Nestle offloads dairy plant to milk core brands

The move continues the company's strategy within Asia of offloading its milk​ businesses to concentrate only on higher value-added products, following a similar sale of its dairy facilities in the region last year. Under the agreement Anco will continue to produce Nestlé branded yoghurts and pasteurised milk through an ongoing licence with the company, at the site in the Ha Tay province. Alongside licensed production, Anco will also use the facility to capitalise on the growing market in the country for fresh milk products. The 57 workers currently employed at the site will either be offered alternative employment within Nestlé's Vietnamese operations, or to take up employment with Anco at the facility. Nestlé declined to discuss the financial details of the move, though welcomed the agreement as an important step in maintaining both employment and a base for its brands in the country's dairy market. However, the decision bellies growing optimism in the country's dairy sector, which has become increasingly important to the country's food processors. According to industry analysts Euromonitor, the dairy sector is one of the fastest growing sectors in Vietnam's packaged food category, with estimated 2006 sales (in current value terms) of VND 5375.1 billion (€267 million). Milks make up the majority of these sales. The dairy market is forecast to reach VND9560.7 billion in 2010. Distribution improvements and economic growth will also contribute to growth in dairy consumption. For all the promise of the country's dairy products however, Nestlé appears keen to move away from milk production to higher cost markets like coffee. Last October, Fraser & Neave, the Malaysian beverage and glass group, signed a RM310 million (67.2m) deal with Nestlé to produce and sell the Swiss group's liquid milk products in south-east Asia. This has seen F&N take over Nestlé's canned milk brand in Thailand, as well as the smaller UHT, and chilled dairy and juice business. As with the Anco deal, the company has also licensed its milk brands to F&N as well as selling its production facilities and equipment to the Asian company. In the markets of Malaysia and Singapore, Nestle also transferred its Tea Pot milk brand to F&N, which will also be licensed to manufacture and distribute the group's Ideal, Carnation and Milkmaid brands in these markets.