International Strategy of TH TRUE MILK [PDF]

Zitiervorschau

Executive summary The major purpose of this report is to develop a full business strategy of TH True Milk, a company in Vietnamese dairy industry. Based on findings through the internet and other reliable sources and valuable knowledge acquired from the International Business Management course, our group have successfully develop a business strategy research on TH True Milk Company with both domestic and international business approaches. The paper is divided into three main parts and will cover all the suggested questions. In particular, the first part of this report will be aimed to the briefly introduce the company, history of development and financial status. The second half is about all the elements that differentiates TH True Milk from other competitors. And the final one will cover all aspects of how TH True Milk can take advantage of international opportunities.

1

Chapter 1: Introduction about TH True Milk 1. Brief introduction about TH True Milk The TH Milk Joint-Stock Company as part of TH Group which was founded with the financial advisor of North Asia Commercial Joint Stock Bank is a well-known brand in dairy industry of Vietnam. Established in 2010, processing and UHT milk is their major business. The company is famous for advanced management system and integrated production processes, synchronized by international standards from planting grass, building barns, cattle feed processing, management veterinary control, processing and packaging, to the distribution of products to consumers. It is their goal to become clean milk and UHT milk supplier in Vietnam and at the same time develop chain convenience stores called TH True mart to provide clean fresh produce from Farm TH, safe and high-end products for consumers. TH True Milk decides to choose its own path to produce clean and fresh milk products (not reconstituted milk). It can be said that until now, TH True Milk has its own position in Vietnamese consumers’ mind and achieves many successes. 2. Vision and Mission of the company At TH True Milk, people always cherishes a question “How can we improve Vietnam’s Statue and help Vietnam to takes its place among the world’s strongest nations”. It cannot deny that this passion encourages TH True Milk to create a new road, with a clear vision and mission: Vision of TH True Milk: TH Group aspires to become Vietnam’s leading manufacturer which owns in hand clean natural origin. With serious and long-term investments combined with the most modern technology, TH True Milk Company is determined to become a world-class brand of food that is likely everyone’s favorite and national pride. Mission of TH True Milk: In the spirit of closeness to nature, TH Group has always tried its best to nourish the Vietnamese physical and soul by providing the food products derived from nature - safe, clean, fresh and nutrient. 3. Financial status and funding TH Milk Joint-Stock Company, in late 2010, launched TH true MILK in central Nghe An province. This is a remarkable milestone for Vietnam’s milk industry. With the launch of TH true MILK, TH is closer to its goal to become the leading player in Vietnam’s food market. The total capital cost to deploy the project is USD 1.2 billion. The project benefits from investment advisor from North Asia Commercial Joint Stock Bank and technology consultant and transfer from AfiMilk – an Israel leader in high-tech dairy farming development. TH Milk is also looking for a strategic investor to increase charter capital by 10% through the issuance of new shares or convertible bonds issued USD 100 million.

2

North Asia Bank is the project’s investment advisory. According to North Asia Bank financial report in the last 6 months of 2013, Vice President Thai Huong, also Chairman of TH group, was personally holding nearly 7% shares of North Asia Bank. If adding those who support for her, there shares would account for nearly 9.9% of the charter capital of the bank. Although North Asia Bank has been the direct financial advisor for TH True Milk project, in the end of 2011 it capitalized only VND 3,245 billion and has VND 25,344 billion in total assets. The concern then was the donor for TH True Milk was also facing the risk of bad debt and insufficient assets to finance. Therefore, in 2013, the project borrowed a record of VND 10,700 billion, equivalent to 65% of total investment capital of the whole project.

