food sector, and is now expanding its portfolio.

At the June shareholders’ meeting, KIDO Group CEO Tran Le Nguyen announced a shake-up scheme, in which KIDO Foods will merge into the parent company.

According to data from Euromonitor, in 2019 KIDO Foods led Vietnam’s ice cream market with 41.4% share. KIDO said it had plans to expand its ice cream business to regional and Asian markets.

The name of the Vinamilk-KIDO joint venture, Vibev, sounds partially like ThaiBev or Thai Beverage, Thailand’s, and one of Southeast Asia’s, largest beverage companies, who is also the owner of Ho Chi Minh City-based Sabeco – Vietnam’s largest brewer. The partial likeness in the two names may suggest stiff competition in the future.

Back in 2017, ThaiBev successfully bid US$5 billion for a majority stake in Sabeco, which makes Beer Saigon. Late last month, the Singapore Exchange-listed company refuted news reports in a bourse filing that it was seeking a buyer for its businesses in Vietnam, in particular Sabeco. ThaiBev also expressed gratitude that Vietnam’s Ministry of Industry and Trade had issued clarifications regarding the news reports in the country.

Last December, it was reported that analysts had seen ThaiBev’s attempt to spin-off the beer business as “a feint intended to seek a buyer for the company’s richly-valued Vietnamese unit”.