big assignment topic vinamilk in usa market

Ministry of Food Industry to manage and renamed the Combined Enterprise of Milk - Coffee - Confectionery I.- Innovation period 1986-2003: Renamed Vietnam Dairy Company Vinamilk.. Achieve

VIETNAM NATIONAL UNIVERSITY, HA NOI

Course name: International Marketing

Course code: INS304204 – GROUP 7

Year: 2023-2024

Lecturer: Hồ Nguyên Như Ý – Vũ Minh Quân

I EXECUTIVE SUMMARY

In parallel with developing the domestic market, Vietnam's leading dairy company actively exploits opportunities to expand business in international markets, through investment

in foreign branches and export

Vinamilk has been approved to increase investment capital by an additional 3 million USD in Driftwood, bringing the total investment capital in this unit to 10 million USD and increasing the ownership ratio from 70% to 100%

Driftwood is a subsidiary of Vinamilk headquartered in California, USA Driftwood is

a company specializing in the production and distribution of dairy products such as fresh milk, soy milk, milk ice cream, fruit juice and snacks The products are distributed in the California market and can be exported

It can be said that these export contracts not only have economic value but also show the flexibility and correct strategy of businesses in identifying potential markets and making key investments, especially in the dairy industry - an industry with fewer advantages compared

to other Vietnamese agricultural products

II CURRENT MARKETING SITUATIONAL ANALYSIS

1 Company profile

1.1 History of formation and development

Vinamilk's formation and development process is divided into three periods:

- Subsidy period (1976-1986): In 1976, Vinamilk was established as Southern Milk - Coffee Company and took over 03 Thong Nhat milk factories, Truong Tho milk factory, and Dielac powdered milk factory In 1978, the Company was transferred to the

Ministry of Food Industry to manage and renamed the Combined Enterprise of Milk - Coffee - Confectionery I.

- Innovation period (1986-2003): Renamed Vietnam Dairy Company (Vinamilk) Joint venture with Quy Nhon Frozen Joint Stock Company

- Equitization period (2003-Present): In 2003, the company was equitized and transformed into Vietnam Dairy Products Joint Stock Company, acquiring Saigon Dairy Joint Stock Company In 2006, listed on the Ho Chi Minh City Stock Exchange (HOSE)

It can be said that Vinamilk has been the leading milk producer in Vietnam for many years Since starting operations, the company has built a nationwide distribution system and launched many different types of products such as juice, bottled water, yogurt, etc Selected as Top 40 largest dairy enterprises in the world in terms of revenue and the Top 10 most valuable dairy brands globally With a total consolidated revenue of more than 60,075 billion VND, Vinamilk currently owns and manages more than 40 member units including a system of factories, farms, branches both domestically and internationally

1.2 Business areas

The company's business areas include:

- Producing and trading canned milk, powdered milk, nutritional powder, and other dairy products

- Producing and trading cakes, soy milk, and soft drinks

- Doing other business lines in accordance with the provisions of law

1.3 Main product

Currently, Vinamilk is providing more than 250 product types in 6 product lines, including 3 main product lines: Vinamilk Milk (ADM GOLD, Flex, Super SuSu), Milk (SuSu, Probi, ProBeauty), Milk powder (Dielac, Alpha, Pedia, Grow Plus, Optimum Gold, CalciumPro, Mama Gold) In addition, condensed milk is also one of the products that brings high profit value to Vinamilk

1.4 Achievements acquired

Based on the principle throughout Vinamilk's operations of giving top priority to quality, each product created is the result of management systems and production lines that meet international standards

Vinamilk is proud to be one of the pioneering enterprises to standardize operating processes in diverse aspects: from quality, food safety and hygiene to energy, environment and social responsibility, to bring innovative quality products, value, choose the variety and most suitable for health and environmental friendliness Over the past many years, Vinamilk has achieved achievements and food hygiene and safety certificates in Vietnam and around the world such as:

- Global G.A.P Certificate

- Certification of Food Safety and Hygiene according to FSSC 22000

- Certification of occupational health and safety management according to OHSAS 18001/ ISO 45001 standards

- EU Organic Certificate

- Certificate of High Quality Vietnamese Goods

- Certification of food safety conditions according to regulations of the Ministry of Health

- International Standard ISO 9001:2015, ISO 9001:2008, ISO 17025, ISO 14001:2004

- Certification of food safety & quality management system according to BRC British standards

- GFSI Food Safety Certification

- Certificate of HACCP

- Certified by Clean Label Project organization from the US

1.5 Vision & Mission & Core value

With the vision of becoming Vietnam's leading symbol of belief in nutritional and health products serving human life Vinamilk is increasingly consolidating and building its brand strongly in both domestic and international markets

Vinamilk's mission is to commit to providing the community with top-quality nutrition and quality through our respect, love and high responsibility to human life and society In addition, Vinamilk always considers customers as the center and commits to meeting all customer needs.

