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Agriculture offers food for thought

FRIday - 15/08/2014 18:13
Singaporean firms are eagerly eyeing market share in Vietnam’s agricultural, consumer goods and foodstuffs sectors.

Being the largest exporter of farm produce in Vietnam, Olam Vietnam is a typical example of a Singaporean firm carving out a specific niche in the country.

“Olam has been annually increasing investment in research and development and production. Our firm is preparing some more projects in Vietnam, like a cashew processing project in Phu Yen province,” said Le Tran Anh Dung, director of Olam’s branch in Dak Lak province.

“In the first half of this year we reaped good revenues, and that’s likely to continue through to 2015,” he said. “Olam is focusing on coffee, cashew and pepper processing.”

Olam is the largest exporter of cashews, pepper and instant coffee in Vietnam, with eight large factories across Vietnam.

According to the Singapore Businesses Group in Vietnam, other Singaporean firms are expanding business in Vietnam’s agricultural, consumer goods and foodstuff market. These firms include milk product maker F&N, drink makers Gold Roast and Super Coffeemix, tissue producer New Toyo, furniture maker Serrano Vietnam, foodstuff producers Hock Hin Foodstuffs and foodstuff additive maker ApecChem.

“There are a number of notable Singaporean brands that have risen to prominence in the beverage sector, food products, and bakery chains. There are an even greater number of multi-national companies successfully operating where Singapore acts as a supplier to Vietnam,” said the group’s president Norman Lim.

For example, SuperCoffeemix Vietnam (SCV), which manufactures and distributes various instant beverages and convenience foods, said it “wants to become the leading maker of foodstuffs and beverages in Vietnam,” and will “constantly create new and innovative products with high quality ingredients, customised to suit the palates of its consumers in Vietnam.”

SCV is now boosting the sales of its nutritious cereal, instant diet cereal, soya milk and ginger tea products in Vietnam.

Meanwhile, F&N Vietnam Foods Company Limited, a subsidiary of Fraser and Neave Limited, is operating a manufacturing plant at the Vietnam-Singapore Industrial Park (VSIP) in Binh Duong province to produce and distribute foodstuffs, dairy and beverage products in Vietnam.

The Singapore Business Group has claimed that Vietnam is proving to be an exciting destination for retail as many Singaporean enterprises are searching for the next high-growth market. Vietnam has a rapidly growing young population and a consumer market of some 50 million people. It is estimated that within the next ten years, 16 million new consumers will come of age in Vietnam.

Vietnam’s middle class has doubled over the last five years, with rising disposable incomes leading to increased consumption. This has led to a growing demand for goods and services, particularly for better quality and premium products. There has been a consumer shift from unbranded to branded goods, an increased demand for packaged and convenience goods, as well as a trend towards healthier products.

According to the London-based Business Monitor International Ltd’s Vietnam Food and Drink Report for the third quarter, food and drink consumption within the country will grow at an impressive pace, delivering double-digit annual growth through the forecast period to 2018.

Specifically, 2014’s total food consumption will grow 19.2 per cent, while the annual growth rate during 2014-2018 will be 15.5 per cent.

This year, per capita food consumption will grow 18.1 per cent, and the annual rate will be 14.7 per cent during 2014-2018. The respective rates will also be 12 and 8.7 per cent for alcoholic drinks value sales, and 10.5 and 7.5 per cent for soft drinks value sales.

However, Lim said the presence of Singaporean consumer goods and foodstuff enterprises “is still rather limited in Vietnam, as Singapore’s commercial presence tends to focus more on other sectors like property, logistics and financial services.”

He noted that Vietnam, despite significant advances in terms of structural reforms, still needed to become more business friendly. “Burdensome bureaucratic procedures, as well as unclear and sometimes contradictory legislation can create critical problems in doing business. Vietnam needs to reduce red tape and create more incentives in order for its business environment to be more conducive to foreign firms.”

Via Vietnam Investment Review

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