TH True Milk Debt and Equity. Source: vietinbanksc.com In 2013, this debt balance increased by about VND 4,400 billion from the debt balance of VND 6,329 in 2012. Overall loans are short term loans. The debt equity ratio of TH True Milk from 2011 to 2017 reaches an average of 42.3%. TH True Milk plan to decrease the debt balance down to VND 2,472 billion in 2020. In 2011, the project has received an investment of USD 100 million from the Israeli government. The total investment of USD 1.2 billion to import breeds of milk cows from countries like New Zealand, Uruguay and Canada, raise milk cows and produce clean milk, was started in 2010 with USD 350 million for the first stage to be completed by 2012. The project covers 37,000 hectares (8,100 ha in the first stage). Up to now, the project owns approximately 20000 cows in which there are 7000 milk cows with output of 160 tons of fresh milk per day. It is planned to reach 45,000 cows (30000 milk cows) by the end of 2014, increasing to 137,000 cows in 2017 when automatic milk processing plant with output of 500 million liters per year will come online. The net revenue is estimated at VND 15 trillion (USD 714 million) in 2015, increasing to VND 23 trillion (USD 1.09 billion) by 2017. Though set up and running for just 2 years, the huge dairy 3

farm of 20000 Holstein-Friesian (HF) cows is recognized as the biggest in Southeast Asia. “This is the signal of a start-up trend for new generation of investors aiming to international standard projects in Vietnam,” said Ms. Huong. Furthermore, in 2011, TH Milk also bought Tate & Lyle, a cane sugar processing company in Nghe An, for USD 52 million to be more independent of the resources to feed cattle farms and sugar which are inputs to the production of its dairy products. Recently, FDI flows into agriculture have increased. A lot of agricultural projects have been invested nationwide. Here, a fresh foreign investment poured into TH true milk in 2011. The government of Israel invested USD 100 million in TH Group’s industrial dairy farm project backed by TH milk food joint stock Company. The deal was signed on the occasion Israel President Shimon Peres’ visit to Vietnam and was a supplement to the Finance Cooperation Protocol between the governments of Vietnam and Israel. President Afimilk, Mr. Tal Cohen said: "At the time the project started, in Vietnam totally not exist forms of dairy concentrate industrial scale. Yet after only 6 years cows imports from New Zealand have high milk yield doubled in conditions extremely harsh weather on homeland Nghe An. At the time, everyone can believe almost mission impossible was to can become a reality? With a strategic vision, the ingenious leader Mrs. President led the staff and workers firmly TH Group pass each phase of the project. Staff employees TH-quality intelligence, diligence, hard work did not stop learning for today can master every process in farm work. Professionals Afimilk us together with experts from around the world, is proud to contribute to the overall success of the project. We always try our best not afraid difficulty, keeping optimistic spirit to always work closely with a team of TH perform all tasks assigned ". In addition, many Vietnamese businesses have shown their keen on investing in Moscow oblast (province). Typically, TH Group is planning to implement the world’s largest concentrated dairy cow and fresh milk production project in Russia, with an expected capital of nearly $2.8 billion. TH Group is due to join hands with Russian authorities in order to construct the world’s largest dairy processing plant. This project, expected to cover 140,000 hectares, will be 2.32 times bigger in capital and 3.78 times bigger in area than the group’s existing $1.2 billion, 37,000ha project operating in the central province of Nghe An’s Nghia Dan district. If this project comes to fruition, it would be the biggest of its kind in the world. TH Group is currently working with Russia’s authorities on this project. According to their plan, the project will include three stages, spanning from 2015 to 2025. After completing legal procedures and necessary preparations, the first phase is expected to kick off in late next year at an initial investment of USD 500 million. Specifically, the first stage, from 2015-2016, is expected to see $386 million invested in an area of 20,000ha. It will be focused on constructing three clusters of dairy farms, auxiliary facilities, an office area, workers’ housing, and a fresh milk processing plant with a daily capacity of 800 tonnes. This stage will likely have 50,000 cows, of which 21,600 will be milked. 4

The second stage, from 2017-2019, will see the construction of another six clusters of dairy farms with each cluster having three farms, auxiliary facilities, and another fresh milk processing facility with a daily capacity of 1,700 tonnes. With the total investment capital expected to be $796 million, this stage will likely have 100,000 dairy cows, with 43,200 milked, and will cover an area of 40,000ha. TH Group will build the third stage from 2020-2025, including another 12 clusters of farms, auxiliary facilities, and another mega fresh milk processing facilty. This stage, expected to cost $1.592 billion, will cover 80,000ha, raising the total area to 140,000ha for the three stages. This stage will consist of 200,000 milk cows, including 86,400 milked. This will raise the total number of cows for the three stages to 350,000 including 151,200 milked. The mega fresh milk processing facility will cover 1,000ha, including office buildings, warehouses, workers’ housing, a sports area, and a commercial display area. This facility will have capacity of 3,400 tonnes per day, raising the total daily capacity of the project’s three stages to 5,900 tonnes. The project plans to use the world’s most modern technology, imported from Israel. All the milk products will be marketed in Russia, a country of 150 million people, where only 18 million tonnes of milk are currently produced. This project will supply nearly 50 per cent of the nation’s demand. The total number of employees needed for the whole project is expected to be about 6,000. At a July meeting in Moscow attended by Vietnamese Ambassador to Russia Nguyen Thanh Son and leaders from the TH Group, Moscow’s leaders said agricultural development, in particular, the dairy industry, would enjoy major incentives and support from Russia’s government.