With 5 core values, Vinamilk has become a leading symbol of trust in Vietnam in nutritional and health products serving human life: integrity, respect, fairness, ethics, and compliance

1.6 US market – Reasons to choose this market

The US is a large and potential market, with high demand for milk and dairy products

In addition, the US also has high quality standards and strict food safety requirements, so exporting Vinamilk products to the US is also a way to prove quality and compliance with safety regulations food In addition, the US and Vietnam have signed a Free Trade Agreement (FTA), creating favorable conditions for exporting products from Vietnam to the US This helps Vinamilk access the US market more easily and reduces trade barriers Today, the proportion of the young population in the US, especially the number of children born every day, is increasing, affecting the purchasing behavior of households This is a favorable condition for the dairy industry and products made from milk The rapid increase in population has a very strong impact on the production and business situation of Vinamilk milk in the US market This is a favorable condition for Vinamilk to develop many product lines to meet the diverse needs of consumers in the US and Vietnamese people living in the US

The products Vinamilk chooses to export to the US market are condensed milk and condensed creamer The demand for milk, especially dairy products such as butter, yogurt and cheese is tending to "revive" because many people have changed their eating habits and are more sympathetic to fatty dairy products in recent years When talking about condensed milk,

no one has heard of Ong Tho condensed milk - one of Vinamilk's branded products Furthermore, in recent years, with the US inflation index has remained at a low level, creating conditions for consumers to shop more and businesses to boost production again After receiving a lot of attention from customers at the Summer Fancy Food fair, condensed milk and condensed creamer products produced by Vinamilk began to be sold in supermarkets in Arizona and California

2.1 Nestle

Nestle is a Switzerland multinational corporation, specializing in the world's leading production of nutritional and beverage products from milk, and one of the first places to research and produce condensed milk products As a hundred-year-old corporation, Nestle always focuses on nutritional value and human health The diversity in product lines is the main reason why the name Nestle is no longer strange to anyone Nestle La Lechera Sweetened Condensed Milk is one of the popular condensed milk products in the US With the advantage

of birth, large production scale, and delicious taste, Nestle is a formidable competitor of Vinamilk in the US market

2.2 Eagle Brand

Eagle Brand was born during the American Civil War This company's products provided a lot to the US military during this period and continue to this day because of their good and long-term preservation From there, it creates prestige in the product and widespread coverage During more than 160 years of brand building, Eagle has created many condensed milk products with different types such as Low-fat, Original, and Dulce de leche Also, it has world-leading advertising campaigns Among them is the campaign calling for "Recipes in which Eagle Brand Sweetened Condensed Milk makes cooking quicker, easier, and surer" and building the image of Elsie cow - a recognized symbol of wholesomeness and quality Eagle Brand is considered one of the best condensed milk brands in the United States

2.3 Others international brand

Some brands with a large market share in the global milk market currently have fresh milk and powdered milk products being consumed in the US market including Santini, Borden, Parrot Brand, and local businesses in the US These businesses have a number of advantages such as large production scale, long-term operation and extensive experience in the

international market However, Vinamilk can still compete in the US market by enhancing product quality, building a strong brand and developing effective marketing strategies.

3 PESTEL analysis

3.1 Political

The US has a stable political system and strong legal system, creating favorable conditions for businesses participating in international business here Thanks to the political stability of the US, and the Vietnam - US trade agreement, customs procedures, trade contacts

or importing goods into this market are also stable

3.2 Economic

The economic growth rate of the third quarter of 2023 is 4.9%, more than double the 2.1% in the previous quarter The report published on October 26 on US GDP noted that consumers are the main growth driver Americans are increasing their spending in every aspect, from buying cars to eating out However, many Americans, especially those with low and middle incomes, are spending more on credit cards These cards are offering much higher interest rates after the Fed pushed the federal funds rate to about 5.4%, its highest level in 22 years Overall, Americans saved only about 3.8% of their income in the third quarter of 2023, down from 5.2% in the second quarter of the same year and significantly lower than the level before the COVID-19 pandemic

In October 2023, the consumer price index (CPI) increased by 3.2% over the same period and moved sideways compared to the previous month, according to data from the US Department of Labor on November 14 Core inflation decreased sharply compared to forecast, but remained at a high level The prices of other products are still increasing while the prices of food and dairy products are quite stable This is a good sign for Vinamilk

3.3 Social

Americans often choose fast foods such as hamburgers, pizza, or sandwiches are popular products in this country America has a high obesity rate because Americans like fatty foods like butter, cheese, and dairy products Grasping this point, two new products launched in the

US market by Vinamilk, condensed milk and condensed creamer, have been very successful

3.4 Technological

Driftwood factory operates based on a closed automatic production line, from input materials to output products Retains the natural flavor and nutritional ingredients, vitamins and minerals found in milk The operating system is based on the Tetra Plan Master automation solution, allowing connection and integration of the entire factory, thereby controlling all activities taking place in the factory Vinamilk imports purebred Holstein Friesian dairy cows that are registered with the American Dairy Association, and have complete pedigree information up to three generations In addition, there are genetic analysis certificates for the lifetime profit index and production performance index issued by designated US testing laboratories, also improving the quality of Vinamilk's products

