Top instant noodle producer UNIBEN's profit falls short despite $110 million revenue

According to the World Instant Noodles Association (WINA), Vietnam ranks fifth in the world in terms of instant noodle consumption with the number of five million packets of instant noodles. 

Since experiencing a dilemma in consumption in 2015, the demand for instant noodles in Vietnam has been started to increase mainly on the rural areas.

Based on a report of Kantar Worldpanel market research firm, 3 Mien instant noodle brand, a brand under UNIBEN company had surpassed a series of strong competitors in the market such as Gau Do, Hao Hao and Kokomi to hold 27.4 per cent of the rural areas' market shares.

UNIBEN has become one of the largest instant noodle producers in Vietnam together with Acecook, Masan and Asia Foods. Recently, Uniben invested roundly $43 million in a factory in Hung Yen province to boost its production capacity.

Focusing on the rural areas has proven to be a worthy move of UNIBEN when the company gained approximately $113.5 million in revenue in 2017, an increase of 6.7 per cent compared to the previous year.

At the same time, thanks to lower raw material costs and lower cost of goods sold, Uniben's gross profit increased by nearly 50 per cent compared to the year before.

However, having spent heavily on advertising and discounts for distributors, UNIBEN’s cost of sales reached roundly $30 million, nearly double the figure in 2015.

High cost of sales leads to rather modest profits of UNIBEN over the last few years, even lower than the profit of Miliket, an effete brand, whose post tax profit reached $941,039 in 2017.

Despite the growth in revenue and gross profit (reached nearly $34 million), the post tax profit of UNIBEN in 2017 only reached $513,000. The company also recorded post tax profits of only $171,000 in the last two years.

Given UNIBEN’s revenue scale of over $110 million, its profit margin is almost the lowest in the instant noodle industry.

UNIBEN’s business results partly reflect the fierce competition of the instant noodle market in Vietnam. Especially, many old brands have actively stepped up their game by launching new products such as Masan Consumer Corporation.

With new drivers for growth, Masan Consumer expects revenue from convenience foods (mainly instant noodles) to reach $192.5 million by the end of 2018.

Meanwhile, Vina Acecook, the leading company in the instant noodles market in Vietnam with 25 years of experience, is also rapidly launching new cup noodles with high hopes on the return of this product.