CORPORATE STATEGY

AND INNOVATION

MBA 27 - Group 17
Bourgault Camille
Nguyen Thi My Hoa
Tran Xuan Linh
Diep Mai Thao 1
 CONTENTS

COMPANY AND MARKET OVERVIEW

COMPETITIVE ANALYSIS
& SWOT ANALYSIS

SUPPLY CHAIN STRATEGY

VOLUME STRATEGY

DIVERSIFICATION STRATEGY

THE POWDER MILK STORY

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 COMPANY AND MARKET OVERVIEW
A brief introduction and history of Vinamilk (“VNM”)

Da Nang, Lam Son,

Binh Duong and
Tuyen Quang Vietnam beverage
Ha Noi office dairy farm factories Thong Nhat –
Nghe An dairy
“Vietnam Dairy Thanh Hoa dairy
farm
Products Joint- farms
Stock Company”
Binh Dinh, Sai Gon
State-owned factories.
“Southern
Coffee-
Dairy
Company”

1976 2001 2004 2008 2010 2013 2016

1994 2003 2006 2009 2012 2015

Thong Nhat,
Truong Tho,
Dielac Powder
factories.

VNM
Organic
Nghe An factory (Liquid)
Can Tho factory Tien Son - Binh Dinh Tay Ninh, Ha Tinh
factory Thanh Hoa, Lam dairy farms
Dong dairy farms 3
 COMPANY AND MARKET OVERVIEW
Dairy market overview

Vietnam dairy market size by segment (2017)

Market share of dairy companies in Vietnam (2017)

Source: Stoxplus – Vietnam dairy market 2018 4

COMPETIVE ANALYSIS
What are the rules of the game in the dairy market
Potential
Threat of potential entrants
entrants
LOW
Government
- Most of major dairy companies
Catalytic role in the world are already on the
vietnamese market.
- Lot of barriers to entry

Industry
competitors
Suppliers Buyers
Intensity of rivalry
Bargaining power of suppliers Bargaining power of buyers
High
MEDIUM MEDIUM

- Limited bargaining power of - Customers have quality

local milk suppliers expectations
- High dependence on imported - Customers are price driven
milk powder materials

Substitutes

Threat of substitutes
LOW

- Soja milk, but customer is

looking for nutrition
supplement
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SWOT ANALYSIS
What are VNM’s key strengths, weaknesses, opportunities and threats
STRENGTHS
- Strong foundation
- Consumer trust
- Knowledge of local market
- Nationwide distribution
system
- Modern factories
- Strong relationships with
suppliers
OPPORTUNITIES
- Preferential policies for dairy
industries
- Stable raw material
- Increase in demand
- Vietnamese consume
Vietnamese products
- Internationalization :
Exportations
WEAKNESSES
- Exchange rates affect
operation of the company
- Local production do not
cover the demand
- Imported raw material
THREATS
- WTO : International
competitors, especially for
powdered milk.
- Local competitors for dairy
market
- Innovation and Marketing
are often better among
competitors
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SUPPLY CHAIN STRATEGY
What are the key activities of VNM in supply chain strategy

PURCHASING
Quality control of
raw milk #ISO 9001:2015, Global G.A.P
purchased before-
and Organic.
during -delivery
process
##5 factories organic
Certification.

#TPM production, ERP control to

improve production efficiency
and minimize the risk of
production interruption.,
CUSTOMERS SYSTEM Mgnt. Business Risk management
Adding value on SUPPLY Technology 4.0
in livestock and #Satisfaction level domestic
all stages :
Production -
CHAIN Production, TMP customers : 98%; key export
,ERP system, E-
Distribution-
Service
Mngt. Commerce
partners : 100%.
Website
# Supplier : Increasing
efficiency, Enhancing social
responsibility

# Strategic cooperation with

Vietnam Airlines to Share value
STAKEHOLDERS and bring Vietnamese brand to
Mgnt: international level
Leading position of
sustainable
development with
partners

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 VOLUME STRATEGY
VNM maintains the more affordable price comparing to competitive products
CATEGORY
VNM PRODUCTS COMPETITOR PRODUCT 1 COMPETITOR PRODUCT 2 COMPETITOR PRODUCT 3
STRUCTURE
50% share 25% share 8% share

Liquid milk
(43%)
VND19.000/batch VND25.000/batch VND24.500/batch
41% share 16% share 9.2% share 6.2% share

Powder
milk (32%)
VND339.000/can VND455.000/can VND435.000/can VND429.000/can
67% share 13% share 8.5% share
Yogurt
(12%)
VND24.000/batch VND25.000/batch VND20.000/batch (80gr)
80% share 17% share 2% share

Condensed
Milk (7%)
VND16.000/can VND16.400/can VND17.000/can
Source: Stoxplus – Vietnam dairy market 2018/site check/tiki 8
VOLUME STRATEGY
Thanks to the management of material & energy usage, plant & technology management and
marketing, VNM has successfully reduced the cost and reach mass consumers.

