Wednesday , November 29 2023

The making of a coconut oil tycoon

From borrowing money by mortgaging his father-in-law’s property to set up a coconut oil plant to earning trillions of dong (VND1 trillion = $42.19 million) a year, Cu Van Thanh has come a long way.

When Vietnam still had a command economy, Thanh and his wife worked at a state-owned coconut processing plant.

The plant simply took out the flesh, dried it and pressed it for oil to sell domestically and barter with Eastern European countries.

Then Thanh moved to the Dong Go Experimental Research Center (now Dong Go Coconut Center, part of the Research Institute for Oil and Oil Plants under the Ministry of Industry and Trade) and worked there for 10 years.

“In 1991, after the Soviet Union collapsed, it became impossible to sell large volumes [to the independent countries], and many small businesses had to close,” Thanh recalls.

The general director of Luong Quoi Coconut Processing Company was born in the southern province of Ben Tre, Vietnam’s main coconut growing area.

In 1995 he quit the center when life was difficult and Vietnam’s coconut processing industry gradually fell behind that of neighboring countries such as Thailand and the Philippines.

He and his wife planned to join hands with some friends to hire a machine and place to press coconut oil, but had no money.

“My father-in-law said if I seriously wanted to do business, he would give me his land and house ownership certificate to pledge for a bank loan,” Thanh says.

After getting a loan of VND40 million in the early 1990s, he and his wife and their friends quickly started a business.

In 1997 they established Luong Quoi Coconut firm with an annual pressing output of 2,000 tons of coconut oil.

Thanh had understood by then it would be difficult to achieve a breakthrough without innovation.

At that time older and larger plants in Vietnam still dried copra by burning rice husk or charcoal, which took up to four days.

He knew that in foreign countries they ground the coconut so that more of the surface was exposed to heat, helping it dry faster and make the oil pressing easier.

“I processed copra in that way, designing a roller drying system to increase productivity and reduce labor. Even today some small establishments use this method.”

In 2000 his new generation desiccated coconut production line with an annual output of 1,000 tons was ready.

Over the next two decades, he constantly updated technologies. His production lines churn out a variety of products from canned coconut oil to juice and milk.

His company’s coconut growing area has expanded to 6,100 hectares and an annual yield of 80 million fruits.

Luong Quoi has become one of the key coconut exporters in Ben Tre. Initially it sold its products domestically or exported them to China.

In 2008 a customer in the Middle East bought nearly 600 tons of desiccated coconut from the company. Thanh understood that to do big business he had to attend international fairs. “The first time I returned home empty-handed. But I tried a few more times and got customers.”

He has invested in obtaining international quality certification including ISO, HACCP, BRC, and ISF. He believed customers would come to his company if it had the right management system and standardization.

Workers at Luong Quoi Coconut Processing Company pack cans of coconut cream. Photo by VnExpress/Dy Tung

Workers at Luong Quoi Coconut Processing Company pack cans of coconut cream. Photo by VnExpress/Dy Tung

In 2011 a Taiwanese customer suggested that his company should produce canned coconut juice and cream.

If a ton of desiccated coconut fetched $2,300, these fetched $5,000. Thanh decided to rent three hectares of land and build more plants to make the new products.

Soon he was exporting coconut juice and cream to Europe, the U.S., Canada, Japan, and South Korea and $20 million year.

In 2018 his revenues crossed VND1 trillion a year with exports going to more than 60 countries and territories.

In 2021 sales were worth VND1.6 trillion and the company was among the 500 largest in Vietnam.

Luong Quoi expects to double exports to $200 million by 2030. In Vietnam, its Vietcoco is the only coconut product recognized as a national brand.

There have been challenges in recent months as global demand decreased due to economic difficulties.

In early 2022 the company was exporting 250-300 containers a month, but by September it had fallen to below 100.

“Experts say 2023 will be very difficult and there may be recovery from 2024. It is easy to manage for a while, but will be a problem in the long term. But I have decided to keep all of my 2,000 employees.”

Thanh is present from morning to 5p.m. every day at one of the plants in An Hiep Industrial Park in Chau Thanh District.

Employees see him going around in a conical hat, keeping an eye on the work.

He goes to work even on weekends to watch mechanics service machinery.

“I am in production and have to take care of both big and small things to be perfect. Creating a product is difficult, selling it is even harder.”

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