Vietnam Overseas

Wednesday saw the price of some powdered milk brands increase by five to seven percent following the surge of famous brands such as Vinamilk, Abbott and Dutch Lady onto the market.

For instance, Old-Lac Milk 1, 2, 3 produced by the HancoFood Company soared from VND96,000 to VND102,000 per can, whilst Dolac DHA with added calcium and vitamins rose from VND51,000 to VND55,000 per can and the price of regular milk products has been gradually on the rise for some time.

Vietnamese consumers have to pay a premium for milk products, twice as much as other countries in the region.

Representatives of the milk companies explained that the price increases are due to the rising price of imported ingredients.

However many feel this reason is unsatisfactory. The real problem is that the prices for new products will be even higher than the current products once introduced into the market.

Milk companies are launching new products all the time, advertising new nutrient additives such as DHA, an omega-3 essential fatty acid.

These added nutrients usually add VND50,000 to the price of those without; hence milk companies spend hundreds of thousands of dollars per year on advertising and this money comes from the increased price of the basic products.

Furthermore, enterprises pay tens of millions of dong for 30-second television adverts and consumers are bearing these high advertising costs in the purchasing price of the basic products.

Very few import companies import powdered milk ingredients, a contributing factor to the hike in retail prices.

VietNamNet Bridge, posted June 23, 2007,(Source: SGGP)

In a bid to keep domestic customers, some powdered milk suppliers have decided to keep prices at current levels, though other foreign suppliers have increased retail prices.

Companies such as Mead Johnson’s Enfa have not changed the price of their products and the company said it does not plan to increase any retail prices.

Prices, including value added tax, have been set at VND81,000 for a 400g Enfamama box, and VND162,000 for a 900g Enfamama. The prices for Enfagrow products are between VND73,700 and VND190,000 a box depending on type and weight.

In a bid to attract a greater share of the domestic powdered milk market, Dutch Lady, a Netherlands firm, and Vinamilk, the largest domestic milk company, will also follow suit and not raise prices.

Dumex, a Danish powdered milk supplier raised prices of its powdered milk products since January 24 due to the release of new products and increasing weight of a box, the company said.

The selling price is VND51,700 for a 450g Dumex 1 box and VND58,900 per 450g Dumex 2 box.

Abbott, a US firm, has raised retail prices by 6-10 per cent for all varieties of powdered milk products since March 1, the company said.

The prices of the most popular and expensive powdered milk products on the domestic market are VND228,000 for a 900g Gain Advance IQ box, VND234,500 for a 900g Similac Advance IQ box, and VND102,500 for a 400g Grow Advance IQ box.

VNS, posted March 25, 2005

Mead Johnson, the dairy product subsidiary of Bristol-Myers Squibb, has started production at its first powdered milk plant in Thailand that will serve as a base to increase the company’s business in Southeast Asia, the Bangkok Post reports.

According to the report, the US company is hoping that the US$10million (€11.4m) plant will help it increase its market share in the increasingly competitive powdered milk market in Thailand.

Local production will substitute some products that have previously been imported from factories in the US, Australia and New Zealand for distribution in Thailand.

The plant’s output is expected to be exported to neighboring countries, such as Vietnam, Singapore and Malaysia, starting from the middle of this year. Mead Johnson plans to produce other lines of dairy products including infant powdered milk and UHT products.

Anakkawat Kowathanakul, local marketing director of Mead Johnson’s nutritional division, said Thailand was chosen as the production base for Southeast Asia because it was a convenient transport centre and had a milk market that was quite large when compared with other countries.

“To have our own factory here would help increase our management efficiency in terms of launching new products, transport and the development of new flavors to match consumer demand,” said Anakkawat.

Although the import tax on finished products had been cut, the cost of the company’s products is largely unaffected because raw milk still has to be imported from New Zealand.

The Chon Buri plant is the third Mead Johnson powdered milk plant in Asia, with the two others in China and the Philippines. All of the capacity from the Chinese factory serves the domestic market while some milk from the Philippine operation is exported to Indonesia and Malaysia.

