FrieslandCampina's heady growth in Viet Nam

Update: February, 29/2016 - 08:05

Since coming to Viet Nam 20 years ago FrieslandCampina has remained one of the country's leading dairy companies. Viet Nam News speaks with Arnoud van den Berg, managing director of FrieslandCampina Vietnam, about the company's business in the country and prospects for the Vietnamese dairy industry in an integrated world.

What do you consider are the achievements of FrieslandCampina Vietnam in the last 20 years? What do you attribute them to?

Arnoud van den Berg.

Our great achievement in the past 20 years has been to provide nutrition to many people in Viet Nam. We sell more than a billion packs of milk every year.

The Vietnamese consumers have embraced our brands, and we can provide the right nutrition to many generations of Vietnamese.

From a very small company with one factory here, we have been able to expand three times in Binh Duong. Then we opened a factory in 2008 in Ha Nam. With that our total capacity right now is four times bigger.

I think there are many reasons for our success. There are some organisational reasons but it all has to do with the high-quality products we bring to Viet Nam. We are very much an international company but we are locally based. We are working with a local team, and we have local products produced in Viet Nam from milk from Vietnamese farms.

We have an ever growing number of farmers who co-operate with us: currently 3,500 farmers supply milk to us on a daily basis. And that has grown from 300 litres a day to about 300 tonnes now. And it has not only grown in volume but also in quality. We have had very strict quality standards from the start, and have been able to increase the quality of milk brought to us by helping farmers with farming techniques we bring from Holland and other countries.

We have the "dairy development programme" to help farmers improve quality and efficiency on the farm.

How do you see the potential of the Vietnamese dairy industry? Now that the ASEAN Economic Community has been established and the Trans Pacific Partnership (TPP) signed, what are the likely advantages and challenges for the industry from Viet Nam's integration?

I believe Viet Nam's dairy industry has a bright future. Dairy consumption will grow if GDP per capita grows. And Viet Nam is growing its GDP per capita. If you look at the dairy consumption per capita, it is still quite low in Viet Nam. If you compare with regional countries like Malaysia or South Korea, there is a possibility to grow four or five times if the GDP per capita grows.

We think one important development from TPP may be to get the milk pricing in Viet Nam in line with the world market. What you currently see is milk prices, raw milk prices in Viet Nam are 40-50 per cent higher than in some markets such as Australia and New Zealand. There will always be a difference, but the gap is quite big. So there is a big task for the dairy industry and the Government together with farmers to improve efficiency on the farm so that the price can be more competitive.

Will your company benefit from that and how? The threats are likely to be serious. How do you plan to cope? Do you have plans to open more plants in Viet Nam?

Currently, we are satisfied with the capacity we have. We have a factory in Binh Duong and Ha Nam that we have optimised and still has a lot of room to grow. So we can cater for growth in the next several years with what we have. Beyond that, if you look at another 20 years from now, I am sure we will need more capacity.

We have continuous improvement programmes in our company with respect to quality, safety and efficiency because every year you have to be better than the year before since your competitors are as well.

So we have a world-class operations management programme that is going to review all our plans to see where we can do better, what we can learn from what we do in Germany or in Indonesia or in Russia, what we can bring here.

An employee of FrieslandCampina Vietnam instructs a farmer how to properly feed cows to produce high-quality milk at a farm in Cu Chi District in HCM City. — VNS Photo

We continue our dairy development programme supporting the farmers with best practices in the farms. Those are areas we focus on.

What is your advice if Viet Nam wants to have a thriving dairy industry?

I think the Vietnamese Government is doing a lot already to help farmers be competitive. In Ha Nam, we have set up the development of sustainable dairy zones project which is partnership of Ha Nam Government and the Dutch Government within the Facility for Sustainable Entrepreneurship and Food Security for the period 2014 to 2018.

I think what important is to see dairy farming as part of an open economy so that we have healthy development of dairy in the country as well.

We need to make sure there is not too little or too much milk, and that only works in an open system where we can contact directly with farmers as we have been doing in the past.

Can you tell us about your company's social responsibility (CSR) activities?

The highlight of FrieslandCampina Vietnam's exceptional CSR commitment is the Den Dom Dom (DDD) program. The DDD programme has provided 25,000 scholarships to students and built 20 schools. Since its institution in 2002, this has been supported by the construction and renovation of schools and providing scholarships to ensure that children are able to pursue their education without financial distress to their families.

Besides, inspired by the need to work towards improving the nutritional status of children, we conducted the ‘Drink, Move, Be Strong' campaign with the

Jr. NBA partnership will allow children across the country to adopt an active, healthy and nutritious lifestyle through play, sports and proper nutrition. We believe in the goodness of milk and basketball as a vehicle to promote a healthy lifestyle and help secure the future generations of Viet Nam. — VNS