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VIETNAM FOOD MARKET

By Mrs. Pranomsri Sormkunngoen

Director of Thai Trade Center – Ho Chi Minh city, Vietnam

MARKET POTENTIALITY

• Potential market – population nearly 90 million – with Youth consumers + Multinational consumers + Strong Tourism Growth

• Continuous economic growth brings more higher income consumers.

• Rising affluence among Vietnamese consumers

• Expansion of the mass grocery retail industry in the country.

• Internationalization trade (WTO, ASEAN, ASEAN +3, ASEAN+6)

• Health consciousness

• Positive forecast for 2011 - 2016: Food consumption annual average growth rate 5.1% , Per capita food consumption: average growth rate 4.3%.

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MARKET POTENTIALITY (cont.)

For Thai food products:

Vietnam is also one Asia country, the taste of food is something similar

A lots of Vietnamese tourists travel to Thailand every year and get acquaintance to Thai food.

Vietnam is nearby country, having convenience for transportation (by sea, by road), preferential import tariff (AFTA) for 5% only.

Supports from DITP for Thai exporters: Thailand Trade Exhibition, Thailand Outlets, Thai Food promotion, Thailand Pavilion at Food & Hotel Fair in HCMC, Trade mission from Vietnam to visit ThaiFex….

FOOD CONSUMPTION in VIETNAM

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CANNED FOOD & PROCESSED FOOD in VIETNAM

CONFECTIONERY in VIETNAM

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VIETNAM FOOD PRODUCTS IMPORT & EXPORT

. Export growth between 2011 and 2016 is forecast at a

compound annual average rate of 8.6%, stronger than

import growth of 8.1%.

FOOD DISTRIBUTION CHANNELS IN VIETNAM

The most important retail formats for the food and beverage market are:

• Fresh market, Traditional stores, convenience stores :

• Large retailers: For modern trade such as hypermarkets and supermarkets, shopping malls.

• Food and drink specialists: Specialist retailers such as bakeries and butchers.

• Leading retail companies: Saigon Co-Op, Maximart, Citymart, Big C (French), Metro (German), Dairy Farm (Hong Kong), Parkson (Malaysian) and Lotte (Korean).

• Hotels, restaurants and institutions (HRI):

• Independent street vendors and full service restaurants, other places for food consumption.

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FOOD VENDORS & PLACES TO GET FOOD

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PICTURE OF SOME CONVENIENCE STORES : SHOP & GO, CIRCLE K,

FAMILY MART, FOOCOMART

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FOOD REGULATIONS IN VIETNAM

• NORMAL FOOD : LOCAL IMPORTERS / DISTRIBUTORS MUST REGISTERED AND DECLARE THE FOOD QUALITY

• SPECIAL FOOD: MUST REGISTERED BY EXPORTERS AND AUTHORITIES IN THAILAND (FROZEN MEAT, LIVESTOCKS, FRUITS)

HOW TO PENETRATE THE MARKET

& DEVELOP BUSINESS IN VIETNAM

• Marketing and promotion – supporting the local importers/ distributors

• Having good understanding about : market, consumers, regulations, competitors

• Should concern on strict regulations for advertising. Mass market advertising for alcoholic beverages with alcohol content above 15 percent,

cigarette, FOOD PRODUCTS THAT ARE NOT REGISTERED is not permitted.

• Other limits on advertising and promotions include:approval from the relevant authorities and Spending on advertising and promotion cannot be more than10 percent of total sales spending.

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Regional considerations

Vietnam is split into three distinct regions. Each of

these regions has a central urban hub.

North: Hanoi city

Central: Da Nang city

South: Ho Chi Minh city

Consumers’ habits and tradition in each region

Selecting starting market depending on products

Long term strategic issues to consider

• Vietnam is a rapidly developing nation and exporters must be

prepared to adapt their strategies to meet the needs of a frequently

changing market.

•Exporters should also be aware of Vietnam’s frequent regulatory

changes. Although Vietnam has an open market policy, the

Government is conscious of protecting the local agricultural sector,

which has been negatively impacted at times by ‘open door’ policies.

•Trade barriers to restrict agricultural imports such as new decrees

and circulars to protect local agriculture & in order to ensure food

security and independent supply for Vietnam’s large population

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Establishing Distribution Channels

The most common market entry strategy for food and beverage products is to

work with a local partner, trader, distributor or agent.

Raw materials for manufacturing industry must have sales staff with flexible

policies.

Vietnam allows foreign companies to import food and beverage products buit

must sell to distributors only. However, companies need to be registered in

Vietnam and have an investment license (even for trading company).

MOST IMPORTANT THING TO DO:

FINDING THE LOCAL IMPORTER,

AGENT or DISTRIBUTOR

Pricing :

Should set the price that is suitable for each

market share and consumers’ income.

