The recent acquisition of the remaining 30% stake in Driftwood Dairy Inc., one of California’s largest processors of milk and dairy products based out of the City of El Monte, by Vinamilk is a textbook example of how to enter a foreign market.
Initially, Vinamilk purchased a 70% interest in Driftwood Dairy in December 2014 with options for the remaining 30% in a deal originally reported to be worth more than US$70 million.
However, sources have since revealed the actual price was more likely closer to US$30 million, though specific details of these types of private equity transactions are rarely if ever fully disclosed.
Driftwood Dairy was previously owned by a Newport Beach private equity firm by the name of Marwit Capital, which procured its 100% stake in the company in 2006.
Vinamilk, whose legal name is Vietnam Dairy Products Corp. has its home office located in Ho Chi Minh City, Vietnam.
Driftwood Dairy has a solid reputation as being an established dairy company and the largest supplier of milk and juice to grades kindergarten through the 12th in school districts throughout southern California.
Chris Britt, Marwit’s managing partner, said it could not have found a better partner in Vinamilk.
“This was truly one of the most intriguing transactions that I have had the pleasure of being involved with in more than 20 years in private equity,” Britt said, in a statement released to the press.
“And I believe one of the most significant transactions to date involving the acquisition of a US business by a leading company based in Vietnam.”
The tipping point purportedly came for Vinamilk most recently after its introduced two of its dairy products – condensed milk and creamer products – at the Summer Fancy Food Show in New York, in the US this past June.
Based substantively on the positive feedback received at that event and successful test-marketing of the products, a subsequent decision was made by Vinamilk management to take the plunge into the dairy market in the states of Arizona and California.
This expansion marks a significant step forward for Vinamilk in its quest to gain a toehold in global markets such as the US and lights up the pathway for future Vietnamese companies.
One of the basic tenets of ‘going global’ is that if a company, such as a Vietnamese company, desires to successfully sell their product in a foreign market, they first need to invest in and have a base presence in that foreign market from which to develop.
For Vinamilk, they have unequivocally now established their base in the US market with the acquisition of Driftwood Dairy.
Meanwhile, Mai Kieu Lien, CEO of Vinamilk, has announced the company will focus on additional overseas investment in the coming time in the US as well as other markets in its quest to build global market share.
Quality of products, fair prices and good service are core values that has enabled Vinamilk to successfully compete with its high quality foreign competitors, Ms Lien proudly has stated.