KIDO has achieved great success selling ice cream. It currently leads the market with a share of around 37%. The group will soon build a new factory to increase capacity to 56 million liters/year.
A promising, highly competitive market
Vietnam's ice cream market is considered quite promising. According to Euromonitor 2015, the chilled and frozen food market is worth approximately VND 15.940 billion, comprising VND 2.400 billion for ice cream, VND 9.300 billion for yogurt and VND 4.240 billion for other chilled & frozen foods. Vietnam's ice cream industry features leading players such as KIDO, Vinamilk, Thủy Tạ, Tràng Tiền and Bạch Đằng… across various segments.
Vinamilk is strong in supermarkets. KIDO offers ice pops, tubs, cones, scoops… across mass-market, midrange, and premium segments through more than 30,000 retail outlets nationwide. KIDO’s strength lies in products suited to Vietnamese tastes in affordable and midrange segments. Thủy Tạ and Tràng Tiền operate in the affordable segment. Foreign ice-cream brands such as Buds, Fanny, and Baskin Robbins focus on midrange and premium products.
Euromonitor International's 2015 report also shows KIDO leading the ice-cream industry with a 36.9% market share, far ahead of its closest competitor at just 10.3%. KIDO's chilled-products division, including ice cream and yogurt, grew revenue by 30% in 2015 compared with 2014. The group also reported 2015 revenue growth of 16%, 16%, and 80% for Merino, Celano, and Wel Yo, respectively.
Ice cream profit of about VND 200 billion in 2016
Recently, the Group Joint Stock Company KIDO (Ticker: KDC – HoSE) held its 2016 Annual General Meeting. Discussing investment and product-category expansion, KIDO's leadership expressed strong expectations for refrigerated products, particularly ice cream and dairy.
Ice cream is not new to KIDO, which entered the sector in 2003. Trần Lệ Nguyên, Vice Chairman and General Director of KIDO, said ice cream generated VND 116 billion in profit for KDC in the first 6 months. By year-end, the figure could reach VND 200 billion.
Returning to KDC’s 2016 business plan, the target profit of VND 1,500 billion includes selling 20% of its confectionery business to Mondelez. That stake is worth around VND 1,200 billion. By calculation, KDC’s operations generate around VND 300 billion in profit. KIDO’s chilled and frozen business will therefore contribute most of the 2016 profit structure.
After Selling Its Confectionery Business to a Foreign Partner, KDC Focused on 3 Areas: (1) Ice Cream and Dairy Products; (2) Cooking Oil; (3) The Industry instant noodles, seasonings, and convenient packaged foods. KIDO's refrigerated category (ice cream & yogurt) grew 30% in 2015, compared with average industry growth of 15% per year.
The Group's leadership said that to expand its product portfolio and increase revenue and profits in the frozen goods segment, KDC plans to put a new factory in Bắc Ninh into operation this coming month 8. This factory will add 20 million liters of capacity to the current 36 million liters/year, equivalent to a 170% increase in capacity. KDC currently has an ice cream factory in the Northwest Củ Chi Industrial Park, covering nearly 24 hectares.
This shows KDC’s ambition to expand its ice-cream and dairy-products market into the North rather than deepen its presence in the South. Building this factory will reduce transportation and logistics costs while serving the northern market faster, more deeply and more broadly. KDC also plans to expand its cold-chain distribution system, innovate dairy products and move further into cold foods by broadening the range of products sharing the same channels and making use of cold distribution.
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