strategy - nutifood

• Tran Quang Hoan• Huynh Diep Nhu Ngoc• Pham Ngoc Huyen• Phan Do Le Dung • Truong Nguyen Diem Trang

Agenda

• Introduction– Company’s background

• Environment Scanning– External Environment: Opportunities & Threats– Internal Environment: Strengths & Weaknesses

• SWOT• Critical Success Factors• Strategy Formulation– Strategic Alternatives– Recommended Strategy

Introduction

• Founded in 3/2000, under the name Dong Tam Corp.

• 9/2003, company was named an international brand name - Nutifood.

• Manufacturing and selling dairy products and baby food

Products

• Categories:– Powder milk– Special treatment– Liquid milk• UHT milk• Drinking Yogurt

• More than 35 SKUs of product.

Performances

Within a few years of operation, Nutifood gains• “Sao Vang Dat Viet” Award• Top 100 Vietnamese strong brands• Top 4 milk products• Vietnamese High quality products

2008 (VND) 2007 (VND)Revenues 522b 501.46b

Profit after tax 17b 7.364b

Source: Nutifood

Vision, Mission and Activities

• Vision– The top company to provide the best

nutrition products and services.• Mission– “One glass of milk contributes to the

development of human genes”• Activities

– Being a Founder for many Charity Funds for the poor patients and poor students.

– Being a Sponsor for many campaigns promoting healthy benefits (e.g. walking campaign for better health).

Environment Scanning

• External Environment: Opportunities & Threats– PEST Analysis– BCG Matrix Analysis– Porter’s Five Driving Forces Analysis

• Internal Environment: Strengths & Weaknesses– Structure– Leadership style & Culture– Resources

PEST – Economic Factors

Increasing consumption and demand of high quality food, especially in urban areas.

Source : BMI ( Business Monitor International LTD)

In general, economic slow down decreases buying power.

Opportunities

Threats

PEST – Social Factors

Source : BMI ( Business Monitor International LTD)

Number of targeted consumers (4-40 years old) is increasing.

Consumers’ worry of melamine contaminated food.

Increasing population in urban areas.

PEST – Social Factors

Changing lifestyles -> Increasing demand of convenience, healthy food.

Growing number of MGR outlets, in urban areas.

BCG Matrix Analysis

• “Production over the same period more than tripled to 228,000 tonnes, as more and more milk is sought for the manufacture of processed dairy products, the most popular being powdered milk, condensed milk and yogurt.” (Source: Vietnam Food & Drink Report Q1 2009, Business Monitor International Ltd)

• Moreover, market sizes of yogurt and sour milk drink in Vietnam:

(Source: Euromonitor)→ Powdered milk & Yogurt have HIGH market growth rate

Vietnam 2003 2004 2005 2006 2007 2008

Yogurt and sour milk drink (VND bn)

942.1

1052.6 1193.3 1363.6 1567.8 1815.4

BCG Matrix Analysis

• Industry growth forecast:

(Source: HSC Report)→ UHT milk has LOW market growth rate• “Nutifood holds a 2.9% share of the whole dairy market and

enjoys a 5% market share for powdered milk and infant cereals.”→ Nutifood has LOWER market share for its UHT milk & Yogurt and

HIGHER market share for its powdered milk

Vietnam 2008 2009 2010 2011 2012

Liquid milk (including fresh milk & UHT milk)

22% 21% 20% 19% 18%

BCG Matrix Analysis

Powdered milk

UHT Milk

YOGURT

OYES! (Drinking Yogurt)

• Porter’s 5 Forces Analysis

OYES! (Drinking Yogurt)

• Direct competitors → HIGH– Dutch Lady (Dutch Lady drinking yogurt, YoMost)– Vinamilk (Vinamilk drinking yogurt, Susu)– Nestlé (Nestlé drinking yogurt)– Hanoimilk (Yoha, Yotuti)

OYES! (Drinking Yogurt)

• Substitutes → HIGH– UHT Milk, Soya Milk, Drinking chocolate, other

drinks• Threat of New Entrants → LOW– Economic crisis– Hard to set up distribution– Transport difficulties

OYES! (Drinking Yogurt)

• Bargaining Power of Suppliers → LOW– Ingredients easy to purchase

• Bargaining Power of Buyers → HIGH– Supermarkets, wholesalers, retailers, coffee

bars, end-users

OYES! (Drinking Yogurt)

• Threats– Be eaten by strong & well-known brands– Future market can be saturated

• Opportunities– Create products diversification & differentiation

Resources Capital-Factory condition

• Registered capital: VND 120 billions • The factory condition:

Half of 8 hectare: producing milk powder and liquid milk

2 main modern technological systems: over VND130 billions

packing on line automatically closed: Tetra Pak (Sweden) Wolf (German)

Source: Nutifood

Resources – R&D

– ISO 9001:2000 (issued by BVQI in 2/2004 and reissued in 2/2007)

– GMP (Good Manufacturing Practice Regulations)– HACCP (Hazard Analysis and Critical Control Point)

(issued by Quacert in 12/2006)– A group of 30 QC staff (checking raw material inputs,

semi-finished products, and experimenting microbiology in laboratory)

Focusing on R&D

Resources – Networks

• Suppliers: Fonterra (New Zealand), Muray (Australia), Keivit (Holland), Orafti (Belgium), Solae (America) and Foritech (Malaysia)

• 4 distribution channels: Retail channel: 96 exclusive distributors and over 60.000 retail

shops, convenience stores. Supermarkets: Metro, Co-op mart, Big C, Maximart, Citimart,

Vinatex, and Intimex. Schooling channel: 1200 kindergartens and elementary schools Hospitals and medical centers

Wide networks of suppliers and distributors

Structure

Board of Directors

CEO

Sales

Manager

Marketing Manager

Health

Relation

Manager

Manufacturin

g Manager

R&D

Manager

Technology Manager

HR Manager

Financia

l Manager

Surveillance Sector

Union Committee

Leadership Style

• “Share power in the control over the company from making decision to strategic plans.” (Tran Thi Le, former CEO)

• Young but Not Superficial.• Creative but Realistic.• “Creating favorable conditions to promote

individual potentials.”• “Staff deal with each other by

Understanding and Self-responsibility.”

Culture

• A culture of high-ranking human resources with experiences working in top multi-national corporations.

Efficiency in operational structure

Value propositions

• Business Philosophy: Every product is not for profit, but for the high demand of nutrition from customers

Strengths & Weaknesses

The reputation of quality-oriented company

R&D focus leading to poor marketing strategy

SWOT

STRENGTHS The reputation of quality-oriented company. Efficiency in operational structure. Focusing on R&D Wide networks of suppliers and distributors

WEAKNESSES R&D focus leading to poor marketing strategy Poor differentiation for some product lines (e.g. Drinking Yogurt, UHT Milk)

OPPORTUNITIESCreate products diversification & differentiation. Increasing consumption and demand of high quality food, especially in urban areas.Number of targeted consumers (4-40 years old) is increasing.Increasing population in urban areas.

THREATS Be eaten by strong & well-known brands Future market can be saturated In general, economic slow down decreases buying power.Consumers’ worry of melamine contaminated food.

Critical Success Factors

• Products’ quality• Focusing on Research and Development

(R&D)• Trusted Brand• Culture – Community-Oriented• Distribution Network

Strategic alternatives

Nutifood’s products are famous mostly for nutrition and special treatment purpose.

The brand name is not as popular as some dominants.

Strategic Alternatives

• To popularize the brand name, Nutifood can focus on:– Marketing– Diversification of products

Diversification of products

Recommended strategy - Nuti food Yogurt

Fruit Yogurt (with 4 flavors: kiwi, pear,

pineapple, strawberry)Cheese Yogurt

Feature One layer of yogurt and one layer of fruit in mixture Natural taste of fruit

Cheese and yogurt in mixture

Nutrition benefit for health

Target market

14 – 40 years old 2 – 13 years old

Packaging - Transparent packaging (so that layers of fruit can be seen)-Size of 8 x 5 x 4 cm- One block of 4 packages

- Normal packaging like other yogurts- Small size of 3 x 3 x 5 cm- One block of 6 packages

Design - eye-catching -colorful

Recommended strategy - Nuti food Yogurt

Fruit Yogurt (with 4 flavors: kiwi, pear, pineapple,

strawberry)Cheese Yogurt

Supplier -fruits: from farmers-Packaging: Tetra Park (existing supplier)

-cheese: Import-packaging: Tetra Park

Distribution: existing distribution channels with focus on

- canteen of university, high school, office, etc.

- Canteen of kindergarten and elementary schools

Proposed promotion plan

-Ads (esp. on VTV6, HTV), banners, print ads (on HHT, Muc Tim, Phong Cach, Phu Nu, etc.)-PR events on the benefits of natural fruit on health and skin beauty

-ads (esp. on Yeah1, Phunu), banners, print ads (esp. on Nhi Dong, Tiep Thi Gia Dinh, etc.)-promotional activities: toy, gift.

References

• Vietnam Economic Stimulus ( http://www.vinase.com/forums/showthread.php?t=2701 )• BMI Vietnam Food and Drink Report 2008/2009 (

http://www.vinase.com/forums/showthread.php?t=2522 )