Vilomix said it will own 70% and Hung Vuong Corporation 30% of the facility, production from which is intended to meet the Vietnamese company’s growing focus on pig production.
Peter Iversen, CEO of Vilomix, told FeedNavigator the partnership with Hung Vuong followed extensive negotiations between the two players over the past six months. “We were contacted initially by Hung Vuong as it was interested in getting know-how about Danish pig genetics,” he said.
Ho Chi Minh headquartered, Hung Vuong, which turned over around DKK 8bn (USD$1.2bn) in 2015, currently produces 1.5m tons of fish feed for its pangasius fish farming and export business, but has lofty ambitions in terms of the pig sector.
It is aiming to have production based on 100,000 sows with Danish genes by 2020.
“Hung Vuong is in the process of building a new feed factory with 500,000 ton capacity. Our new factory will supply premix and vitamins for existing and new feed production facilities,” said Iversen.
If all approvals and permits fall into place according to plan, Vilomix said building of the plant will get underway next month, with production runs to start in April 2017. It has formed a new subsidiary in Vietnam to manage the building process under the name of Vilomix Vietnam LLC.
Supply goals
The 70/30 premix and vitamin joint venture factory is also set to supply the wider Vietnamese pig feed market.
“Vietnam currently has over 4.2 million sows - that’s 4 times more than in Denmark - and there are 225 feed producers in Vietnam. It’s these very producers that we want Vilomix Vietnam to supply products and services to in partnership with Hung Vuong,” said Iversen.
Eventually, though, the goal is expansion into production of poultry and dairy cow premixes for other compound feed producers operating within the Vietnamese market, he said.
According to official Vietnamese data, meat consumption in that country should grow by 2.9% annually until 2022.
The Vietnamese feed market is forecast to reach US$10.55bn in value by 2022, noted a report from Grand View Research.
Vietnamese meat consumption patterns though, said the market analysts, are quite atypical when compared to other developing countries, due to the high level of pork meat bought. They say this trend could be linked to rising incomes.
Data on consumption figures for pork meat in 2014 in the country of 90 million people was 28.8 kg per capita; poultry meat came in at 12.7 kg/capita, and beef and veal 9.6 kg/capita.
And Vietnam, said the research group, is still very dependent on foreign imports with three quarters of the feed additives used in livestock production imported.
This is Vilomix’s first venture into Asia, and as regards expansion plans for other countries in that region, Iversen said: “Our only focus right now is to get the production facilities [of the Hung Vuong JV] up and running to the satisfaction of suppliers and customers. This is our ambition for Asia right now.”
Chairman of the board of Vilomix Holding A/S, Christian Junker, noting the enormous commercial opportunities within the Asian markets, said the deal means the Danish firm can test itself on a remote market for the first time.
“This investment can actually be the first step towards transforming Vilomix from an international to a global player in the premix and vitamin sector, which is dominated by major global corporations,” he added.
Danish Agro acquires Kalmar Lantmän
Vilomix had turnover of €308m last year, with product sales in over 25 different countries.
It is part of the Danish Agro group, which produces around 3m tons of feed in, primarily, the Scandinavia and the Baltic Sea region, and which recently confirmed it had received regulatory approval for its acquisition of Swedish agribusiness, Kalmar Lantmän.
The Kalmar business will now be integrated into the group’s Swedish subsidiary, Swedish Agro AB.
The purchase, said Danish Agro, includes the “most modern feed factory in Europe” on the harbor in Kalmar, with a capacity of 275,000 tons. It plans to expand the feed production facilities there to increase the number of Swedish farmers it supplies.
Commenting on the Kalmar acquisition, Iverson said: “Feed manufacturing and agribusiness as a whole have become an international, if not global, industry on which terms we compete. In order to be able to deliver the best products at affordable prices, you need to have a significant distribution power in order to match the big global suppliers. The acquisition of Kalmar Lantmän will help us in this endeavor. Furthermore, through internationalization, we are able to build know how and compare best practice to the benefit of the individual farmer.”