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A rising middle class and 7.9 million hungry tourists are helping fuel the demand for premium food and beverage products in Vietnam. Nada Young pinpoints the opportunity for Kiwi exporters.

Vietnam is a unique market within Southeast Asia. Having been forced to protect its sovereignty so fiercely during the Vietnam War, the country and its people became self-reliant and it wasn’t until 1975 that imported goods slowly started trickling back in.

Today, imported food and beverage products are still largely commodity based. By far the biggest export commodity from New Zealand is dairy, worth NZ$296 million dollars in 2015 (source: Statistics New Zealand).

Fruit, the second biggest F&B export by value, was a distant NZ$24.7 million by comparison, followed by seafood at NZ$13.4 million and meat at a modest
NZ$5.9 million.

There is a long way to go before these export statistics start to match some of New Zealand’s more historic export markets such as Singapore, where two-way trade has been active since around the time of Singapore’s liberation from Japan in 1945.

‘Modern trade’ as we know it is still in it’s infancy in Vietnam. The major hypermarket chains in Vietnam such as Metro, Big C, Lotte and Giant are not widely dispersed (Big C, one of the biggest chains, only has 32 stores) and the selection of premium imported F&B products is sparse.

There are some smaller niche players such as Annam and Citimart supermarket that offer a reasonable selection of imported items, but as a sales channel for New Zealand exporters they are not significant. 

The real opportunity for New Zealand’s F&B exporters lies in the food service sector.

Hotels and restaurants are happily enjoying a bustling trade as the number of foreign visitors continues to grow. The total number of international arrivals reached an impressive 7.9 million last year and 2016 figures are already up 20 to 30 percent compared to the same period last year according to the Viet Nam National Administration of Tourism.

While tourists will find plenty to delight the palate in the local cuisine, few are eager to eat Pho for breakfast, lunch and dinner. Most hotels offer Vietnamese and Western-style breakfast buffets and one can usually find a good selection of European dishes on the menu at four and five star hotels.

The rapidly growing European style dining scene in Ho Chi Minh City and Hanoi is also a worthy channel to explore. As disposable incomes rise and the constant stream of Vietnamese students return home from their studies in countries like New Zealand and Australia, the demand for international cuisine has noticeably increased. It’s not unusual to find New Zealand lamb and Central Otago Pinot Noir on the menu at such establishments.

Take your partner
For many food and beverage exporters, the most practical way to access the food service sector is via a reliable distribution partner. Doing business in Vietnam is complex and extremely difficult to navigate without the support of a local partner.

The number of F&B distributors in Vietnam that are well equipped to carry international brands is limited and as such, the competition to work with these companies is tough. Exporters looking for volume sales need to have a solid value proposition that meets the demands of the market.

Consider the following:

  • The cool chain is not easy to manage in Vietnam, so distributors favour ambient or frozen products rather than chilled, which are easily spoiled.
  • Sell-through can take time, especially if goods are high value, so a long shelf life is a must. Ambient and frozen goods should have 12 months minimum.
  • Infrastructure is not well developed, so goods are subject to frequent unloading and loading on their way to their destination. Packaging and shipping cartons must be strong enough to cope with this strain.
  • Regulations are complex and border issues ongoing. This can make it challenging to move goods across the border and few succeed without the help of a distribution partner.
  • Relationships are very important. Distributors rely on the trust and goodwill they generate with their customers and they expect the same from their suppliers.
  • Few distributors have nationwide coverage. Exporters are often better off dividing the market in two and appointing a distributor in Hanoi to cover North Vietnam and another distributor in Ho Chi Minh City to cover South Vietnam.
  • Appointing a distribution partner can take a very long time (overnight success stories about F&B exports to Vietnam are rarely what they seem. It can take years to make a match).

Vietnam will be on the export radar for many F&B companies in New Zealand right now. There has been a lot of media focus on this market, as well as a number of highly visible diplomatic delegations including the recent visit to New Zealand by the Vietnamese Prime Minister, accompanied by the largest ever delegation of senior ministers and business leaders.

For those exporters with the right product offering (and plenty of patience) Vietnam is an emerging export market with significant potential.

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