VietNamNet Bridge – Though dominating the domestic market, the big sweets manufacturers have shifted to other kinds of undertaking as the market has got saturated.

Profits from sweets market down

According to Business Monitor International (BMI), a market survey firm, the Vietnam’s sweets industry got the turnover of VND29 trillion in 2013, an increase of 10 percent in comparison with 2012.

The industry has witnessed the steady growth rate of 10 percent over the last few years. However, it is expected that the growth rate of the industry would slow down, with the 8-10 percent growth rate projected for 2014.

Kinh Do, Bibica and Hai Ha are the three biggest domestic sweets manufacturers, holding 42 percent of the market share. The other domestic manufacturers and foreign ones hold the other 38 percent of the market share, while the remaining 20 percent is the imports.

However, the noteworthy thing is that a big proportion of the profits for the two big guys – Kinh Do and Bibica – comes from Moon cakes, the seasonal products.

Tran Le Nguyen, General Director of Kinh Do Group, once said that the domestic sweets market is getting saturated. Meanwhile, the economic recession which led to the economic growth slowdown, plus the difficulties to access bank loans both have made the situation worse for sweets manufacturers.

Kinh Do’s total turnover in 2011 was 15-20 percent higher than in 2010, while the 2012’s turnover was just equal to that of 2011. This has forced Kinh Do to reconsider its product items, gather strength on key products and cut down expenses.

Bibica has also experienced a very tough year with the modest turnover increase of 5 percent in 2013, much lower than the targeted level of 15 percent.

Analyst have also noted that the sweets market have narrowed because of the changes in people’s consumption habits. Obesity, diabetes and some other diseases have become the obsession for consumers and prompted them to refuse sweets products.

Meanwhile, a lot of foreign big guys have jumped into the domestic market, which has put bigger difficulties for domestic manufacturers. They have been warned that the situation would get worse when Vietnam has to remove the tariff barriers under the ASEAN’s free trade agreements.

Shifting to other types of business

Kinh Do group made a profit of VND600 billion in 2013, which was equal to the profit of a medium joint stock bank, though its chartered capital was much lower. It now leads the sweets market with 30 percent of the domestic market share. However, it still moves ahead with the plan to shift to other types of business.

Nguyen said Kinh Do needs to find other ways to follow to implement its strategy on developing food and essential products. Besides sweets, since 2012, it has been trying to make more food products.

The projects on making instant noodles, sauce and vegetable oil have been implemented. It is expected that the new products of Kinh Do would be marketed in 2014.

Meanwhile, Bibica has been trying to develop nutrient food products, including Growsure cookies for children, Mumsure for pregnant women, and specific products for people with diabetes, blood pressure, blood steatosis, obesity.

DNSG