5

CHAPTER 2: WHAT DIFFERENTIATES TH TRUE MILK FROM OTHER COMPETITORS? 1. TH True Milk’s competitive advantages Because of comparative disadvantage in produce raw materials of milk, traditional milk producers in Vietnam market mostly imported milk powder from other countries, then, they refreshed it into liquid milk before distributing to retailers. In 2008, Vietnam milk producers imported 90% of raw materials. This rate reduced to 70% in 2009. Therefore, there was not much competition in the pure milk market in Vietnam a few years ago. However, Vietnamese pure milk industry has become more active recently, with the strong development of big dairy groups. Although newly established about 5 years, TH true milk is often mentioned with full pride by Vietnamese people. This brand has created its own comparative advantage in Vietnamese dairy market. The company is famous for advanced management system and integrated production processes, synchronized by international standards from planting grass, building barns, cattle feed processing, management veterinary control, processing and packaging, to the distribution of products to consumers 2. Differentiation strategy Following a differentiation strategy, TH true milk focus on serving customers the most natural and highly qualified products which are clean, safe, fresh, delicious, and nutritious. Special feature used to differentiate TH’s products is a combination of three main differentiators: the basis of quality, brand image, and product design. Firstly, about quality level, TH true milk is created within the high standard originations and production in which emphasized the position of high quality milk products. They have an 8000 ha farm in Nghe An province which is raising raw materials for TH true milk, with pure raw selfsupplied materials. This makes it easy to manage input, rather than having to depend on imported raw materials like many other competitors. With the slogan “100% pure milk”, TH true milk built the largest factory in South East Asia where they currently have 30,000 cows to ensure sufficient raw milk material for production. At present, TH’s cow are imported from countries famous for raising dairy cows in the world such as New Zealand, the USA, Australia, and Canada with clear genealogy to ensure best milk, high yield, keeping fat, protein, etc. in the milk, and high fertility and disease immune as well. In addition, cows are listened to music, fed the best nutrition, drunk clean water, and bathed every day. For manufacturing, the entire farming, veterinary canter, laboratory and milking system are well-designed using Control Technique from Israel with annual expert teams supervisions. In addition, TH true milk is also certificated ISO quality product with the most modern preserving tools. The highly invested components and proof of clean and safe production differentiate them from the other brands.

