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Strong productivity, a sharp customer focus and the best employee engagement score in the company all contributed to Vietnam becoming our 2014 Market of the Year. And there’s plenty of scope for future winning performance too, says Managing Director Robert Graves

VIBRANT VIETNAM

WORDS GREG MCIVOR

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Vietnam in recent years has become one of Southeast Asia’s fastest-moving economies. In fact, only China has grown more rapidly over the last two

decades. Urbanisation, growing affluence and booming exports are driving an economic success story that has helped our net sales here rise by more than 15% and packaging material volume leap 30% in the three years between 2011 and 2014.

Such eye-catching figures are a key reason why Vietnam was named our Market of the Year for 2014. “This is a very exciting and dynamic market,” says Robert Graves, Managing Director Tetra Pak Vietnam. “Our growth has been fantastic in the last three years. We grew at 7% last year, a little ahead of national GDP growth of 6 %, and are looking to return to double-digit growth in the coming years. Right now we’re closing

in on 5.4 billion packs per year, which is a tremendous performance.”

Our core category in Vietnam is dairy and is founded on white milk, sweetened, unsweetened and some infant formula. Together, these account for just over 50% of total sales. Then come flavored milk and tonic foods, which together make up around 20%. Soy-based products make up most of the remainder.

Relatively low milk consumption compared with other countries creates excellent potential for future growth. Milk and dairy products have become increasingly well established among younger Vietnamese consumers, while increasing awareness of the health benefits associated with milk – especially among older people – is driving demand.

“Dairy consumption per capita here is less than 20 litres a year,” says Robert. “In other more advanced markets we are looking at around

60 litres, and in Europe and the US more than 100 litres. This implies that there’s scope for bigger sales in the future, provided the market continues to evolve in the right direction.”

Tetra Brik® Aseptic 200 Base, Tetra Brik Aseptic 200 Slim, Tetra Brik Aseptic 125 and Tetra Fino® Aseptic account for 95% of sales in Vietnam. “This opens up another fantastic opportunity for us in terms of improving our portfolio in the eyes of the end consumer,” says Robert.

New opportunitiesVietnam, he explains, has a range of “unexplored categories where we need to jump in – various beverages where we see great growth potential, but are not yet present. Our ambition is to capture these new opportunities, while continuing to roll out new packaging systems.”

The hugely successful Mega factory project with Vinamilk, Vietnam’s

The night skyline of Ho Chi Minh City, the engine-room of Vietnam’s growth.

Vinamilk’s Mega plant is just outside the city

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The night skyline of Ho Chi Minh City, the engine-room of Vietnam’s growth.

Vinamilk’s Mega plant is just outside the city

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largest dairy producer, is a key factor behind Vietnam’s strong performance. The fully automated and integrated plant near Ho Chi Minh City opened in 2013, with 17 Tetra Pak lines including processing, packaging and plant integration equipment.

The Mega factory had already been up and running for a year when Robert took over as managing director in 2014. He can’t disguise his enthusiasm for the venture, which has radically reduced operating costs for the client and upped productivity.

“Vinamilk is one of the best projects I’ve seen in my 18 years at Tetra Pak. In part, the growth that Vinamilk has shown in the last few years is a result of the efficiencies they’ve achieved at the Mega factory. We’re now working with them on the second phase. The idea is to double the capacity compared with where we’re at today.”

Customer-centric culture Being able to showcase a successful venture like the Mega factory is a valuable calling card, says Robert. It opens the door to similar projects with other customers eager to reap the benefits of such a fully integrated production system.

Working so closely with a customer across such a wide range of operations is also hugely beneficial to building understanding. A customer-centric culture is deeply embedded across all functions. “A key success factor in growing our partnerships has been the improvement we’ve been able to make in strategic alignment,” says Robert.

“Our relationships with customers are stronger than ever. Once you understand their business model and strategy, you can identify all the potential synergies. If you know what the customer is planning to do – and how you can link that to your own strategy – you can develop new products and ideas that will benefit both parties. The customer trusts you and knows the direction you’re heading. The same is true the other way around. We’re working towards the same goal.”

Robert stresses that employees across Tetra Pak Vietnam share a common commitment to this approach – a prime reason whythe country also achieved top ranking globally in 2014 for employee engagement. “Everyone here feels as if they are part of the same family,” he says. “We’re a very ‘open door’ organisation. I see this in many

other parts of the world, but here you can really see how everyone is involved in every activity – and always with a clear focus on the customer.

