One of the pioneers in Vietnam’s instant noodle market, Colusa-Miliket Foodstuff JSC, the producer of the iconic ‘two-shrimp’ noodle brand, has witnessed its market share dwindling from 20% in 2006 to just 2% presently.
It is now planning to do a major restructuring of its business and invest more on expansion and innovations to spruce back its market presence. As a result, it will be slashing down its dividends and will retain earnings for equipment upgrades and new factory development to improve operational efficiency and trim labor costs. Shareholders blame the poor performance to the current overcapacity at its labor-intensive factory as well as cramped warehouse which are not able to catch up with higher demand. The company often has to turned down orders, while existing orders are often delayed by weeks. The company might also need to phase out less profitable Mi Ky noodle line, and focus on newer products.
Despite all the above challenges, the company continues to enjoy a stable export market.
Its Chairwoman Mai mentioned that one of the challenges for growth is securing capital for expansion, as the company has 2 major state-owned shareholders which are not so keen in attracting outside capital. Mai said, “If we had received stronger backing from state shareholders earlier, Miliket could already have a new factory, a new office, and revenues exceeding Dong 1 trillion (US$38.3 million).”