6

Secondly, TH True Milk has successfully created an outstanding brand image which is wellknown for its clean and safe products with ingredients made of high quality components through modern and standard production. From the beginning stage of the firm, this brand is targeted to bring Vietnamese consumers with breakthrough products of which assure highest quality daily milk for customers. It is also clear that TH true milk has a different product design and packaging which is easy for buyers to perceive as unique throughout Vietnamese dairy industry. From the main theme of “Truly Nature” and “True Happiness”, TH true milk focus on the two basic colors of white and blue emphasize on the simple but high quality and presentable products. Packaging materials of TH true milk, which is in creation under high standardization with safe and friendlyenvironmental materials, is also an example of elegance and high class. Simple but modern design and packaging are crucial factors that help this brand attracts its target customers. Due to the unique features and differentiated characteristics of its products, TH true milk sets the price higher than most of its competitors like Vinamilk or Friesland Campina does. Therefore, price premium is another thing that must be mentioned in TH’s differentiation strategy. However, TH true milk is aiming to reduce their price to compete against competitors more effectively. Firstly, by producing food for cows themselves, then, increasing the quantity of cows as well as improving their productivity through a more effective production system. Once TH true milk is able to reduce costs, then they will lower prices set for their products. Compared to the distribution places such as normal supermarkets or small retail stores of other competitors, TH True mart – the direct selling system of TH true milk – is much more ideal for customers. It is a chain of convenience stores that provides safe, clean, fresh, delicious and most nutritious, natural-original products produced by Farm Fresh Dairy TH. TH True Mart facility is invested with modern design and special interior materials, as well as the upgraded methods in preserving the best products. Milk are not only preserved carefully under the best conditions but also placed neatly on the shelf which is convenient for consumers to find their wanted goods. They will enjoy a clean and enjoyable place of shopping. Unlike the normal overcrowded supermarkets and stores, TH True Marts bring comfort to shoppers and make the purchase process of them become easier with smart and scientific designed stores. 3. CSR activities Being recognized as a responsible company by the public, which joins in a lot of charity campaigns for unlucky people, is another significant feature that differentiates TH true milk from other competitors. TH true milk are very concerned about their responsibilities with customers and society. They guarantee their milk is 100% fresh milk. They also run social responsibilities programs, which focus on care for children and poverty in Vietnam. As the annual activity of the company, TH tends to participate in as many charity campaigns as possible. One of TH aims is to join efforts to fight poverty for a sustainable future. For instance, TH Group gives a hand to create a better educational environment in Vietnam by renovating schools and providing 7

scholarship program for students or sponsoring calf for farmers in Nghe An province, reconstructing new houses, sponsoring “Vietnam’s Brainiest Kid” - a kids' entertainment program broadcasted on Vietnam’s VTV channels, etc. Consumers are also increasingly responsive to this brand that show a social purpose through their offering a gateway to healthier lifestyles. Strongly focusing on “Fresh and Clean milk”, TH True Milk aims for the leading position in Vietnam dairy market. The young and ambitious player starts to expand their portfolio with continuous innovation in the past few years, and currently becomes one of the top pure milk manufactures and suppliers in Vietnam with their differentiate strategy.

8

CHAPTER 3: TH TRUE MILK’S BUSINESS STRATEGY IN VIETNAM AND SUGGESTED STRATEGY FOR TH TRUE MILK TO ENTER INTERNATIONAL MARKETS 1. TH True Milk’s business strategy in Vietnam a. Business strategy 3 years ago, at a seminar on economics, Ms. Thai Huong made a shocking announcement that, by 2015, TH True Milk’ s sales would reach 3.700 billion, and it would account for 50 % share of fresh milk in Vietnam, which means it would "outperform" Vinamilk (Sơn Ngọc, 2015). At that time, with high coverage rate of TH True Milk products on the market, together with billions of dollars investment projects, many experts expected TH True Milk could succeed in achieving its goal. However, recently, the market research firm, Nielsen, reported that Vinamilk is still the fresh milk market leader in Vietnam, both in terms of sales volume and revenue (Sơn Ngọc, 2015). Vinamilk has been existing for 35 years; meanwhile TH True Milk was established only 5 years ago. Therefore, it would be definitely difficult for TH True Milk to overtake Vinamilk. To be fair, TH True Milk entered the dairy market when there were hundreds of brands, but now it accounts for 40% of fresh milk and ranks number one in this field. One major reason that makes TH True Milk become a famous brand is that it has laid the groundwork for developing the ‘fresh’ and ‘clean’ milk in Vietnam. It also provides 50% of fresh milk for Vietnam market. Before TH True Milk, 90% of milky products are reconstituted milk which is made from imported milk powder. Especially it achieves this position after only 5 years (Thùy Liên, 2015). Vinamilk sees the fast growth of TH True Milk and quickly recognizes the big competitor; therefore, Vinamilk has been increasing its investment in the number of cows, and modern technology. Until now, TH True Milk still cannot catch up with Vinamilk in terms of productivity, but it continues expanding its scale to reach 137.000 cows in 2017. To do that, the Group has been surveying to implement the project of dairy and milk processing with similar models in Thanh Hoa, Dak Lak, Lam Dong. Furthermore, to consolidate its position, TH True Milk should be consistent with its very first strategy and keep improving its product quality. The consumers now care more about the quality of food products such as milk rather than their price, so dairy firms have responsibility for ensuring the source of inputs, and the hygiene of production. One of several methods used to improve its product quality is to raise the quality of food for cows. The fact proves that despite the higher price than Vinamilk’s, TH True Milk with closed production process, modern technology, and verifiable origin, has gradually gained customers’ trust and has rapidly increased its market share. In fact, product price of TH True Milk is about 10% higher than some other competitors. Even though its strategy is not low-cost leadership, its representative committed that in the near future, 9

