VietNamNet Bridge – Many foreign food and agricultural firms are expecting to reap good returns in Vietnam this year.

Vu Quoc Tuan, corporate affairs manager of Swiss-owned Nestle Vietnam told VIR that Nestle had just completed a $37 million expansion of its Milo drink factory in the southern province of Dong Nai, doubling its capacity to 100,000 tonnes. It was expected that Nestle Vietnam will experience revenue growth in the double digits.

“Nestle has invested nearly $500 million in Vietnam. However, whether it will invest more or not will depend on many factors,” Tuan said.

Nestle currently runs five factories in Vietnam and employs about 2,000 workers.

Le Tran Anh Dung, director of Singaporean-backed Olam Vietnam’s branch in the Central Highlands province of Dak Lak, also told VIR that the branch’s total revenue this year would likely grow 200 per cent on-year thanks to favourable market conditions. However, it was expected that revenue for 2015 would grow about 70-80 per cent against 2014, he said.

“Vietnam’s food and agricultural sector is a big magnet for many foreign firms,” said local senior agricultural expert Pham Hoang Ngan.

She told VIR that US’ Hawaii University was introducing some new plant varieties into Vietnam. It was now co-operating with some local non-governmental organisations to pilot a taro variety.

A US company was also co-operating with some local companies in a project to plant baby jackfruit in the central province of Nghe An over dozens of hectares, at a site that would eventually be expanded to 100ha. The fruit would be used to make medicine. Another US company was also exploring an opportunity to plant organic rice in the central province of Quang Nam, Ngan said.

“Many foreign companies are also seeking mergers and acquisitions with Vietnamese companies,” she said.

Mondelez International Inc., the producer of Oreo cookies and Ritz crackers, recently announced it would acquire an 80 per cent stake in Kinh Do Corporation’s (KDC) category-leading snacks business in Vietnam for $370 million. The deal is expected to close in the second quarter of 2015, subject to approval from KDC’s shareholders and local authorities.

“Our significant investment in Kinh Do and Vietnam is a perfect fit for our growth strategy in the Asia Pacific region, strengthening our core snacking categories in a high-growth dynamic market,” said Tim Cofer, executive vice president and president of Mondelez International’s Asia Pacific and Eastern Europe, Middle East and Africa.

In early August 2014, Pilmico International Pte Ltd, a wholly-owned subsidiary of the Philippines’ Aboitiz Equity Ventures Inc, also completed the acquisition of a 70 per cent stake in Vinh Hoan 1 Feed JSC (VHF), one of the largest aqua-feed producers in Vietnam.

Pilmico’s president and CEO Sabin Aboitiz said Pilmico would increase its investments in VHF to double its capacity. Pilmico would acquire the remaining 30 per cent of VHF within five years at a pre-agreed price, for a total transaction value of $28 million.

According to the London-based Business Monitor International’s Vietnam Food and Drink Report for 2014’s fourth quarter, the country’s total food consumption would grow 19.2 per cent this year, while alcoholic drinks value sales would grow 12 per cent.

VIR