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Consumer goods businesses the main target in M&A
Consumer goods led the merger and acquisition M&A market in 2011 in terms of the value of the affairs, while it is believed to continue leading the market in 2012.
Of the total value of four billion dollars of M&A deals in 2011, the deals in the consumer goods industry alone were worth one billion dollars. Experts believe that consumer goods businesses would remain the “aiming points” of the partners who have the ambitions to join the market or expand their business scale.
Food, drink, healthcare products the priorities
The world’s biggest glass bottle manufacturer Owens-Illinois (O-I) has opened its factory in Vietnam. O-I’s General Director Anthony Barstow, said that the factory would break even in five years, when it would hold 50 percent of the glass bottle market share in Vietnam.
The senior executive keeps optimistic about the operation of the factory in Vietnam, partially because in the 47.5 million dollar project, it has teamed up with Berli Jucker Public (BJC), a Thai leading distributor of packaged products, consumer and healthcare products to buy back the stakes of the Malaysian partner in the Malaya Vietnam joint venture (a joint venture with Vietnamese Sabeco, a brewery company).
“The purchase of Malaya would help us take full advantage of the existing market share. Our key clients would be not only Sabeco, but 350 drink manufacturers that need bottles. Meanwhile, the market is growing by 15 percent every year,” said Anthony.
In 2011, Japanese Kirin Holdings bought 57 percent of stakes of Trade Ocean Holdings at Interfoods, the company that owns the well known Wonderfarm trademark with the large distribution network of 110,000 sales agents. Besides, Kirin also bought the whole capital contribution in the joint venture with Acecook to possess a drink factory which has the investment capital of 60 million dollars.
Yokomizo Munechika, General Director of Kirin Vietnam, said that the purchases were the important steps of the Japanese company to develop its business in Vietnam, a potential market with very high non-alcoholic drink growth. The consumed volume has jumped from 630 million liters in 2006-2010 to 1.5 billion liters and expected to reach 2.5 billion liters by 2015.
Ezaki Glico, a Japanese sweets and food company, in January 2012 bought KDC’s shares in a plan to penetrate the Vietnamese market through KDC’s distribution network.
Statistics show that the majority of M&A deals related to consumer goods manufacturers, including food and drink companies. In general, investors target well known brands or the leading companies in the market which have large distribution networks.
Both demand and supply on the rise
Analysts have said that the M&A deals in consumer goods industry would be boisterous because of the favorable conditions in both the supply and demand.
Regarding the market, Vietnam has a young population with increasingly high income which allows creating a market with stable natural growth. Vietnamese companies, which once faced big difficulties due to the lack of capital and high interest rates, now need experience to develop brands and stabilize the markets. Therefore, cooperating with foreign partners would be a good choice for them.
Consumer goods prove to be the industry which bears the weakest impacts of the economic downturn, because it makes the products essential to people’s life.
That explains why investment funds nowadays also drive their investment to consumer goods businesses. The disbursement of the funds to the businesses has brought more satisfactory results than the investments in other fields.
In the past, investment funds only injected money in big businesses, while they now eye small and medium, but potential businesses as well.
vietnamnet
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