after totally depreciating capital cost, it would reduce price to benefit the consumers. In addition, even when the dairy market price increases, TH True Milk can keep the old price, because it controls its own inputs. TH True Milk has been providing a wide range of dairy products such as UHT milk, yogurt for young children, and micronutrient milk for adults. It will be very potential for TH True Milk if it is the first one who introduces some new flavors or supplements. Recently, it introduces pasteurized milk and is going to sell rice and herbal milk which seems exclusive in Vietnam’s dairy market. b. Distribution strategy In TH True Milk, before coming to the end-users, products are transferred through different stages. From the early stage of cows importing, herd control, veterinary care, disease prevention and treatment to milking, the fresh milk is transported and stored by cooling tank trucks at 2-4 degrees C in order to best preserve the nutrients of TH True Milk. In this place, the latest pasteurization techniques are applied to ensure quality, naturalness, flavor, nutrition and safety of the company’s clean, fresh milk. After production stages, the milk are distributed to TH Stores, TH retail outlet and TH True Marts in best conditions and bring to families standardized products with preserved essences, flavors and nutrients of nature. In TH True Milk Company’s case, they have carried out both outbound and inbound logistics in accordance with its direct selling system called TH True Mart for the distribution of TH True Milk. TH True Mart is a chain of retail stores that provides food products safe, clean, fresh and delicious and most nutritious, natural origin, produced by Farm Fresh Dairy TH. Under the advice of North Asia Commercial Joint Stock Bank-oriented and high-tech investments of the Group, TH True Mart facility is invested with modern design and special interior materials, as well as the upgraded methods in preserving the best products. Milk are not only preserved carefully under the best conditions but also placed neatly on the shelf which is convenient for consumers to find their wanted goods. Compared to a scattered layout of normal supermarkets, TH True Marts are truly ideal for customers. Instead of wandering around and hardly find the items in crowded places, TH True Milk offers consumers with clean and scientific designed stores; enable them to free and smart shopping. Besides, to bring convenience to consumers, the outlets are located near many schools and offices in big cities. In the first stage, this system is concentrated in the major cities of Hanoi, Nghe An and Ho Chi Minh City. As a long term strategy, this will be key distribution channels and specialty channels besides traditional distribution. The number and location of distribution outlets are designed scientifically and rationally due to geographical and population maps in each region, namely the density distribution of the major streets, residential areas, high-rise buildings, schools, hospitals ...For instance, the chain stores in Hanoi are located in nearby center path like Chua Boc, Nguyen Chi Thanh, Hoan Kiem and so on which is easy for residents to find with a system of 40 stores citywide. For the new UHT Fresh Milk Added Collagen, like the other kinds 10

