French seed maker Vilmorin is to become the first international industry player with a direct presence in Vietnam through the acquisition of local firm Tropdicorp as part of its push into emerging markets.
The deal, announced on Wednesday, will take the world's fourth-biggest seed maker by sales into Vietnam's vegetable seed sector, where it hopes to tap into demand from a population of 90 million people whose household spending is rising as the economy is liberalized, Chief Executive Emmanuel Rougier said.
"With Vietnam we have a country that offers us dynamism for the future," he told reporters. "Three or four years ago our analysts hadn't identified it as a key market."
Tropdicorp, based in Ho Chi Minh City, had sales of $6 million in 2013 and is one of three firms that together account for nearly half of a vegetable seed market worth $45 million, Rougier said.
As the only operator to develop its own varieties locally, Tropdicorp would allow Vilmorin to expand its catalog of seeds for vegetables like bitter gourd, which widely eaten in Asia, he said.
Vilmorin earlier this year took a stake in Zimbabwe's Seed Co (SEED.ZI) and acquired Thailand-based Seed Asia, two deals focused on maize (corn).
"Even if it isn't spectacular yet in sales terms, we have laid the foundations for a much more international profile," Rougier said at a presentation of 2013/14 results.
In its financial year to June 30, Europe accounted for 53 percent of Vilmorin sales of 1.5 billion euros ($1.90 billion), the Americas 30 percent, Africa 9 percent and Asia-Pacific 8 percent.
In 2014/15, the group expects vegetable seeds to lead sales growth again as its crop seed division continues to face unfavorable conditions in grain markets, with the possibility low prices will lead U.S. farmers to plant less maize for the second year in a row, Rougier said.
A fall in the euro against the dollar in recent weeks was a favorable trend after broad strength in the euro contributed to a fall in Vilmorin's profit in 2013/14, he said.
But any positive impact would depend on the euro's fluctuations versus other currencies and on exchange rates later in the year when Vilmorin finalizes orders for its peak second-half sales period, he added.