ROK food-producing conglomerate Daesang Corp. has completed the acquisition of a 99.99 % stake in Vietnamese meat processor and distributor Duc Viet Food Joint Stock Company for US$32 million in September, fetching the Korean company a bridgehead in the Southeast Asian meat processing market.

According to newswire Pulsenews.co.kr, the deal was completed in September, however, Daesang decided to publicise the information only a few days ago.

Previously, the two parties failed to complete the purchase, which was rumoured to be finished by August 5, because Daesang had yet to finish all necessary documents for the acquisition.

The purpose of buying Duc Viet Food is to reinforce its food processing business in Vietnam, currently centred on frozen ham products.

The Vietnamese food processing market is set to grow fast as it is still in its fledgling stage. According to market intelligence agency Mintel Group Ltd., the demand for processed meat products in Vietnam has reached $490.57 million in 2015. Chilled sausages made up the largest share with 23 per cent, followed by shelf stable sausages (19 per cent) and Vietnamese traditional sausage (18 per cent). 

Competition in the chilled sausage market in Vietnam has been gradually becoming fiercer among local players-Duc Viet and Vissan-and foreign peers, such as San Miguel Corp. from the Philippines, Nippon Ham Group from Japan, and Thai CP Foods. Daesang will be the first Korean firm to enter the market. 

Established in 2001, Duc Viet Food specialises in manufacturing and distributing meat products, sausages, spices, and instant food. The company currently has a total asset value of $5.99 million. In 2015, the company earned $26.5 million in sales and $1.7 million in net income.

Starting operations in 1956, Daesang specialises in food and seasoning manufacturing, including soybean paste, marinade, soy sauce, soups, and Chinese noodle, among others.

Daesang first entered the Vietnamese food market in the 1990s by building a seasoning manufacturing plant. It currently owns three manufacturing bases across Vietnam. One of its key products in Vietnam is Miwon monosodium glutamate. 

The Korean food producer hopes to make $42.29 million in annual sales in Vietnam by 2020.

VIR