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The two have recently signed a strategic partnership in Ho Chi Minh City to increase presence in the market. Accordingly, KDC will distribute 60,000 tonnes of Bien Hoa Sugar in 2018. The sum is projected to reach 200,000 tonnes by 2020.
Under the plan, KDC will exclusively distribute some of TTC’s refined sugar products via its network of 200 distributors and 450,000 retail points. In addition to distribution, KDC will be responsible for achieving annual sales targets and expanding product coverage. Meanwhile, TTC will produce sugar and grant distribution rights over some of its products to KDC.
Dang Van Thanh, chairman of TTC, said that KDC has achieved impressive an performance with charter capital of over VND2.5 trillion ($110 million) and equity of VND8 trillion ($352 million). In addition to its strong financial capability, KDC has been active in the equitisation process. The company now has 10 subsidiaries and six affiliated companies.
Bien Hoa Daily White Sugar will be the first TTC product distributed by KDC. In the first phase starting from January 2018, KDC will display Bien Hoa Daily White Sugar on its shelves across the country with a yearly sales target in mind.
TTC will start the distribution of Bien Hoa Daily White Sugar in its chain from December 20, 2017. For the second phase, TTC will give KDC franchise rights to produce a number of exclusive sugar products.
The tie-up will diversify KDC’s portfolio of consumer products from instant noodles, dipping sauces, and beverage to sugar. The company will also optimise its logistics operations by transporting more essential consumer products with each ride.
Moving forward, KDC will utilise its cooking oil distribution network to sell instant noodles, dipping sauces, and beverages, following sugar distribution. KDC and TTC will explore new ways to do business in the second phase.
KDC currently operates six factories specialised in frozen food, ice cream, and cooking oil. Meanwhile, TTC has six sugar mills in the central region, the Central Highlands, the south-eastern region, and Laos with a total processing capacity of 46,100 tonnes of sugarcane per day.
TTTC Tay Ninh Sugar has recently merged with Bien Hoa Sugar to create the biggest sugar producer Vietnam. The post-merger company has increased capacity at its major sugar mills TTC Tay Ninh and Bien Hoa by 60 per cent.
Specifically, the TTC Tay Ninh factory will raise its annual processing capacity from 200,000 to 300,000 tonnes. Meanwhile, the Bien Hoa-Ninh Hoa factory will increase its annual processing capacity from 100,000 tonnes to 180,000 tonnes. The expansion plan has a total investment capital of VND368 billion ($16.19 million).
Tran Que Trang, deputy general director of TTC, is upbeat about the outlook of the domestic sugar market. Direct sugar consumption in Vietnam is estimated at 35,000 tonnes per month or 420,000 tonnes per year. Average sugar consumption per capita in Vietnam amounts to 12-14 kilogrammes per year.
According to Trang, Bien Hoa Sugar has distributed 10,000 tonnes of sugar since 2010. The firm plans to increase the output to 100,000 tonnes of sugar in 2017 and expects to reach an annual output of 1 million tonnes in the coming time.
TTC is currently holding 40 per cent of the local sugar market with VND22.64 trillion ($996.16 million) in revenue and VND1.5 trillion ($66 million) in profit.