In May, the company announced that its formula containing a proprietary ratio of human milk oligosaccharide 2’-fucosyllactose (2’-FL) and fructooligosaccharide (FOS) for digestive and immune support received patent approval from the United States Patent and Trademark Office (USPTO). One of its products, Nutifood GrowPLUS+, was developed based on this patented formula.
This is a crucial step not only for owning and protecting the product’s formulation but also for standing out from the stiff market competition in Vietnam and venturing into overseas markets.
Rating the level of market competition in Vietnam’s infant formula at 9.5 out of 10, Tran Bao Minh, vice chairman of the board of directors at Nutifood, said that securing patent protection, working with internationally established partners and producing clinically-backed formulas have been adopted as key strategies to attract and gain the trust of Vietnamese parents.
“The level of market competition in Vietnam’s infant formula sector is very, very high,” he said. “The Chinese market, at its peak five or six years ago, had about 500 brands and SKUs. In Vietnam, it has gone up to thousands in the last few years; you can see both small brands, big brands, small local companies and big companies in this space.”
Vietnam has one of the fastest-growing infant and kids nutrition markets in Asia-Pacific. Companies like Vinamilk, Nestlé and Danone have sought to differentiate themselves by incorporating more types of human milk oligosaccharides (HMOs) in their products.
Milestones like achieving USPTO can also increase the brand’s chances of succeeding in international markets, Tran said.
So far, the company has identified neighboring Southeast Asian countries as a starting point for expansion.
“Our objective is not only to become the market leader in nutrition in Vietnam, but also to expand our footprint outside of Vietnam, going to Southeast Asia and other markets,” he said. “This is why, in all the product formulations that we’re working on, we want to have international recognition and certifications and one of the ways that we want our products and product formulations to be recognized as an international standard is to acquire a U.S. patent.”
Taking the lead
In its quest for market success, the company has transformed the way it approaches new product development.
One of its key strategies is to proactively scout for international business partners from countries with reputable dairy supply chains, such as Australia, Sweden and the United States.
“We used to wait passively for ingredient suppliers to offer us formulations and ingredients that we can put into our products,” Tran said. “However, in the past five years, we have redefined our strategies and looked for opportunities to collaborate with big international research institutions and dairy companies in Australia, Sweden, and America to develop scientifically proven formulations.”
The USPTO-patented digestive and immune support formula, for instance, was developed by the Nutifood Nutrition Research Institute in Sweden.
Last year, Nutifood also partnered with Australia’s ViPlus Dairy to jointly set up the brand GippsNature. This month, GippsNature is launching an A2 milk infant formula in Vietnam, but Tran said that the company has already received orders from its business partner in South Korea.
Even breeding A2 cows in Vietnam has come onto its radar.
Nutifood currently runs a dairy farm with 12,000 A1 cows in the highlands of Vietnam and plans to expand the cattle population to 20,000, including A2 cows.
“We are not only relying on the suppliers to offer us the milk and ingredients, but we are proactively working with the suppliers, the farmers in the U.S. and in Australia to identify a good source of milk,” Tran said.
Viewing A2 milk as a unique selling point, the company is also expanding an A2 organic dairy farm in the United States, while evaluating investment plans for a spray-drying facility to supply premium and high-purity A2 organic ingredients to Vietnam for the manufacturing of products under its newly established Nutifood American Nutrition Science brand.
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