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Vietnam Tan Hiep Phat Beverage Group, known as THP locally, is open to mergers and acquisitions to become one of Asia’s top drinks makers, the founder Tran Qui Thanh said in an interview implemented by the Bloomberg on May 7. The company is looking to expand sales in neighboring Southeast Asian countries, after spending $500 million on three new factories at home, he said.

“It’s crucial to find the right partner with the same vision,” said Thanh, 66, who runs the firm with his two daughters. “We don’t need money. We are looking for industry expertise so we can develop together.”

THP, whose Zero Degree Green Tea propelled it to the the top of Vietnam’s bottled tea market -- the label outsells those from Coca-Cola and PepsiCo Inc. in the country -- is finding success as more of the nation’s 96 million people become middle-class consumers. It is capitalizing on a younger generation of health-conscious consumers who prefer teas and natural drinks.

The company also makes an energy drink that it says is more suitable for Vietnamese and Asian tastes -- less sweeter while still packing the caffeine jolt. It’s hoping to use the drink to penetrate deeply in Asia, along with its teas, to rival Red Bull GmbH in Asia.

CEO Tran Qui Thanh Photographer: Yen Duong/Bloomberg

THP is Vietnam’s top homegrown non-alcoholic beverage maker, surpassed only by a drinks joint venture between PepsiCo and Suntory Holdings Ltd. Still, THP’s presence in Southeast Asia is still small. It sold about 510 million liters of drinks last year, according to research firm Euromonitor International. By comparison, Danone‘s Indonesia unit is the top beverage maker in Southeast Asia’s biggest drinks market, and it sold about 5.3 billion liters last year, according to the research firm. That underscores the need for THP to scale up substantially to meet its goal of becoming a top Asian player.

Dr. Thanh drinks. Photographer: Yen Duong/Bloomberg

With sales expected to double to $1 billion in the next five years, Thanh says THP’s value could be as much as $5 billion. Any strategic partner -- with distribution or industry know how, rather than a private-equity investor -- should be ideally willing to plow in at least $2 billion to $3 billion in order for the company to expand in Asia and globally, he said.

THP, which currently distributes products in 16 countries, is also looking at acquiring smaller beverage makers in countries with established tea markets such as Thailand and Taiwan, said Deputy CEO Tran Uyen Phuong, who shares the title with her sister Tran Ngoc Bich. THP is willing to spend as much as $50 million for such an investment, she said.

A worker moves beverage inside a THP Beverage warehouse in Hau Giang province.Photographer: Yen Duong/Bloomberg

Spurning Coca-Cola

Founded by Thanh in 1994 just as Vietnam opened its economy to private businesses, Tan Hiep Phat turned down a $2.5 billion offer from Coca-Cola to acquire a stake in the beverage maker in 2012. Coca-Cola declined to comment.

“After discussions, we realized that we had different visions,” said Thanh. “We needed a partner who can support the development of THP and together, grow faster. Money wasn’t the deciding factor. There’s no regret.” The deal would have prevented THP from expanding globally, Phuong wrote in her 2018 book, “Competing with Giants.”

The company plans to spend another $500 million to finish the build out of its factories within the next three years. THP has also made a foray into real estate, acquiring land in the southern and central regions of Vietnam. Its development arm will invest $300 million to build a residential complex on the riverfront of Danang, a resort city known for its white, sandy beaches.

Employees perform quality checks during packaging at an assembly line at the THP Beverage factory. Photographer: Yen Duong/Bloomberg

Next year, the company will also invest as much as $40 million in a new plastics recycling business that will turn discarded bottles and other waste into flooring tiles and wall insulation to be used by its housing projects.

Thanh said he doesn’t plan to retire anytime soon, but is focused on finding a successor. For now, he’s grooming his two daughters but insists he’s also open to a capable executive who’s a not a family member.

“The successor has to be the right person in the right role,” said Thanh. “If my daughters are not as capable as someone else, they don’t need to be the CEO. If they can be CEO, it’s better. But if they can’t, it’s not a big deal.”

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