of milk coming from the TH True Milk system, they will be stored and placed in these outlets with a separated section in order to attract customers and using normal transferring methods of TH True Milk to come to the end-users. With the co-operation of more than 200 outlets nationwide, TH True Milk is about to have no difficulties in distributing its new products. Base on this huge network, TH’s products can be well-connected and widely spread to more parts of country. In addition, since milk is a regular commodity, distribution can be largely spread; the milk can also be distributed through trade marketing in retailers like Co-op mart, Big C, Maxi Mart, etc. This indirect marketing method is used in parallel with the direct selling mentioned above. Besides selling in retail store of their own, TH True Milk also contracted to outside distributor which help their products co-exist on the same shelf with other competitors like Vinamilk, Dutch Lady and so on. By this means, TH Milk has offered busy consumers a chance to shop along with other stuffs. If people do not have enough time to go to specific store of TH True Milk, they can easily find TH products on normal shelves. Nonetheless, most of TH’s customers find it more desirable when shopping in TH True Marts. This indirect methodology solely accounts for a smaller percentage in compare to direct selling method distribution of the company. In addition to current direct purchasing method at TH True Mart and popular supermarkets, consumers can also order online on the website thmilk.vn and receiving milk in their home. Currently, this system is now in developing stage and promised to coming into force in the nearest future. This development will bring Vietnamese consumers to a more enjoyable and convenient shopping experience along with traditional forms. 2. International market research for TH True Milk International marketing or global marketing is the term refers to marketing carried out by organizations overseas or across national borderlines. This strategy employs an extension of the techniques used in a firm’s original country. It refers to the company-level marketing practices across the border including market identification and targeting, entry mode selection, marketing mix, and strategic decisions to compete in international markets. International marketing and domestic marketing have many differences due to its varied characteristics. It is of importance for TH True Milk to understand international conditions and people in attempt to market their products to overseas consumers. Economics: As a result of different components and characteristics, domestic market and international ones differs a lot from economics point of view. A stable market can create advantage for TH True Milk when operating. Nonetheless, a country of unpredictable and dangerous economy is likely to do harm to the firm’s business. Consumers in a crisis nation will definitely reduce their purchase and be more reserved in daily expense. It is needed to take into consideration whether the target country TH want to market their products are wealthy and suitable enough for the marketed milk. A wise and careful-prepared pricing strategy could also bring TH True Milk 11

desirable outcomes. In compared to foreign countries, for the similar products and quality, milk prices in Vietnam are 30% higher than the overseas nations. TH True Milk is well-known for the higher class in domestic market so the price is of high level which is often 10% than the others (usually 3500-4500 VND higher than Vinamilk for the same type of milk bottle). When TH enters international milk industry, keeping the same prices requires firm thoughtful consideration in both sales and profitability aspects. Social: Different countries will bring back different consumers’ behavior. It is obviously that the home country’s customers will be easier to understand than the international ones. Integrated into overseas industry, companies have to face with various types of enormous behaviors from consumers of different backgrounds. Hence, careful research is often conducted before any deeper movement into the big sea. In Vietnam, TH True Milk mainly deals with skeptical thoughts of consumers in quality’s problem especially the safety and originations of claimed ingredients on the milk. Marketing of them, thereby, aiming for proof of high quality milk components and standardization production. On the other hand, in other countries, due to standard requirements, TH will have to prove their products to be free of forbidden ingredients and still nutritious to consumers. Cultural: Also, making wrong decisions that violate one’s culture or traditional value could do harm to the companies and even more, self-eliminate them from the market. Not all countries are able to be applied one cultural approach successfully. TH True Milk on its way to international market is required to have suitable strategy for different cultures. TH’s style in Vietnam is considered to be high class level. Nonetheless, in other nations, the same conditions are viewed as normal type. With the lack of both experience and financial support when operating in overseas countries, it could be hard for TH to maintain their image of high class brand. Instead, the company could invest in distinct features of products and culture that could distinguish them from the competitors. For example, it could be useful to display the traditional milk making process in old Vietnam in accordance with a more casual and Vietnamese decoration style but still keeping original basic colors of TH. The differences come from the company’s nature itself and to be success in outside markets, utilizing them is a wise movement. Also, milk preferences of foreigners and Vietnamese people are varied. In developing countries, they tend to care more about the fatness of products while the domestic consumers aimed to improve their height and daily nutrition. Therefore, TH True Milk should focus on diet ingredients for demanding consumers. Competition: Competitors’ evaluation is crucial whenever a company enter a market. International market, certainly, implied more competitiveness than the domestic one. In Vietnam, in competition with 12

