Besides researing and launching new products that are essential for consumers's life, Kinh Do will increase the numbers of joint ventures and foreign partnership and M&A activities to access to the international markets, promote sales and diversify product portfolio within the food industry.
Kinh Do Confectionery - A brand that has been familiar to people across the country just turned 20 years old. After 20 years of development (1993 -2013), Kinh Do Corporation (HOSE: KDC) confirmed its success by its well-known brand in the domestic market as well as the gradually expansion toward international markets. After 20 years, this is also the occasion for Kinh Do to look back at its journey of bringing the taste of happiness.
When asked about past journey, Mr. Tran Le Nguyen - Vice Chairman and CEO of Kinh Do - proudly shared with many emotions as Kinh Do has become part of his life where he worked and underwent all the ups and downs of the company since its inception.
Looking back at the successful journey of Kinh Do
Having been with the confectionery industry for the past 20 years, can you please share about the transformation of this industry in Vietnam as well as Kinh Do current position in the market?
Mr. Tran Le Nguyen: Based on my experience, Vietnam confectionary market in the past sold mainly imported products and consumers also prefered foreign products. However, over a long period, domestic confectionery companies positions have greatly increased compared to before. On the market, domestic confectionery products thrived and consumers began to realize the quality of local products.
If in the past, only imported goods had high quality, nowadays, the customers can enjoy local products with similar quality and price at a much more competitive level. At the same time, the brand of local products were increasingly known by the consumers while imported products brands were consindered strange and alien in the minds of consumers
Speaking about the position of Kinh Do, the company started out as a small confectionery production facility but transformed into a major corporation in Vietnam. While many companies especially the listed companies on the stock market are staggering, the financial results of our business are still steady. In particular, in the confectionery industry, Kinh Do became increasingly dominant. Specifically, the market share of our products increased significantly especially in the mooncake category with market share of nearly 80% and cookies category with market share of 30%.
During the 20 year journey of Kinh Do, what is the achievement that you most proud of? What were the factors that helped Kinh Do became a famous and essential brand in people's lives?
After 20 years been with the company, I am proud to see that the company has growth from a factory with 70 employees to a corporation with total numbers of employees up to 8,000 people. However, for me, the most successful achievement of Kinh Do is to become a national brand. In addition, the product of Kinh Do became increasingly diverse and could serve the consumer at any time of the year. In particular, the most successful brand of our company is mooncakes with market share of nearly 80%.
Our products are popular with consumers because of product quality, safety and our motto of always uphold the interests of consumers. If a product does not meet our quality standards, we refused to supply it to the market.
With these achievements, Kinh Do is also always oriented to social responsibility; actively seeked to contribute to the community, cared for the life of our staffs and employees, and strived to build a corporate culture. Through the implementation of corporate social responsibility (CSR) program, from 2001 to 2012, we have spent approximately VND 35 billion. Kinh Do always accompanied and supported the social programs of the Fatherland Front Committee of Ho Chi Minh City, and Association for Poor Patients, as well as organized visits and awarded gifts to families with difficult circumstances.
In the Group's activities, for me, the most favorite achievement is the acquisition of Wall’s ice cream with value increased several times than the initial investment value. From a system that only had foreign operator, we have improved it many times after acquisition.
One of the turning points during the development of Kinh Do was the year of 2010 where Kinh Do successfully merged North Kinh Do (NKD) and Kido Company into KDC. In 2012, we continued to merge Vinabico into KDC marking the scale expansion following a long-term development strategy. These mergers put Kinh Do Food Group as one of the leading companies in the countries and regions.
Can you please share some highlights about Kinh Do operations this year?
This year, we launched bread products under Kinh Do brand. This is a product with extensive coverage and is one of the essential products that has a high position in the market.
Using our business strategy, we will focus on the use of distribution channels, enhance the capability of our management team, focus on core products, and not invest in non-core business. Currently, Kinh Do possess a distribution network with approximately 200,000 retail outlets, 300 food distributors and a cold distribution channels nationwide. In addition, we have been able to build a good governance system, significantly reduce the cost of raw materials, and utilize distribution channels to help increasing the Group's gross profit margin.
From revenue of merely VND 10 billion in 1993, Kinh Do revenue reached VND 4,285 billion in 2012. Profit for the year of 2012 is up to VND 490 billion and the profit before tax target for 2013 continues to increase to VND 600 billion.
In the future, I wish that Kinh Do will continue to grow but must develop on a solid foundation. It is because the further one set out to the ocean the fiercer the waves. I hope that Kinh Do brand and image will not only exist in the next 10-15 years but enternally.
Strategy to expand toward essential products, continue to purse M&A and partnership in the same industry.
What is Kinh Do business strategy for the upcoming period in order to continue to develop enternally?
Regarding to Kinh Do development orientation, we will remain focused on core business of food business following the “Food and essential products” (Food & Flavor) strategy. In order to follow this direction, we will diversify our product portfolio within the food industry focusing on essential product. We will also continue to pursue M&A strategy in the same industry and accelerated growth by forming new joint-venture with international partners.
For domestic market, Kinh Do will exploit certain segments that currently unoccupied and are less competition as the premium segment. Expected in early 2014, we will be officially launched new products including Kinh noodles, cooking oil and soy sauce
As for confectionery category, we want to establish partnership with companies that have international brands and use these brands to export to other international markets. In the short term, Kinh Do will manufacture other companies’products in order to minimize risks and test the acceptance of other markets
Thus, in addition to the use of well-known brands to export to international markets, in Vietnam market, we will continue to push products under our brands.
Can you tell more details about the collaboration and partnership strategy?
We recognized that in the current context we need a breakthrough solution to accelerate revenue growth. Thus, we chose a strategy of forming joint ventures and partnership with international companies to expand to and exploit foreign markets. After 20 years, Kinh Do first priority is to develop Kinh Do brand on the international market.
With this strategy, we will continue to seek investment opportunities in companies that fit with the “Food & essential products” strategy. We will also seek for more partnership and cooperation with foreign companies and invest abroad. Follow the extraordinary shareholders meeting resolution dated 11.04.2013, , KDC will issue 40 million shares to strategic partners. Price as estimated is about 50,000 VND / share. Thus, this share issuance can bring about VND 2,000 trillion dong ($ 100 million) for Kinh Do.
For Kinh Do, many investors want to become our strategic partner by both contributing capital and cooperating in business oeprations and not just through a financial investment.
Currently, we are on the process to complete the necessary legal works and are expected to introduce our new foreign partner in 2014. In addition to the capital contribution, our partners will also jointly cooperate with us through the introduction of brand, technology transfer and international distribution network for Kinh Do. Since we already possess the necessary available capacity, with the help from an international brand abroad, Kinh Do will be able to accelerate our exports to international markets
Thank you very much
According to VietStock