Monday, Oct 3, 2022
logo
Update At 12:00    USD/EUR 1,02  ↓-0.0014        USD/JPY 144,81  ↑+0.076        USD/KRW 1.440,09  ↑+0.15        EUR/JPY 142,09  ↑+0.203        Crude Oil 87,97  ↑+0.01        Asia Dow 2.797,04  ↓-29.35        TSE 1.976,50  ↑+3        Japan: Nikkei 225 26.111,54  ↑+174.33        S. Korea: KOSPI 2.155,49  ↓-15.44        China: Shanghai Composite 3.024,39  ↓-16.81        Hong Kong: Hang Seng 17.078,78  ↓-144.05        Singapore: Straits Times 3,16  ↓-0.012        DJIA 20,31  ↓-0.16        Nasdaq Composite 10.575,62  ↓-161.881        S&P 500 3.585,62  ↓-54.85        Russell 2000 1.664,72  ↓-10.2145        Stoxx Euro 50 3.318,20  ↑+39.16        Stoxx Europe 600 387,85  ↑+4.96        Germany: DAX 12.114,36  ↑+138.86        UK: FTSE 100 6.893,81  ↑+12.22        Spain: IBEX 35 7.366,80  ↑+66.7        France: CAC 40 5.762,34  ↑+85.47        

Rising Vietnamese consumer demand a big opportunity for US food products

Article - December 5, 2020

The growing consumer market in Vietnam coupled with historically low import tariffs means there are big opportunities for US food product exporters in the fast-growing Asian nation. However, with that growth comes the higher standards and more sophisticated demands of the Vietnamese consumer – as pointed out by Lê Thị Vân and Didier Lachize, directors of New Viet Dairy, which imports a number of high-quality beef and dairy products from the US for the local market. With this in mind, they point out that opportunities are not only there for big US food firms, but also smaller artisan food companies, for example those making high-quality cheeses. 

Vietnamese food is a big part of Vietnamese culture and Vietnamese people are very proud of it. Since you began importing back in 1997, how have you noticed Vietnamese tastes change?

Lê Thị Vân: In my view, when we started the business, we would not be doing what we are doing today if not for Didier. He’s a food engineer and he knew all about dairy products because he graduated from the National Agronomy Institute in Paris.

We looked at the dairy products and in the beginning we just bought some mozzarella to introduce to hotels and restaurants but at the time there were no pizza ovens like there are today. Back then, we were doing one container per year but now we are doing hundreds of tons per year for mozzarella for pizza. It means that the countries eating habits have been changing a lot. I think that one of the main reasons is that the country is open for foreigners to come in and bring their culture and open restaurants and I think that Vietnamese people are very open minded with food and they always try to eat healthy things. They are very curious about food. Also, many generations have been educated abroad and when they come home, they want to eat pizza and pasta. These factors drive changing consumer habits.

 

Do you think it is demand driven or supply driven?

Lê Thị Vân: Both. There is a supply so people taste it and they like it. Alternatively, they see it in the newspaper or in books, and this may change their habits but if the supply doesn’t change, they don’t have a chance to try it. So I think both. One, the country has opened up so we can import almost any food into Vietnam as long as we respect the regulations; and two, the Vietnamese people have very open minds. The Vietnamese, they like to try new food.

 

In what areas are you seeing the most growth?

Lê Thị Vân: I think, in the last few years, a lot of Western food, Japanese, and Korean are becoming very popular. A lot of cheese. People taste a lot of various kinds of cheese. What I’ve noticed is that Vietnamese tastes are a little bit more open than Chinese people. They have a French influence so they like to taste butter and cheese and the bakeries are also different. They love the traditional French bakery where we use real butter. For Western food they are quite open minded, and lately, in the last few years, they have become very orientated toward Korean food because of Korean cultural influences, like K-Pop and Korean cinema and Korean movie stars which are very popular. A few years ago I would not have thought they would be interested in Korean food but now it is everywhere.

 

The CPTPP has opened the dairy market to countries like Australia, Canada and NZ. Have you noticed an increase in the amount of imports from these countries?

Didier Lachize: Sure. We already have experience with free trade agreements with Australia and New Zealand which are now more than 12 years old. Even at the beginning the reduction of tariffs was very small but with the plan, after 8 or 9 years, they will be scrapped to zero. Once a plan is in place to reduce tariffs, people immediately pay attention to the country. They don’t wait until it goes to zero, they come the first year to start building momentum to really benefit from when it is finally reduced to zero. So with Canada, you can see the effect immediately.

