BIG isn't always better when it comes to Australian businesses wanting to capitalise on the so-called Asian dining boom, says the boss of a Vietnamese dairy company.
Tran Bao Minh - chief executive of International Dairy Products - says big firms can be too slow to deliver products to meet fast changing consumer tastes across Asia.
For example, he said one large overseas company he recently dealt with took 18 months to two years to deliver a product to market.
"That's not suitable for the Asian market when the demand is changing fast and consumers are constantly looking for new and better products," Mr Minh said.
"Our objective is to look for a company that is big enough to be reliable but not too big that it becomes too slow. When they're too big they're not flexible enough."
He had found such a partner in Pactum Dairy Group.
The northern Victorian milk processor is a joint venture between milk producer, Australian Consolidated Milk at Kyabram, and Sydney-based cereal, snack and beverage company Freedom Foods, which directs much of the plant's production orders.
Pactum has signed a deal to supply International Dairy Products, or IDP, with about 4 million litres of UHT milk a year.
Mr Minh said it could evolve into a long-term partnership stretching across a suite of dairy products, provided Pactum can keep up with the fast changing Asian tastes.
"We are also looking at ice creams, cheese - if you have a very high quality raw milk you can do all kinds of dairy products that Vietnamese are more and more looking for.
"So it's a very long-term strategy and partnership with Pactum Dairy if, of course, they can keep up with our fast pace."
IDP is a mid-sized Vietnamese dairy company, generating about $198.4 million in revenue each year.
Mr Minh's comments about bigger companies being bogged down by their size appears at odds with Gary Helou, managing director of Australia's biggest milk processor Murray Goulburn, and economists including HSBC's Paul Bloxham.
They argue Australian agribusinesses needs to get bigger to become more competitive globally.
In November, Mr Bloxham said the biggest constraint on the productivity and competitiveness of Australia's food bowl was a lack of consolidation in the industry.
Mr Helou hoped to create a super-sized co-operative owned business when it lobbed a bid, which eventually failed, for Australia's oldest listed dairy company, Warrnambool Cheese and Butter in 2013.
MG's capacity drive has continued, however, signing up a big supplier base in NSW to support its new Sydney fresh milk processing plant.
Pactum Dairy Group expanded its ultra high temperature (UHT) milk production capacity at its sole Shepparton plant in 2014.
Despite its smaller scale, it has already signed strategic supply agreements with Asian companies.
These included China's Bright Dairy and New Hope Dairy Holdings, which is also a partner with Freedom and Australia's biggest farm milk producers, the Moxey and Perich families in the Australian Fresh Milk Holdings supply chain consortium.
Pactum spent $40m revamping its operation to initially lift its output of 250 millilitre, 330ml and one litre milk packs (plus skim, flavoured and lactose-free milk lines) to 100m litres a year.
