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Published on October 31, 2007

The move is aimed at achieving a measure of control over the company's supply of raw materials, so that it may expand production of its canned fish in sauce.

Deputy managing director Surasak Eiamsumang said the company's joint venture, Royal Food (Vietnam), would initially operate around five fishing ships.

"If we want to expand our production, we need to manage our fish supplies to ensure product quality and price control," he said.

He said the start of the fishing venture would be managed by the parent company on behalf of the Vietnamese joint venture. Current plans involved collaboration with ship owners in Trat province. However, the project first requires permission from the relevant Vietnamese authorities.

Royal Food (Vietnam) is a recently established joint venture between Royal Food and Thai Corp, a local trading firm owned by Thai businessmen who have been operating in the Vietnamese market for a decade. Royal Food (Thailand) owns 76 per cent of the joint venture, with the rest owned by Thai Corp and other investors. It is incorporated in Kien Giang province, to manufacture canned fish in tomato sauce products. Its registered capital is US$10 million (Bt341 million).

At present, Three Lady Cooks leads the market in Vietnam for canned fish products, with a 75-per-cent market share. Its sales are growing by more than 30 per cent annually. The value of the total canned-fish market in Vietnam is Bt500 million to Bt600 million annually.

Meanwhile, Royal Food (Vietnam), led by Surasak, has signed an agreement with Thai Corp for marketing the Three Lady Cooks brand in Vietnam.

Royal Food (Thailand) also hosted an opening ceremony for the new Kien Giang plant, attended by about 700 dealers and suppliers from across the region.

Surasak said phase one of the Kien Giang plant had been operating for a month, with production capacity of 10 million cans per month. Royal Food (Vietnam) plans to embark upon phase two and expand its production lines over the next few years if the market responds well.

Thai Corp managing director Mongkol Banthrarungroj, who is also a director of Royal Food (Vietnam), said that as planned, the company would produce a "business mix" of canned fish products to capture different market segments, varying from the high end to the low end of the market.

He said the Three Lady Cooks brand was positioned as a product for the high end of the market. The company plans to launch two more new brands - Lucky No 9 and Sailor's Wheel - to serve the middle and lower ranges of the market, respectively.

"There is room for growth of canned fish products in Vietnam," Mongkol said, pointing out that the company's sales were mainly in Ho Chi Minh City and Vietnam's central and southern provinces.

He said Three Lady Cooks would be distributed via Thai Corp's 100 dealers, with 350 sales representatives and up to 1,000 retail shops across Vietnam.

Surasak said the company was also planning to export its Vietnamese-made products to Japan and other markets in the future.

"We're in talks with partners in Japan to join in the next phase of production at Kien Giang," he said. If this proves successful, a new range of canned fish products, such as canned fish in teriyaki sauce, will be launched.

Speaking of Royal Food's Thai operation, Surasak said 10 per cent of sales were from exports and the rest from the domestic market. The proportion gained from exports was expected to rise to 30 per cent over the next three years.

"The only way to increase the company's sales growth is to sell as many of its products abroad as possible," he said. "We must go international."

Royal Food in Thailand expects to record 15-per-cent sales growth this year, reaching Bt2.5 billion, he said.

 Sasithorn Ongdee

 The Nation

Ho Chi Minh City, Vietnam