• Purchase large •
• 13 plants across Innovation
volume with import- products.
Vietnam (2 mega
export companies. • More familiar and
factories) with
• Build dairy farms in interesting
specialized line
different areas across communication.
for each category
Vietnam. • Corporate
for mass
• Cooperate with and branding.
production.
support farmers. •
Energy • Fully automatic. Technolog CSR activities.

• • Dairy Plan (US) to

Materials Replacing FO Plants control the cows.
Marketing
energy by Biomass
and solar energy • CowScout to
system to save calculate feeding
energy and the portion for cows.
environment. • Lely Juno (Holand):
auto feeding.
• GEA (US) to control
and reuse water.

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 VOLUME STRATEGY
VNM farming system

Source: VNM annual report 2018 10

 DIVERSIFICATION STRATEGY
VNM develops related diversified product portfolio: all SBUs

Source: www.vinamilk.com.vn 11
DIVERSIFICATION STRATEGY
VNM develops related diversified product portfolio: liquid milk.

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DIVERSIFICATION STRATEGY
VNM develops related diversified product portfolio: powdered milk.

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DIVERSIFICATION STRATEGY
VNM develops related diversified product portfolio: cereals.

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DIVERSIFICATION STRATEGY
VNM develops related diversified product portfolio: eating yogurt.

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DIVERSIFICATION STRATEGY
VNM develops related diversified product portfolio: drinking yogurt.

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DIVERSIFICATION STRATEGY
VNM develops related diversified product portfolio: condensed milk & ice cream.

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DIVERSIFICATION STRATEGY
VNM develops related diversified product portfolio: soya milk and beverages.

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 DIVERSIFICATION STRATEGY
VNM establishes its footprint to a wide range of category, thus, not only
helps to increase the value-added of its products but also improve the
bargaining power with the distributors and suppliers.

Source: company sites 19

THE POWDER MILK STORY
Innovation leads the journey to Future
Cooperated with Witnessed a Leading the
Launched Tap on
international upstream trend Future. After 2
“Smart Choice” strategic
Convenient
in MP category, year preparation,
communication partners in Diversified trend. VNM has just
Restructured VNM launched
Affordable platform, build nutrition with Dielac Optimum wide product Promoted launched its
brand portfolio confidence for deeper study on range of high Ready-to-drink super premium
brand for to tap into the
with new Vnese moms to nutrition needs premium quality with milk powder in product to the
mass, not
positioning choice Dielac; of Vietnamese segment, also set competitive liquid format, market yesterday.
premium &
“Mother’s proven “the children to a footprint by price not only utilized Organic Gold is
trusted as launch “tailor-
Love; same result” vs launching to head up with nationwide the first organic
imported made” products milk powder
Breastfeeding foreign brands SurePrevent head
foreign brands distribution
brand for optimal to head with produced in VN
Guinness by NIN but also to lock channel
development of Abbott in Adult to bring the best
Record 2007 local brands
Vietnamese nutrition product to Vnese
children

Before 2007 2007-2008 2009 - 2010 2011 - 2012 2013 - 2014 2015 - 2016 2017 - 2018 2019 upward

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THE MILK POWDER’s PRODUCT STRATEGY

MILK POWDER’S PRODUCTS

IFMP IFMP
Kid Treatment Adult Treatment Baby Cereal
Mainstream Premium
DIELAC MAMA GOLD VNM OPTIMUM MAMA DIELAC GROW VNM SURE PREVENT RIDIELAC GOLD
Healthy Moms, Smart Strong foundation for Kids stand tall – Moms For healthy recovery and Good for digestion with 1
Babies Child’s development stand proud poor diet patients billion probiotics

DIELAC ALPHA IQ GOLD VNM OPTIMUM GOLD DIELAC GROW PLUS VNM CANXIPRO
Good memory – Smart Optimal brand Out of faltering growth For adults to build a
Baby development strong bone system

DIELAC PEDIA VNM DIECERNA

For children with For diabetics to control
Anorexia blood sugar level

VNM OPTIUM COMFORT VNM NUTRITION

For babies with For providing daily
gastroesophageal energy to the whole
family

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THE MILK POWDER’S DISTRIBUTION CHANNEL
Domestic distribution model with more than 200,000 outlets nationwide

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THE POWDER MILK STORY
How VNM powder milk wins different competitors Became market leader in
volume share since 2011 and
continuously lead the category
In 2008, Foreign brands conquered over 85% market share growth till now
but the prices are twice and even thrice vs local brands
Foreign brands conquer over 85% market share but the prices are twice
and even thrice vs local brands

2.0%

12.60% 26.80%
2.20%

4.40%

8.20%

13.90%

26.70%

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SUMMARY

ON TOP OF THESE, Vinamilk’s mission is: “to bring

the Best Products to Vietnamese Consumers”

Thanks to the consistency in strategy focus on Innovation,

Consumer Demand & High-Quality Products, Vinamilk puts
the consumer in the centric, always be responsible for
consumers’ needs by diversifying products through
innovation, assuring high quality vs international brands
with competitive price, respecting the business ethics
and complying with laws

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THANK YOU!