TH, there is likely to be Vinamilk a huge rival. Vinamilk in domestic milk market is well known for its strong brand which is familiar to everyone in Vietnam while TH is aimed to upper class in society with high standard products. Nonetheless, overseas market is a huge playground for milky brands and TH at that time will have much more rivals to take into consideration when operating, Nestle, Dutch Lady and so on from this point with more experienced in international market will turn into their biggest difficulties. Hence, TH is needed a fully analysis of their rivals and suitable research in which set the stage for their further strategy in promoting TH Brand. 3. Suggested strategy for TH True Milk to enter international market a. Suggested business strategy TH True Milk is preparing for entering global market. So far, it is one of a few enterprises in Vietnam whose products meet international standards in the field of agriculture. TH True Milk’s dairy products have been registered in over 60 countries worldwide. Ms. Thai Huong revealed that in the future the products of TH True Milk will be available in several countries around the world and may be manufactured in those countries (Thùy Liên, 2015). The fresh milk production plant of TH was also recorded as the largest milk processing one in Southeast Asia. With up to 37,000 hectares size, capital investment of $ 1.2 billion, it is also the largest project in Vietnam's agricultural sector so far (Vy Thảo, 2015). Recently, TH Food Chain Joint Stock Company under TH Group, which owns the TH True MILK brand name, has won seven international awards at the WorldFood Moscow 2015 in Moscow’s Expocentre Fairgrounds, from September 14-17, 2015. Taking part in that fair helped TH True Milk enhance the reputation of Vietnam dairy sector in the global market. Before that, TH True Milk tended to expand its business by investing 2.5 billion USD in a project on dairy cow breeding and processing of dairy products in Russia. This project is expected to be deployed till 2025 with 3 stages: • Phase 1 (from 2015-2016): the Group will build three clusters farms and milk processing plants with a capacity of 01 800 tons / day, on a total area of 20,000 hectares is expected, with the dairy herd 20,000. • Phase 2 (from 2017 to 2019): the Group will build 6 cluster farms, with a total herd of 100,000 children, and building milk processing plants with a capacity of 1,700 02 tons / day. • Phase 3 (from 2020 to 2025): the Group will build 12 cluster and finish farm milk processing factory Mega, with a total of about 200,000 cows. Ms. Thai Huong, said that this huge project was strongly supported by the Russian government (Vũ Thu, 2015). After the milk production has been operated stably, Ms. Thai Huong determined to enter the pharmaceutical market. Until now the Corporation Pharmaceutical TH (TH Herbals, JSC) went into operation with the aim of producing food, functional beverages. She said, "This year, I will join the pharmaceutical market. In July 2015, I will register to sell functional products in the US,

13

and in October it will be the Europe.” Maybe this activity will be the stepping stone for TH True Milk to American and European markets (Thùy Liên, 2015). On closer market such as ASEAN, TH True Milk can exploit advantages of the establishment of AEC to enter new markets. AEC will allow “5 free”: free flow of goods, free flow of services, free flow of investment, free flow of capital, free flow of skilled labor. Some possible strategies for TH True Milk include: for those countries having enough resources and infrastructure, it can build new factories as it is doing in Russia. For those countries like Singapore, it can export products with free tax. However, before that it should conduct thorough surveys on ASEAN market. For example, potential markets in ASEAN are Thailand, Singapore. In Thailand, according to Euromonitor International’s report, in Thailand, “RTD volume per capita consumption of drinking milk products in Thailand at 29 litre remained low compared to 74 litres per capita in the US, 70 litres per capita in Europe, or 56 litres per capita in Singapore.” The leading dairy firms in drinking milk products include Friesland Campina (Thailand) and Meiji. They have been focusing on developing flavored milk drink and launched new television commercials and on-ground events to support sales. The report also predicts that “Drinking milk products will record a healthy performance over the forecast period due to continuous product innovation as well as aggressive marketing activities and advertising from leading brands” (Dairy in Thailand, 2015). Dairy firms in Thailand still use reconstituted milk; therefore, to compete with existing firms, TH True Milk may still focus on the same competitive advantages in Vietnam, which means it should highlight its fresh drinking milk products. b. Suggested distribution strategy Overseas market is a huge playground for milky brands. In order to expand the business, TH true milk is investing in new markets of South East Asia. In normal conditions, TH’s milk can be preserved 6 months, so in the first stage, the company will ship milk directly by air to Mekong river’s countries and by sea (to reduce shipping costs) to further countries such as Malaysia, Indonesia, and Singapore… Since milk is a regular commodity, distribution can be largely spread; the milk can first be distributed through wholesalers and retailers like supermarkets or convenient stores. When the sale numbers of milk is growing quite constantly, the company will consider changing into a new form by setting up farms and building factories in order to produce and provide milk in these countries faster. One striking point is that TH Company develops TH true marts chain of stores with the purpose of bringing to customer the best service. It will be a smart choice for the company to bring along this model when going international. All of marts will be built in big cities and are in main streets which are convenient for customers. Customers can be suggested by TH staffs that are trained carefully. The decoration is simple with two colors that are light blue and white. It makes customers feel the clean and fresh which are the same as TH’s products.

