Capital from global investors is flowing one after another into Vietnam's food-processing sector. Symbolic of this is the acquisition of management control of Minh Dat Food by South Korea's CJ Group. CJ CheilJedang acquired about 65% (64.9%) of the company for about US$13.44 million (about 2.08 billion yen), bringing Vietnam's top maker of meatballs and fish balls under its wing. As investors from Japan, South Korea and Singapore reach for Vietnamese food makers one after another, a wave of industry reorganization is spreading.
CJ brings meatball leader Minh Dat under its wing
Minh Dat Food is Vietnam's largest private manufacturer of meatballs and fish balls and has held the largest domestic market share in the field. CJ CheilJedang acquired about 65% (precisely 64.9%) of the company for about US$13.44 million and renamed it "Minh Dat CJ Food." Noting that meatballs and fish balls are standard ingredients enjoyed across Southeast Asia, CJ positions Vietnam as a stable growth market and draws a strategy of rolling out ready-made foods across Southeast Asia.
Background: overseas investors flooding into Vietnamese food processing
CJ's entry is not a one-off move. G.C Food, which processes aloe and nata de coco, has received overtures for joint management and joint development from multiple investment funds and strategic partners, mainly Singaporean. The CEO of Sa Ky Foods revealed that investors from Japan, South Korea and the US have shown interest in acquiring a majority (over 51%). Partnerships with Japanese general trading companies such as Sojitz and Marubeni are also advancing, and Vietnamese companies are gaining access to advanced technology and sales networks.
The livestock and meat field itself is also expanding, and De Heus × Hung Nhon's high-tech poultry-processing plant, large-scale investments with an eye on exports continue. For overseas capital, Vietnamese food processing is becoming an attractive market on both the domestic-demand and export fronts.
The CJ–Minh Dat deal in data (yen conversion)
| Item | Details | Yen conversion |
|---|---|---|
| Shares acquired | About 65% (64.9%) | — |
| Acquisition amount | About US$13.44 million | About 2.08 billion yen |
| Target business | Meatballs and fish balls | — |
| Domestic share | Largest in the field | — |
| New company name | Minh Dat CJ Food | — |
Local reaction
Industry figures view it positively: "With a major like CJ taking management control, quality control and the export system will fall into place at once." The CEO of Sa Ky Foods says, "We've received overtures for majority acquisition from investors in several countries. Capital tie-ups lead to acquiring technology and sales channels." On the other hand, local makers also express a cautious view: "If oligopoly by foreign capital advances, they could seize the initiative on sourcing prices and transaction terms."
Impact on Japanese buyers and food makers
Foreign-capital entry lifts the quality control and export-handling capability of Vietnamese food makers. For Japanese food makers and PB developers, it means an increase in reliable processing-partner options, while popular suppliers are apt to come under foreign ownership, potentially changing bargaining power over transaction terms. Including supply networks via trading companies such as Sojitz and Marubeni, it becomes important to grasp the capital structure of Vietnamese processing makers and then build a sourcing strategy.
Ripple effects on the industry
The CJ case shows that Vietnam's food-processing sector has changed its valuation from a "subcontract production base" to an "investment target with brands and markets." If moves by Japanese, South Korean and Singaporean capital to take majority stakes continue, consolidation and sophistication of local makers will accelerate. Investment that evaluates brand and sales channels together with production capacity, not just the latter, is becoming mainstream.
Practical information
| Item | Details |
|---|---|
| Acquiring company | CJ CheilJedang (South Korea's CJ Group) |
| Target company | Minh Dat Food (Vietnam) |
| Main product | Meatballs and fish balls |
| Other interested investors | Japan, South Korea, US, Singapore |
| Related trading companies | Sojitz, Marubeni |
Summary
CJ Group acquired about 65% of Vietnam's top meatball maker Minh Dat Food for about US$13.44 million, entering meat processing in earnest. Asian funds and Japanese companies are also showing interest in G.C Food and Sa Ky Foods, and Vietnam's food-processing sector has entered a period of reorganization by foreign capital. Japanese makers are required to have a sourcing strategy that discerns the capital structure and supply network of partner companies.
Source: FoodHQ
