VIETNAM FOOD MARKET. By Mrs. Pranomsri Sormkunngoen Director of Thai Trade Center Ho Chi Minh city, Vietnam MARKET POTENTIALITY
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1 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 : Food consumption annual average growth rate 5.1%, Per capita food consumption: average growth rate 4.3%. 1
2 For Thai food products: MARKET POTENTIALITY (cont.) 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 2
3 CANNED FOOD & PROCESSED FOOD in VIETNAM CONFECTIONERY in VIETNAM 3
4 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. 4
5 FOOD VENDORS & PLACES TO GET FOOD 5
6 6
7 PICTURE OF SOME CONVENIENCE STORES : SHOP & GO, CIRCLE K, FAMILY MART, FOOCOMART 7
8 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. 8
9 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 9
10 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. 10
11 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 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! 11
12 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. 12
13 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 13
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