14

c. Market segmentation Milk is one of the industry achieved the fastest growth in the food industry in ASEAN. Milk consumption is continue to grow quickly so bringing TH true milk products abroad is a potential movement. Since the international market of fresh milk has already been crowded, TH true milk will better firstly export beauty and health care products only. With the intention to provide both healthy nutrition and beauty preserving elements, the product is aimed to ladies’ class. In particular, this kind of milk is suitable for women at the age of 18 and older in which help them slow down aging process. Due to the nature of the product, potential dominated customers can also be the young ladies with high living standard that willingly pay for enhancing-beauty products at high prices. Also, for women at these ages in general, they are in need of providing certain amount of Phytosterol, Collagen, and Calcium so drinking this kind of milk is a convenient way for them to a healthy life and properly protected skin. This can be considered as a niche market in which so many of current milk producers solely focus on regular market of children and the elders.

15

CONCLUSION It is undeniable that TH True Milk is standing tall as a phenomenal business and one of the most admirable companies in Vietnam. As the statement of Ms. Thai Huong, Chairman of TH Group, TH True Milk has no rivals and they are creating a new path which owns a number of customers share and market share, do not need to compete with any opponents available. Their path is to create the first Vietnamese 100% natural fresh milk with the passion to nourish the Vietnamese’ physical and soul. Dairy market of Vietnam and International markets, especially ASEAN still implied lots of opportunities. Whether it is international or domestic market, companies are required to have clear understanding and realizing the current situation of the place they are in and utilizing the nature of markets, turning demerits into merits are needed for firms to succeed. Developing intensive market research, sticking to core competency and taking advantage of the fertile market of ASEAN community are what TH True Milk should do to achieve international success. Until now, TH True Milk is still identified to be a young company but achieve a big success in dairy industry and mark the TH True Milk brand name in the customers’ mind. TH True Milk’s story is longer and longer and therefore, it needs to be written by next success that is surely contributed mainly by the customers’ encouragement.

16

REFERENCE Dairy in Thailand, 2015. Available from: [26 September 2015]. Nguyen, N. (2013). TH True Milk - 4Ps. [online] Academia.edu. Available at: http://www.academia.edu/9593203/TH_True_Milk_-_4Ps [Accessed 30 Sep. 2015]. Nguyen, T. (2013). TH true MILK sponsors kids' entertainment programme | Corporate News, Latest Business. [online] Vietnam Investment Review. Available at: http://www.vir.com.vn/th-true-milk-sponsors-kids-entertainment-programme.html [Accessed 30 Sep. 2015]. Sơn Ngọc 2015, ‘Cuộc chiến sữa bò: TH true Milk có "hụt hơi" trước Vinamilk?’, Nhịp sống thời đại. Available from: [28 September 2015]. TH true MILK, (2015). TH true MILK. [online] Available at: http://www.thmilk.vn/common/home [Accessed 30 Sep. 2015]. Thao, V. (2015). TH true Milk-A Leading Brand in Vietnams Fresh Milk Market. [online] Vietnam.vnanet.vn. Available at: http://vietnam.vnanet.vn/english/th-true-milk-a-leadingbrand-in-vietnams-fresh-milk-market/190058.html [Accessed 30 Sep. 2015]. Thùy Liên 2015, ‘Tôi sẽ đưa TH True Milk ra thế giới’, Đầu tư Online. Available from: < http://baodautu.vn/toi-se-dua-th-true-milk-ra-the-gioi-d24881.html> [27 September 2015]. Vũ Thu 2015, ‘TH true MILK tham gia hội chợ thực phẩm tại Nga’, Thời báo kinh doanh. Available from: [25 September 2015]. Vy Thảo 2015, ‘TH True Milk – Tự hào sữa Việt’, Báo ảnh Việt Nam. Available from:

[25 September 2015].

17