Food-beverage industry embraces new business model to overcome pandemic effects

July 05, 2021 - 08:01
Packaged food producer KIDO Group has opened a chain of stores in HCM City selling the Chuk Chuk brand of ice cream, milk tea, tea, coffee, and fresh bakery products with an investment of VNĐ100 billion (US$4.4 million).
Customers buy Kido products at a supermarket.

 Compiled by Thiên Lý

Packaged food producer KIDO Group has opened a chain of stores in HCM City selling the Chuk Chuk brand of ice cream, milk tea, tea, coffee, and fresh bakery products with an investment of VNĐ100 billion (US$4.4 million).

With an additional 1,000 stores likely to be opened across the country by 2025, Chuk Chuk is expected to become a leading brand.

The company’s general director, Trần Lệ Nguyên, said the first outlets were opened in HCM City and then, by September, in Hà Nội and some northern provinces if the pandemic is controlled by then.

The timing is curious to say the least considering the economy has been impacted by the COVID-19 pandemic.

Nguyên explained that it was because there was a lot of vacant land in prime locations as many businesses closed down due to the pandemic.

The company considered this a precious opportunity to build a large chain of food and beverage (F&B) stores at a low cost, he said.

If in the past the company had to spend around $15,000 for a land plot in a prime location in District 1, the price has now halved, he revealed.

Market observers said despite the sharp decline many landlords had been unable to rent out their properties.

KIDO has already signed lease contracts for 10 properties at low rates.

It is among the businesses that have realised the great potential of the F&B market once the outbreak is controlled.

Meanwhile, countries around the world including Việt Nam are making great efforts to vaccinate their people so that the pandemic can be curbed soon.

Việt Nam’s middle class is expected to burgeon to 45 million by 2025, which would significantly increase F&B demand. Analysts in fact expect the market to double in the next two years from its size in 2019.

Analysts said the new entrants should have strategies to build brands, especially offline, since the pandemic has forced people to stay at home.

Some companies in the F&B sector have strongly pushed ahead with the mobile stores model, expanding their market share without having to incur rentals.

It is expected to become a new trend in the industry.

Livestock firms create feed-farm-food model

In May MEATLife, a subsidiary of Masan Group, decided to sell MEATDeli fresh pork and 3F chicken at all its 18 Vinmart supermarkets and nearly 500 Vinmart+ convenience stores in HCM City.

The two products have been extremely popular among customers, and driven the purchasing power at Vinmart’s chain up by 40 per cent.

MEATLife (MML) is the one of the country’s largest fully integrated platforms, and it says its goals are to drive productivity in the meat industry and ultimately directly offer consumers traceable, quality and affordable meat products.

It has been selling fresh chilled meat under the MEATDeli brand since 2018, and the product now is present at 1,606 points of sale nation-wide including more than 1,200 VinMart+ stores in Hà Nội and HCM City.

Japfa Comfeed Vietnam, another giant feed and poultry producer, is also speeding up its entry into the fresh food retail sector by developing a chain of stores.

The Indonesia-based company first came to Việt Nam in 1996 through a joint venture and then became a wholly foreign-owned company in 1999. Now, 25 years later, Japfa has become one of the leading companies in the feed and animal agriculture industry.

It has successfully built up a Feed-Farm-Food value chain with six feed mills, 300 professional poultry and pig farms and more than 20 stores in HCM City selling fresh meat and processed foods under the Japfa Brand.

The company is expected to increase the number of stores in the city to 40 this year.

It opened the G-Kitchen chain of stores in 2019. Now, two years later, the stores with G-Kitchen brand, which specialises in retailing chilled meat produced by Greenfeed’s closed process are present at 38,000 points of sale like supermarkets, convenience stores, e-commerce platforms, restaurants, hotels, and schools across the country.

GreenFeed is one of the 100 largest enterprises in the country, and produces animal, poultry and aquaculture feed under brands like GreenFeed, Higain, Hitek, FCR 1.5, Aquagreen, Panafeed, and Superwhile.

CP Vietnam Corporation, a subsidiary of Thailand’s CP Group, opened its first CP pork shop in August 2019 and now has 700 of them.

A spokesperson for the company said the chain had helped the company reduce intermediaries and sell directly to consumers with better quality and at more reasonable prices.

Analysts said however that the feed-farm-food model requires huge investments, meaning that only businesses with deep pockets could afford it.

They added that the entry of major livestock enterprises in retail means consumers have the opportunity to buy fresh meat products with good quality and clear traceability and, especially, at reasonable prices since the producers eliminate some intermediate processes. — VNS