Anakkawat said that due to the economic downturn, the Thai powdered milk market for children aged above one year grew by just 2-3 per cent in value last year.

“The market for powdered milk will grow again within two years of the economic recovery. At the moment we can’t see clearly when the economy will recover, but the market for infant powdered milk has improved, contracting only 8 per cent last year compared with a 10 per cent fall in the previous years,'’ he said.

Currently, Nestle (Thailand) has a 30 per cent stake in the one-billion-baht a year local powdered milk market, followed by Mead Johnson and Dumex, with 20 per cent each. Mead Johnson has a 5-6 per cent share of the total UHT milk market, worth an estimated six billion baht a year. Yesterday it introduced the new Alacta-NF Calsibank formula for children aged one to six years. The new products are expected to help boost Mead Johnson’s share of the powdered milk market by 2-3 per cent this year.

Posted March 13, 2002, http://www.food-decisions.com

Posted Reuters, Fri Sep 28, 2007, By Chakradhar Adusumilli

The scrap metal industry is riding a wave of consolidation in the wake of limited supply and a sharp spike in iron ore prices, with at least two U.S. companies being touted by analysts as potential takeover targets.

Ferrous scrap, which is also used to make steel, is now becoming an attractive commodity with China, the largest producer of steel, facing a shortage of iron ore supply.

“Scrap suppliers are likely to continue down the consolidation path and companies such as Schnitzer Steel and Metalico remain potential takeover targets,” Eric Glover of Canaccord Adams said by phone.

Both Schnitzer Steel Industries Inc (SCHN.O: Quote, Profile, Research) and Metalico Inc (MEA.A: Quote, Profile, Research) were not available for comments.

Schnitzer Steel’s shares have risen more than 67 percent and Metalico about 70 percent this year.

With few metal recycling companies in the U.S. large enough to meet the demand for scrap, global players are looking to consolidate their businesses in the country.

ALMOST A DEAL A WEEK

Earlier this week, Australia’s Sims Group Ltd (SGM.AX: Quote, Profile, Research), the world’s largest recycler of scrap metal, acquired Metal Management Inc (MM.N: Quote, Profile, Research) in a $1.6 billion deal to strengthen its position in the North American market.

Sims has been on a shopping spree, acquiring stakes in at least three metal recyclers across Europe and the United States so far this year.

The Metal Management deal will boost the combined company’s ferrous throughput to about 9 million long tons/year. This is about a sixth of the total US scrap market of around 65 million lt/year.

Sal Tharani, analyst with Goldman Sachs, said the deal is a positive for the scrap industry, given its fragmented nature.

Tharani said the merger news would benefit scrap processor Schnitzer Steel and, to a lesser extent, Commercial Metals Co. (CMC.N: Quote, Profile, Research), which derives about 20 percent of its revenue from scrap.

In a note to clients, analyst John Rogers of D.A. Davidson & Co. said the Sims acquisition will increase investor interest in Schnitzer. Rogers, who has a “neutral” rating on the stock, raised his price target by $7 to $70.

“Although we do not see Schnitzer as an acquisition target, ongoing industry consolidation may provide additional support for these shares,” Rogers added.

In June, Metalico Inc (MEA.A: Quote, Profile, Research) acquired Tranzact Corp, a recycler of molybdenum, tantalum and tungsten scrap. German metal recycler Interseroh (INSG.DE: Quote, Profile, Research) has also entered into a deal with a U.S.-based company.

It seems like almost every week there is some acquisition usually of private companies because most of the industry is not public, Glover said.

SOARING PRICES

Iron ore prices have risen for five straight years, driven by strong demand from the booming economies of China and India.

Spot prices in China and India have nearly doubled this year.

U.S. spot market prices for ferrous scrap were $327 per gross ton in September 2007, up about 9.3 percent since February, according to metalprices.com.

In the short term, high iron ore prices generally lead to upward pressure on ferrous scrap prices, as the positive economics of using ferrous scrap often lead to increased demand, Glover of Canaccord Adams said.

“On a longer-term basis, sustained high prices for iron ore are likely to make ferrous scrap an increasingly valuable commodity,” Glover added.