Food producer KIDO Group (KDC) announced on Tuesday it is entering the beverage industry by setting up a joint venture with dairy giant Vinamilk.

The announcement, made at the Kido Frozen Foods Joint Stock Company (Kido Foods)’s annual general meeting in HCM City on Tuesday, said the two companies had signed a memorandum of understanding to set up a joint venture, Vinamilk-Kido Beverage Joint Venture Company Ltd (Vibev), with Vinamilk holding 51 per cent and KDC owning 49 per cent.

Kido Foods is a subsidiary of KIDO Group.

The joint venture will explore the beverages and ice-cream markets.

Sharing about the joint venture, Mai XuânTrầm, deputy general director of KDC, said the mission of the new company would be to build strong brands for Vietnamese beverages and offer consumers a wide choice of modern tastes while ensuring nutrition, quality and safety.

KDC said its first products would be introduced soon, possibly in the third quarter.

Trầm said the two companies had strong distribution channels with over 1,000,000 points of sales.

The joint venture would also utilise Vinamilk’s export network in 30 countries and help the two companies better control of raw material prices, he said.

The partners expect the joint venture to grab a 50 per cent share of the domestic ice-cream market.

Merger plans announced

At the meeting on Tuesday, Trần Lệ Nguyên, general director of KIDO Group, announced that more member companies, including Tường An Vegetable Oil Joint Stock Company (TAC), Việt Nam Vegetable Oils Industry Corporation (Vocarimex) and Kido Foods, would merge with the KIDO Group.

On Tuesday, shareholders of Kido Foods voted yes to the merging plan into KIDO Group.

Kido Foods sought its shareholders’ approval for a merger with KIDO Group to better exploit the parent company’s financial and managerial advantages.

According to the merger plan, the swap ratio will be 1:1.3, or one share of Kido Foods for 1.3 shares of KIDO Group.

After the merger, Kido Foods will become a one-member limited liability company wholly owned by KIDO Group.

The new shares will be listed on the Ho Chi Minh Stock Exchange.

Talking about the merger at the meeting, Nguyễn Thị Kim Liễu, deputy general director of KIDO Group, attributed it to both internal and external reasons.

Kido Foods had achieved good growth but failed to meet targets due to the lack of resources.

“The global economy is volatile due to epidemics, trade wars, climate change.”

There was a restructuring of global supply chains, offering Việt Nam an opportunity, she said.

Furthermore, consumer habits were changing, forcing companies to adjust their business models, she said.

“With strong financial, strategic and human resources, KIDO Group has the capacity to support Kido Foods’ development.”

Kido Foods reported revenues of VNĐ1.38 trillion (US$59.2 million) in 2019, up 10 per cent. The pre-tax profit was VNĐ185 billion ($7.9 million), up 488 per cent.

In 2020 the company targets revenues of VNĐ1.6 trillion ($68.7 million) and profits of VNĐ200 billion ($8.6 million). — VNS