“Our culture is based around the idea of one team, one goal. The way the Key Account teams and different functional areas work together around the same objectives really pushes us forward. When you are part of developing and then executing the strategy, you are part of the success.

Family packs bring potential for all kinds of new consumption moments in the home ROBERT GRAVES

That’s something that people in the organisation really buy into.”

Vietnam’s GDP growth may not be hitting quite the stellar levels of a decade ago, but it’s still expected to rise by around 6% this year. And Robert believes that Tetra Pak Vietnam will again succeed in outpacing this as we continue to capture new opportunities in this rapidly evolving market.

Diverse and dynamic Vietnamese consumer tastes have matured considerably in recent years. This is evident in the dairy industry, with a host of new products gaining traction. Where white and chocolate-flavored milk were the mainstay a few years ago, innovation is driving the emergence of new flavours, value-added milks and drinking yoghurts – creating a diverse and dynamic market mix.

Consumer segmentation is growing too, with producers keen to develop products tailored to men, women and children. “The environment will become more complex and competitive, but that’s what will make it enjoyable,” says Robert. “It’s also a great opportunity to improve market share across the different categories.”

Vietnam has traditionally been a portion packs market and, in recent years, has seen a steady increase in sales of our advanced packaging portfolio. “Over the last years, we’ve introduced a

above Michael Zacka with (from left) Chanel Nguyen, Van Nguyen, Co Le, Hoang Nguyen and Khang Bui

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Annual per capita dairy consumption in litres – plenty of room for growth

Estimated package sales for 2015

Tetra Pak lines inside Vinamilk’s Mega plant (right)

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few new packages and that’s still our strategy going forward,” says Robert. “We introduced Tetra Prisma® Aseptic 330 18 months ago and we’re about to add the 250ml version. Recently, we’ve begun selling Tetra Brik Aseptic Edge in portion packs with very positive reaction,” says Robert.

At the same time, family packs are growing in importance. “We first established a foothold a few years ago with Tetra Brik Aseptic 1000 Slim, to which we have recently added new closures. And we have just launched Tetra Brik Aseptic Edge 1l, which has been fantastically received and will help the category to keep growing.

“Drinking milk in the past was all about on-the-go and kids. With family packs comes the potential for all kinds of new consumption moments in the home: we can start using milk in the same way as it is already being used in other parts of the world, for breakfast and maybe for dinner.

“Deploying our advanced packaging systems is the key to that. It’s a bit complex at the beginning, but we are starting to move forward and in a couple of years we will see a big jump in the percentage of those formats in the market. Again, that’s something that benefits everyone – consumers, our customers and us.” Look out for the Market Watch Vietnam feature in the next edition of i-site

Thu Ngo, Head of HR Country Services Vietnam, was delighted to hear that Vietnam had topped the 2014 global employee engagement rankings; but she wasn’t entirely surprised. This is the tenth time in her 14 years with Tetra Pak that Vietnam has achieved that distinction.

“Of course we’re really proud – it’s a great track record,” she says. “But it also makes our work quite difficult in terms of finding ways to improve every year on such a high score!”

She says one of the key factors behind the latest impressive result is a culture where everyone pulls in the same direction and stays focused on the customer at all times.

Management actively encourages employees to suggest ways of improving the working environment, she explains.

“We approach these issues with real sincerity and have a down-to-earth attitude that permeates the entire company. It’s not just about talking the talk, but about walking the walk.

“We take the view that no one is better placed than our employees to tell us how we can improve and develop even further. We value their feedback. When we improve things, it is for their benefit.”

One recent innovation has been an initiative designed to encourage interaction between departments. In less than six years, staff numbers have almost doubled, from 80 in 2009 to 150 today. Perhaps as a result, some felt they were losing touch with colleagues in other parts of the company.

“Some departments have been organising outdoor meetings, so we suggested

they start inviting other departments along,” says Thu. “Now one quarter they might invite along finance colleagues, the next, colleagues from Technical Service. It’s an opportunity for people to get together and catch up on their news.”

Attracting and retaining talent is another pressing challenge in a country where the supply of expertise can sometimes struggle to keep pace with economic growth.

Here, offering a top class working environment is a competitive advantage. “Some of our competitors are competing hard in terms of compensation and benefits,” says Thu. “To remain market leader you have to work very hard on the working environment. That’s our challenge. And that’s where employee engagement comes in.”

How Vietnam keeps posting exceptional employee engagement scores

IN PRACTICE

SUCCESS BREEDS SUCCESS

The Tetra Pak Vietnam team celebrate their 2014 Market of the Year award