 

How do you plan for that? What changes did you make getting ready for this agreement to come into effect?

Lê Thị Vân: Firstly we follow the negotiations between the countries and we also want to know what each country wants, for example, what they can export to Vietnam. Because we are in the dairy industry, we know them and they know us, so we have already exchanged contacts about products before and whenever there is a change, we make contact.

 

When the US pulled out of the agreement did that affect your forward planning?

Lê Thị Vân: With the USA, the tariffs are not that different to other countries on dairy. Only 2% different. Secondly, the US is a big exporter of dairy. In the beginning, the US did not export to Vietnam because they focus on closer markets like Mexico. But the dairy industry has developed a lot in the US and they are producing more than they can sell to neighboring countries so they export a lot to Vietnam and they are a very big exporter. The other thing that changed, when the US started to export, they changed their product quality – when you sell local you just need to put it in a bag and sell it but when you export to a country far away you have to consider transport conditions, packaging, the quality – at

the beginning we had issues with the US exporters because they didn’t realize Vietnam’s standards were so high. They just produced what they sell to their American consumers. But now they have upgraded their processes and improved their quality control.

 

How important do you think your partnership, being one half Vietnamese and the other half European, is to your success?

Lê Thị Vân: I understand the Vietnamese market, I understand their behavior, and I never lived in France or the US. We are a good combination because Didier brings a lot of food safety techniques, he’s very strict on control, and I understand that is very important in our business because that is the future of Vietnam.

On the other hand, I am local. I know what the Vietnamese expect and I manage all of the Vietnamese operational staff but improve it to the European standard. From day one we worked with big exporters from NZ or Australia or the US so when we are partnered with them, we need to be audited by them both on the system at the warehouse and the financial system, and we also learn from our partners. We are the first private company in Vietnam to have KPMG audit us from day one when we were established and they audit us and our operations. We also have the highest Food Safety and Business Quality Management process certification issued by Bureau Veritas.

 

What does the future look like for New Viet Dairy? What are your goals for the future?

Lê Thị Vân: We have 100 million Vietnamese. How many Vietnamese enjoy the food we import right now? The percentage is increasing but still small. So we are trying to develop that, to reach more consumers. Because I think that the Vietnamese are changing in that they tend to eat less but focus more on quality. They understand more about food. For example, why we eat this particular food and why where it comes from is important. Before the Vietnamese just ate it because they liked it, because they needed to eat. But now Vietnam has passed that stage and people can make more choices. We want to go deeper into the Vietnamese consumer market.

 

How do you reach out to your customers?

Didier Lachize: Digital is the key. We have to explain what products are and where they come from. So we use social media and explain how to use a product and how to cook a product. People ask us real questions on social media and we have to reply to them with real answers and quickly.

 

What’s your experience working with American exporters and how much of your imports come from the US?

Didier Lachize: Quite a lot. Basically, from the US we buy beef, French fries, pork, dairy products – milk powder in particular. We are the number one importer of powdered milk from America in Vietnam. We are one of the largest beef importers but it’s a market that is segmented a lot. So we only have a 7-8% market share but that still puts us at the top of the list but we focus only on the high-quality top tier. In French fries we are the number one importer from the US by far. There are a lot of good products in the US but they are not targeting exports so far. You have a lot of good regional cheese and a lot of high-quality beef that is not your average, mass-market kind. Organic products too.

In the beginning, because the US market was so focused on selling domestically, they weren’t really looking to export. But that has now changed. Now I think they are willing to export more and more because maybe the domestic market is reaching saturation and they are learning that in China and Vietnam and places like that they can export their product freely so we receive more and more people. Not those big guys like milk and butter exporters, but smaller guys which come and visit us more and more frequently. We had non-stop visitors from the USA last year. This has stopped obviously (due to COVID-19) but we still have a lot of meetings through Zoom.

We can connect with a small guy in California making a special cheese and we can import it and sell it here. People know that there is a framework, even if there is no free trade agreement with the US, with tariffs that are very low in Vietnam and they have always been low, they have never been high like in other countries. So now it’s very low, not zero but very low and it’s open to a lot of trade. Everything works honestly and you can import and export and it’s not complicated.

Digitization has been key. Electronic registration for imported items in Vietnam is very good. We do everything on the internet without paper. We Customs clear on the internet, we pay our tax on the internet, we hire on the internet, and all of our invoices are electronic. Everything is electronic and working well.

This facilitates a lower cost of entry and competition. The tough thing is that because it has become so easy you have more competition, but it forces us to always find the way to lead the race, that’s the way it is.

  0 COMMENTS