Acquisition leaves Masan Group a major feed player in Vietnam

By Jane Byrne contact

- Last updated on GMT

© GettyImages/alxpin
© GettyImages/alxpin

Related tags: Animal feed, Cargill, Masan, Vietnam

The Masan Group has a acquired a 52% and 70% equity interest in Vietnam French Cattle Feed JSC – Proconco – and Agro Nutrition Company JSC – Anco – respectively - a deal which makes it the second leading animal feed producer in Vietnam.

The controlling interest in the two Vietnamese feed firms follows Masan’s purchase of Sam Kim Limited, which it has now renamed Masan Nutri-Science.

Proconco and Anco, as a combined business, produced over 1.7 million metric tons of cow, poultry, pig and aqua feed products in 2014 and are said to be on track to deliver revenue of $1bn in 2015.

Interestingly, in December last year, in order to focus on the food and beverage side of its business, the Masan Group said it divested 99.99% of its equity interests in its subsidiary, Mason Agriculture, which had a 40% stake in Proconco, to undisclosed third parties. 

The move meant the Masan Group, at that juncture, no longer had any equity interest in the cattle feed producer. 

The company did not respond to our request for comment on yesterday’s announcement.

In a statement though, it said the acquisition would be a key step to increasing the productivity of Vietnam’s livestock sector, noting the country’s gross domestic product (GDP) per capita is one tenth that of the US but its protein price per kilogram is 1.5 to two times more costly.

“Animal feed is an integral component of the protein value chain and innovation in this space will be critical to close the productivity gap between Vietnam and the developed world,”​ said the Group.

It said it intends to transform Masan Nutri-Science by bringing the best practices of the fast moving consumer goods (FMCG) industry to the feed division so that it has a 50% market share of Vietnam’s animal feed market by 2020.

According to the Vietnam Feed Association, Vietnam turned out nearly 17 million tons of animal feed in 2013 with foreign companies accounting for 65 to 70% although they made up only 25% of 200 animal feed firms nationwide.

Meat consumption in the country almost doubled from 16.7 kg per capita in 2001 to 32.8 kg per capita in 2011, and is projected to hit 35 kg per capita by 2020. But the top two proteins of choice are chicken and fish.

Cargill investment

In an interview with this publication last year, Cargill said it was still weighing up the potential of the Vietnamese dairy industry, but it was optimistic about the feed consumption potential of the poultry, shrimp and swine sectors in a country that is seeing continual GDP growth.

The agri-giant was talking to us following expansion of its feed capacity in Vietnam to 1.4 million tons with the extension of a feed mill in the Binh Dinh province last May.

Vietnam’s animal feed industry - while relatively young compared to other countries in South East Asia - is also one of the most promising markets in the region, said Cargill.

“GDP growth is strong and there is a very young population base so we see continued demand for animal protein,”​ said Jorge Becerra, MD Cargill Feed & Nutrition Vietnam

In terms of the dairy sector, which is very much at the embryonic stage, Becerra said the agri-giant is still evaluating its attractiveness before market entry:

“It takes a long time to develop the meal supply stage in a country this size. So it really has to make strong business sense for Cargill to invest in a sector and we still are undecided about the dairy side of things in Vietnam,”​ said the MD back then.

Becerra said providing consistency on the feed side is the challenge in Vietnam.  “There are five million farming households in the country, all with diverse ways of housing and treating livestock and managing farms.  Thus we have to devise compound feed products that can perform evenly across all types of husbandry production systems.”

De Heus expansion

And De Heus, in its strategy to be a leading player in the Vietnamese feed sector, continues to enhance its production capacity in that Asian country, with construction of its seventh feed plant underway in the Mekong Delta region.

The Dutch feed group said the latest feed factory, backed to the tune of US$30m, is located 20km from its existing aqua feed plant in Vinh Long province.

The firm said first phase capacity of the new facility will be 200,000 tons per year and it will supply pig, poultry and cattle production along with other ruminant sectors.

De Heus has also invested in a new port facility the region - in Hau Giang. It said the depot will allow it take advantage of the Mekong’s vital waterway transportation.

Factory completion

March 2015 also saw completion of two other factory builds by the Dutch feed giant – one in the Vinh Phuc province, which is 50km from Hanoi and is targeting the aquaculture market and monogastric and ruminant segments, and a smaller, feed facility located in Binh Dinh, in central Vietnam.

With six factories now up and running throughout Vietnam, the Dutch group is said to have a total annual capacity of 850,000 MT.

Amy My, marketing manager, De Heus Vietnam, told this publication in 2014 that level of production would be enough to enable the group meet its goal of being in the top five feed manufacturers in that country.

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