3.5 Environmental

Vinamilk's Driftwood dairy factory is located in Southern California This is an area with quite cool weather, winter is less cold than in other areas, and there are clear seasonal divisions Cows give the most milk in the temperature range of 5-21 degrees Celsius, so it can

be said that the climate here is quite favorable for the milk production industry Easily obtain raw materials to serve production needs at much lower costs than when production has to import input materials from abroad

Some trends in the natural environment have a great impact on businesses' marketing activities: Scarcity of some raw materials, increasing energy costs, increasing environmental pollution, and state intervention in their use rational and reproducible resources

Milk is perishable and easily degenerates if not stored and handled promptly This negatively affects the quality of milk From here, there is a need to have a specific strategy to preserve milk and produce high quality milk

3.6 Legal

The American legal system promotes fairness but is also very complex and diverse Therefore, a company or business that wants to invest in the US market needs to learn and understand the laws where they want to invest Exporting or investing in the US is still facing difficulties because it does not enjoy many tariff incentives and some other taxes Especially when the Vietnam-US Trade Agreement was signed, it opened a path for Vietnamese goods to enter this difficult market Owning the Driftwood brand, Vinamilk has taken a big step forward

in conquering the international market

4.1 Target customers

Customers in the US are segmented into two groups: individual customers and organizational customers

- Individual customer groups: Customers in the US can be segmented by geography and

spending ability Vinamilk focuses on product development in the state where many Vietnamese people live in the US, California Increasing the use of Vietnamese branded goods in these places is a great way to promote the country's cuisine as well as increase revenue The average income of the middle and upper classes accounts for a growing share of food consumption The ability to pay for dairy products also depends on the average income of each person Condensed milk and condensed creamer are good products for body development, energy, and convenient to use, so the number of customers willing to pay in the middle and upper class segments will be more So the target market for condensed milk and condensed creamer also focuses on potential customers with stable income

- Organizational customer group: In addition to individuals, Vinamilk also focuses on

organizations such as schools, hospitals, restaurants, and supermarket systems based on Driftwood's inherent resources This is a large customer group, easy to generate revenue, and build brand image and high coverage density for Vinamilk

4.2 Competitive advantage

The acquisition of the Driftwood factory brought the following advantages:

- Having sustainable strategic partnerships with suppliers, ensuring a stable, reliable source of raw materials, with the best prices on the market Therefore, Vinamilk - Driftwood's condensed milk and condensed creamer products are sold to the market at the most competitive prices compared to current competitors

- Professional management systems and processes are operated by a team of managers whose capabilities and experience are proven through the company's sustainable activities

In addition, Vinamilk also has strengths in brand positioning As the number one dairy brand in Vietnam, with more than 40 years of construction and development, Vinamilk has

Vietnam With success in many international markets, Vinamilk has experience and wise steps

to enter the US market

III SWOT MODEL ANALYSIS

- Strong brand identity: Vinamilk is a

reputable brand both domestically and

internationally It has expanded its

market presence beyond Vietnam,

successfully entered various countries

and gained recognition that could

prove valuable in building consumer

trust and establishing a customer base

in the US

- Diverse product lines: "Vinamilk

presents extensive product lines under

five brand names: Vinamilk (liquid

milk, yogurt, and ice cream), Vfresh

(fruit juice and soy milk), Dielac

(powdered milk), Ridielac (nutrition

powder)" providing diversification

and catering to various consumer

preferences

- Limited market share: Vinamilk

is a fresh brand in the US Therefore, it may face challenges in the competitive US dairy market

- Resource Dependency: The dependence on imported raw material sources has caused many limitations for Vinamilk

- Global health trends: Vinamilk can

benefit from the rising interest in

health and wellness by meeting the

demand for nutritious and functional

dairy products

- Intense competition: The US dairy

market is highly competitive with established local and international players, requiring Vinamilk to

differentiate itself effectively.

- Emerging markets: Expansion into

new and emerging markets provides

growth opportunities, especially in

regions with a rising demand for dairy

products like the USA

- Rising demand for plant-based

alternatives: Vinamilk can explore

opportunities in developing and

marketing plant-based dairy

alternatives, given that the trend of

plant-based diets is growing in the US

- Changing consumer preferences:

A shift away from traditional dairy poses a threat that Vinamilk needs

to anticipate and respond to

IV GOALS AND OBJECTIVES

As the core values of Vinamilk is to become a world grade brand in food and beverage industry, it is natural that the company reaches out to the international market to stay.One goal for Vinamilk go global is to become a leading exporter of organic grass-fed, plant-based and high-protein lactose-free milk products The American market has a strong demand for these types of products, and there is potential for significant growth in this segment This would require the company to invest in research and development to create innovative products that meet the specific needs of certain consumers, such as those with lactose intolerance or who are looking for high-protein options for athletic performance

Another goal for Vinamilk to reach the international market is to establish strategic partnerships and collaborations with other businesses and organizations in the USA This could involve identifying potential partners through networking events, trade missions, and industry associations, and negotiating mutually beneficial agreements that leverage each other's strengths and resources By doing so, the company can gain access to new markets, technologies, and expertise, while also reducing risks and costs associated with international expansion The ultimate goal could be to build a global network of partners that spans multiple countries and industries, and that enables the company to stay ahead of the competition in a rapidly evolving global marketplace