FOOD PROCESSING INDUSTRY IN VIETNAM

Source: Food Processing and Packaging Machinery Market Research US. Commercial Service BMI Food and Drink Report Q2.2010 General Statistic Office

ECONOMIC DEVELOPMENT
Current GDP growth: ~ 5-7% for almost 10 years 2006 - 2007: 8.17% and 8.48% respectively 2008 - 2009: 6.18% and 5.32% respectively GDP 2009 of US$91.5 billion Income per capita : $1,200 (planned 2010) Expanding export sector

NOTABLE STRENGTHS
key natural resources including oil reserves expanding workforce. 75% of Vietnams population born after 1975 the countrys median age: 25.9 a sizeable population of 86 million (2009) and increase of income levels

FOOD CONSUMPTION

VIETNAM FOOD PROCESSING INDUSTRY

 Food products (processed, semi-processed, and fresh) divided into 3 broad categories based on competitiveness: 1. Internationally competitive products 2. Potentially competitive products 3. Non-competitive: This segment is dominated by imports.

Internationally competitive products

Rice, seafood, processed pork, coffee, pepper, and cashew nuts. These are marketed both at home and abroad. Vietnam is the world's second largest rice, the third largest coffee bean and the largest cashew nuts exporter Poor post-harvest handling/processing high losses & poor quality limit the value of these exports.

Potentially competitive products

Canned meat Vegetable oil Fruit and vegetable juice (canned, concentrated), fresh vegetables Refined sugar Instant noodles; Tea These are largely consumed domestically but might be internationally competitive with increased investment in handling and processing technology.

 The food processing industry in Vietnam attracted both foreign and domestic investment

253 foreign direct investment (FDI) projects on food processing signed with total registered capital of over US$3 billion
Over US$1.8 billion was actually invested.(companies from ASEAN)

 Food processing and packaging account for 27% of total export turnover in 2009. The average annual growth rate has been about 11%.

 The food processing industry in Vietnam attracted both foreign and domestic investment. 253 foreign direct investment (FDI) projects on food processing signed with total registered capital of over US$3 billion Over US$1.8 billion was actually invested.(companies from ASEAN)

 260 seafood processing enterprises, of which 200 are reserved for processing frozen products, with a combined annual capacity of 250,000 tons. 24 slaughter houses and meat processing facilities 60 beverage manufacturers 65 fruit and vegetable processing plants 27 instant noodle producers 23 key manufacturers of confectioneries.

INDUSTRY DEVELOPMENT
Dec 09, Japanese curry, seasonings and spice producer House Foods acquired a 1.85% stake in the Vietnamese Masan Group for VND360bn (US$19.5mn) to diversify its geography, providing a foothold in the high-growth, but lowspending Vietnamese sauces and instant foods markets. Late Oct 09, Danish asset management firm BankInvest's decision to invest a further US$15mn in the company; BankInvest previously acquired an 8% interest in Masan's food arm in November 2008. Early Sept 09, The Charoen Pokphand Group announced that it was to invest THB3bn setting up a new integrated food production plant in Vietnam. The investment is to include feed mill, integrated chicken business from farm to processed food and will initially focus on production for the domestic market before considering exports. Jun 09, Nestl opened the new Maggi production plant in the Dong Nai province of Vietnam. The production plant is expected to create 800 jobs by 2010.

Seafood/aquaculture products
In 2008, Vietnam ranks 6th in the top 10 aquaproduct exporting countries and 3rd in the top 10 aqua-product breeding countries. Fish, shrimps, squid, frozen crabs, fish sauce and other processed fisheries products shipped to about 155 markets in the world (2009) Three major importers the U.S, Japan, and the EU account for 61 % of the Vietnams annual export turnover (2009). In 2009, seafood products: the countrys third largest export earner after crude oil and garments

Seafood/aquaculture products
Seafood export turnovers: 2007: USD 3.7 billion 2008: USD 4.6 billion 2009: USD 4.2 billion

Main value-added products sold for direct consumption: fillet, surini, sashimi grade cut-fish and cooked & peeled shrimp.
80% of the export are semi-finished products

Improve aquatic products quality

Monitoring and verifying chemicals (chloramphenicol ), pesticide residue, feedin aquaculturing, handling, processing prior to consumption) Strengthening capacity of monitoring and inspection in quality assurance and labs development for QC at manufacturers. Processing of seafood: frozen, dried, surimi, sashimi (Ex: basa, snapper, tuna, Threadfin bream)

Threadfin bream Surini

Tuna Sashimi

Raw peeled and deveined tail-on black tiger shrimp

Skinless fillet Cobia

Other processed seafood products

Fruits & vegetables processing

Fruits and vegetables account for 15 to 20 % of agricultural output, only 5% of Vietnams total agricultural export volume. Most vegetables and fruits consumed fresh Fruits exported:pomelo, lychee, longan, mango, dragon fruit, rambutan to China, Europe Small portion processed for export to about 40 overseas markets.

