September 1, 2016
VinaMilk is one of Vietnam’s greatest cash cows. No pun intended. We swear.
Since it went public in 2003, it has become the darling of the Ho Chi Minh City Stock Exchange and a symbol of Vietnam’s rising economy. At a $9.2 billion market capitalization, VinaMilk’s 14,000 cows are literally valued at $657,143 each. Not bad for a company that once only produced condensed milk in two factories.
Below, we discern three Entrepreneurial lessons from one of Vietnam’s greatest growth stories.
1) Infuse the Idea Pool
Mai Kieu Lien (pictured below), VinaMilk’s CEO, was sent to the Soviet Union by the Vietnamese government to study dairy processing at a local university. After she took VinaMilk public in 2003, she also made it the first Vietnamese heavyweight to lift its foreign ownership limit past 49%.
She followed that up in 2006 when she brought in a former Pepsi executive to launch American marketing initiatives, and in 2014 when she acquired American supplier Driftwood Dairy. Both moves propelled VinaMilk to higher-quality standards and more modern technology.
Companies who do not expand their idea pools get caught in “echo chambers” where they hear the same ideas over and over again. Such companies stagnate because they have already reaped all the benefits of their ideas. VinaMilk broke out of its echo chamber when Lieu infused it with international practices.
Entrepreneurs hoping to break growth barriers should peer outside familiar horizons. This runs parallel to the “Blue Ocean Strategies” we discussed in our lessons learned from billionaire Kieu Hoang.
2) Play History’s Trends
When Vinamilk launched its now-trademark yogurt line in 1983, many believed it would fail. Vietnamese households had a long-held tradition of making their own yogurt. However, Lien believed that the nutritious superiority of Vinamilk’s yogurt would win the market. “It was a hit and sold out. That’s a story about being responsible and being a pioneer.”
Entrepreneurs sometimes face barriers that seem entrenched in society. However, those barriers often only appear entrenched because the market has never seen the next level of their product. When consumers know two products are identical in every aspect, they have always gone with the more nutritious option since time immemorial. History can offer answers about the trajectory of your product.
3) Stir All Hearts
Before 2006, Vietnam perceived milk to be primarily a nutritious supplement for children. However, when Vinamilk brought on former Pepsi executive Tran Bao Minh, it revved up its marketing from 2% to 6% of total budget. Then it changed the perceptions of an entire nation with one message: milk nourishes adults, not just children.
Just like that, Vinamilk created a gargantuan addressable market out of nothing. Entrepreneurs should understand that consumers do not always know they want most. By helping consumers discover products that add value to them, Entrepreneurs can create entire markets that were previously untouched.