Imported products in Vietnam will face the following mark-ups:Import agent fees (or profits of local importers, distributors)

Custom duties (5% for products imported from Asean countries with C/O Form D)

Value-added tax (VAT range from 5 – 10 percent)

Consumption tax (for products such as alcoholic beverages)

and……

many other unexpected charges that you cannot

predict.

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Practical advises for Thai new exporters

1. WHO CAN HELP YOU BETTER THAN

YOURSELF ???

Should come to Vietnam and do the market survey by YOURSELF

because when YOU go to the supermarkets, hypermarkets,

convenience stores, you will see the same type of products with

different prices, different brands, different competitors, and ONLY YOU

will know your products are potential and have chances to penetrate the

market or not >>> TRUST ON YOUR OWN EYES.

2. VIETNAM IS NOT LIKE SINGAPORE OR OTHER

EUROPEAN COUNTRIES.

DO NOT ASK THE LIST OF LOCAL IMPORTERS AND THINK THAT YOU

CAN STAY AT YOUR COMPANY AND JUST SEND THE LOCAL

IMPORTERS AN EMAIL AND THEY WILL PAY ATTENTION TO YOUR

PRODUCTS. YOU MUST TRY TO APPROACH THEM IN MANY WAYS,

THAT’S WHY YOU NEED THE LOCAL SALES STAFF.

THERE IS NO LIST OF LOCAL IMPORTERS. IF YOU NEED TO KNOW

WHO IMPORT THAT KIND OF FOOD, YOU CAN FIND THE NAME OF

IMPORTER AND DISTRIBUTOR ON THE PRODUCT LABEL.

PLEASE DO NOT ASK FOR THE IMPORT / EXPORT STATISTIC OF EACH

KIND OF PRODUCTS BY H.S CODE. THE SOURCE OF STATISTICAL

DATABASE AND CUSTOMS FILES ARE NOT OPENED !

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3. BE A PROFESSIONAL EXPORTER !

WHEN YOU COME TO MEET THE LOCAL IMPORTERS

IN VIETNAM, PLEASE PREPARE WELL THE PRODUCT

SAMPLES, PRICE LIST (NORMALLY LOCAL

IMPORTERS NEED CIF PRICE, NOT FOB PRICE) AND

MOST IMPORTANT THING THEY WILL ASK YOU

WHAT ARE THE SUPPORTS FROM YOUR

COMPANIES IN ORDER TO PROMOTE THE NEW

BRANDS IN THE COMPETITIVE MARKET.

4. INCOTERMS OR TRADITIONAL WAYS ?

WHEN YOU DEAL BUSINESS WITH THE LOCAL IMPORTER FOR

THE FIRST TIME, BEWARE OF THE SALES CONTRACT IN

DETAILS AND METHOD OF PAYMENT.

IT IS RECOMMENDED TO REQUEST THEM THE PAYMENT BY

L/C WHICH IS GUARANTED BY THE BANK FOR THE UNKNOWN

IMPORTERS.

IN VIETNAM, WHEN YOU DISTRIBUTE THE PRODUCTS TO THE

WHOLESALES, RETAILERS, YOU MUST ACCEPT PAYMENT BY

INSTALLMENT (SENDING THEM PRODUCTS FIRST,

COLLECTING MONEY LATER ON). IF YOU REQUEST PAYMENT

UPON DELIVERY, YOU MAY HAVE LESS CUSTOMERS THAN

YOUR COMPETITORS.

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LAST POINT & MOST IMPORTANT:

WHAT DO YOU PLAN FOR YOUR BUSINESS IN VIETNAM ?

ONLY SELLING ?

INVESTMENT TO PRODUCE IN VIETNAM ?

LONG TERM BUSINESS OR SHORT TERM ?

CHOOSING SOLUTIONS

REPRESENATATIVE OFFICE

FDI TRADING COMPANY

FDI MANUFACTURING COMPANY

OR …JUST BE THE THAI EXPORTER IN THAILAND

THEN.. YOU NEED A LOCAL IMPORTER ONLY

BUT WHO WILL BE YOUR IMPORTER ?

PLEASE GO BACK TO OUR FIRST ADVISE: WHO CAN HELP

YOU BETTER THAN YOURSELF !

FOR MORE INFORMATION PLEASE CONTACT

THAI TRADE CENTER IN HO CHI MINH CITY

thaitradecenter@hcm.fpt.vn(inquiry please sent in English, no need to write in Thai for the Director)

THANK YOU FOR YOUR KIND ATTENTION

WISHING YOU GOOD LUCK TO FIND A LOCAL IMPORTER,

SUCCESS IN YOUR BUSINESS

AND DEVELOP MORE AND MORE IN VIETNAM