The wise move

With the consultancy by Morgan Stanley, Masan spent 96 million dollars to buy 40 percent of Proconco’s stakes from Prudential investment fund. After the affair got completed, Masan has assigned Masan Consumer, a subsidiary, to develop the new business field.

In the press release, Masan Consumer said the purchase of Proconco would lay a foundation for the company to join the nutritional cooking market – the business field which has been witnessing considerable growth over the last few years. This is an important step taken by Masan in implementing the strategy to provide nutritional food products which can meet the European hygiene standards.

In order to implement the strategy, Masan Consumer would set up a value chain of “clean breeders – clean food – clean processing – warehousing and distribution” by 2013, before it launches a new brand into the market by 2014.

Commenting about the move, Tu Vu, Acting Head of the Analysis Division of the Ban Viet Securities Company, said Masan Consumer is following the model that helped Charoen Pokphand Group (C.P Group) develop strongly. The group began its development as a livestock feed processor. After that, it jumped into the field of husbandry, then to food processing, and finally, it has successfully developed a clean food brand – the brand of the products made from a closed process.

Le Ba Lich, Chair of the Livestock Feed Association, also thinks that it was a reasonable move for Masan to buy Proconco at this moment, because the animal feed market remains large enough for new comers. He also said that the move might not absolutely because Masan Consumer strives to build up a closed production process relating to clean food products as announced.

Will it be easy to reap fruits?

The move by Masan Consumer does not surprise those who understand the strategy it is following.

Masan Consumer would only jump into the business fields which promise strong growth opportunities.

Analysts have also pointed out that Masan Consume always targets the “easy-to-be-picked fruits,” i.e. the business fields which have large markets and promising opportunities.

Masan Group has invested in six emerging consumer product groups, namely soya sauce, fish sauce, instant noodle, seasoning, coffee, nutritional cereal powder, while it has created a new class of consumers.

When entering the above said business fields, Masan Consumer once faced big difficulties. And it will meet new challenges in the new business field – animal feed and clean food.

Especially, Masan Consumer would have to join a cutthroat competition with foreign giants in the field, including CP Group, Cargill, Tomboy (Australian Skretting Group). Of these, CP group proves to be the biggest rival for Masan.

CP Group has been trying to control the domestic animal feed market, considering this an assistant step to join the clean food market in Vietnam – the thing that it did in China.

Managing Director of CP Vietnam has also confirmed that in the near future, it would pay more attention to the food and instant food processing which now just makes up 10 percent of the CP Vietnam’s works.

The biggest obstacle for CP Group now is the limited supply of materials, since farmers find it difficult to approach means of transport or seaports.

Anyway, the plan by Masan Group has been applauded by Vietnamese enterprises.

“Maybe Masan would become they guy who would help re-divide the market, where 70 percent of the market share has been put under the control of foreign companies,” Lich said.

DDDN