 An average Vietnamese consumes about 65kg of vegetables and 55kg of fruits a year (compared with 90kg in the world). Demand for vegetables and fruits are increasing by 3.6 %/year along with growing disposable incomes

 Annually, only 5-7% of fruit and vegetable output processed every year (compared with 78% in Thailand). Low capacity facilities with outdated processing technology -> big losses of 20 % of fruits and 30% of its vegetables. Exports of fruit and vegetables aim to reach $1 billion by 2010, 3-fold as much as those of 2001.

Vacuum fried Jack fruit

Dried Guava

Dried Bitter melon

Vacuum fried Taro Fruits juice Rambutan juice

Meat processing
Assorted processed meat products The meat industry produces 1.6 million tons annually; 77 % pork, 18 % poultry, and 7% red meat. 4 million tons of meat will need to be processed over the next ten years. Two leading companies in the meat processing industry are the Vietnam Animal Industry Corporation (VISSAN) and Animex. Plans to produce 6 MT of raw pork, 5 MT of processed product in 2020 of which 1.55 MT is for export.

Meat products

Minced Pork In Bananas Leaf

Pork Ball

Spring-Roll

Paste In PE Bag

Pork Sausage

Two Bits of Pork

Ham

Dairy products
Average per-capita milk consumption increased from 5.2 L/year in 2000 to > 8.0L in 2006 The fresh milk production is 2.4kg per capita/year, meeting nearly 20% of the local demand Plan to increase per capita milk supply to 10 kg/year by 2010 and 20kg by 2020. Demand for dairy manufacture development (expanding to remote and high-land areas)

Dairy products

Nutritional supplement

Fruits yoghurt

Orange milk

Fibre Drinking Yoghurt

Fruit juice
Domestic fruit juices now account for 70 80% of fruit juice products available in the market (with more than 30 categories, including orange, guava, mango, apple, and lychee) Imported rival fruit juice products generally cost 20 % more. Birds nest, coconut water, aloe, noni, winter melon tea, passion fruit juice

Soft drink
Pepsi brands: Pepsi, 7 Up, Mirinda, Everess, Aquafina, and Sting. Market observers estimate Pepsis market share at around 50%. Coca Cola brands include Coca Cola, Sprite, Diet Coke, Fanta, and Samurai. US$182 million in Coca Cola Vietnam in HCMC, US$151-million in Coca Cola Ngoc Hoi, Ha Tay US$25-million in Coca Cola Non Nuoc, Danang Domestic companies: Number 1, Chuong Duong, Tribeco, Dona - Develop purified, mineral water production: potential water source, new technologies applied (Ex: osmotic filter to reduce the price 4-fold )

Fruit juice

Winter melon tea Birds Nest Soya milk

Orange juice

Guava juice Coconut milk

ALCOHOLIC DRINK
Average beer consumption: 20 liters/year (2008). Alcoholic drink sales growth ~ 8% in 2007 and 2008. Leading brands produced and marketed locally include Tiger, Carlsberg, Heineken, Foster and San Miguel The market still dominated by the 350-plus smallscale breweries, which hold 80% of the market.

FOOD PROCESSING TECHNOLOGY

Equipment domestically manufactured

Development strategy to encourage to

Produce convenient and suitable products for industrial society Produce clean and safe foods for sustainable markets. Develop Vietnamese traditional food and retain some elements of traditional food and drink. Innovate and manufacture domestically food processing equipment at low prices

FOOD PROCESSING TECHNOLOGY PROSPECT

Processing equipment for seafood: frost coating machine, peeling & grading equipment, air blast freezer, contact freezer, pre-processing & pastry making equipment, glazing machine. Fruits & vegetables: grinding, small-sized fruit pressing and mixing machinery, slicing, juice extracting, juice concentration, centrifugation and superheated steam drying. Coffee, tea: coffee processing, instant coffee making & packaging lines, rubbing and dehydrating machines. Rice and wheat flour processing machinery. Processing equipment for meat: freezing, tumbling, grinding, cutting, pasteurizing, mixing, stuffing machine and equipment used in making canned and frozen foodstuffs Machinery for the preparation of vegetable oil, vegetables, cotton and dairy.

FOOD PROCESSING TECHNOLOGY PROSPECT

Packaging: Vacuum packing machine, packaging machinery for fruit & vegetable juice processing. Small pack-packaging equipment.

Alcoholic and non-alcoholic drink packaging machinery.

Instant noodle and snack packaging equipment.

High and medium capacity bottling and labeling equipment.

.

FOOD PROCESSING TECHNOLOGY PROSPECT

Cold chain equipment: Commercial cold storage facilities. Port projects. Retail supermarket and convenience store chains. State-owned enterprises and cooperatives in the seafood/ aquaculture sector.