Vietnam Food Processing Market 2016

‹#›
Vietnam Food Processing Market 2016
Date of the report: 1st August 2016
Part of StoxPlus’s Market Research Report Series for Vietnam www.biinform.com
@ 2016 StoxPlus Corporation.
All rights reserved. All information contained in this publication is copyrighted in the name of StoxPlus, and as such no part of this publication may be
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2
Date: 1st August, 2016
Dear Our Valued Customer,
Re: The publication of Vietnam Food Processing Market Report 2016
I am pleased to pleased to announce the publication of Vietnam Food
Processing Market Report 2016.
The purpose of research work is to have an in-depth understanding of
food processing market in Vietnam and assessing potential of the
market. We also highlighted current market size as well as potential
demand of commercial cold storage for each segment. We believe it
should be further studied and evaluated.
In addition to our experience in this industry, we have conducted
various discussions and interviews with industry players, distribution
partners at executive levels to grasp local insights and the practical
ways of the market in Vietnam.
We understand that this is a targeted but also an open research. We
would be happy to provide any further information to address any
questions that you may have, for any specific sector or target business
in Vietnam. Our ultimate objective is to bring real values to our clients
via in-depth research and practical local insights.
Should you have any questions, please contact I myself or our Managing
Director, Ms. Lan Nguyen at +84-4-35626962 (ext. 109) or her email:
lan.nguyen@stoxplus.com
Yours sincerely,
Nguyen Quang Thuan
CEO
StoxPlus Corporation
StoxPlus Joint Stock Company
Head Office
5th Floor, Anh Minh Building
36 Hoang Cau, Dong Da
Hanoi, Vietnam
telephone: +84 (4) 3562 6962
facsimile: +84 (4) 3562 5055
stoxplus.com
Ho Chi Minh City Branch
2nd Floor, May Plaza
63D Vo Van Tan Street, District 3
Ho Chi Minh City, Vietnam
telephone: +84 (8) 3823 3485
facsimile: +84 (8) 3827 3068

3
Table of Contents
Part Content Page
Executive Summary
1 Vietnam Food Processing Market Overview
1.1 Market structure and description
1.2 Market Size
1.3 Value chain structure
1.4 Major M&A
2 Segment Analysis
2.1 Processed Seafood
Seafood Industry
Supply Analysis
Demand Analysis
Distribution
Competitive Landscape
2.2 Processed Meat
Meat Industry
Supply Analysis
Demand Analysis
Distribution
Part Content Page
2.3 Milk products
Milk Industry
Supply Analysis
Demand Analysis
Distribution
2.4 Processed Fruit & Vegetables
Fruit & Vegetables Industry
Supply Analysis
Demand Analysis
Distribution
3 Macroeconomic Situation & Regulatory Framework
Macroeconomics
Regulatory Framework

4
Executive Summary
This content is intentionally removed for demo purpose

5
Executive Summary (cont.)

6
Abbreviation
No. Abbrev. Stand for
1 bn billion
2 Agifish An Giang Fisheries Import & Export Co.
3 CHOLIMEX Cho Lon Import & Export Co.
4 CAGR Compound Annual Growth Rate
5 FPO Farmer Producer Organization
6 FMCG Fast-Moving Consumer Goods
7 FDI Foreign Direct Investment
8 F&V Fruit & Vegetables
9 Hanfoco Halong Canned Food Co.
10 IDP International Dairy Producers
11 IDI International Development Investment
12 MT Metric Ton
13 mn million
14 MARD Ministry of Agriculture and Rural Development
15 SAGRI Saigon Agriculture & Processed Food
16 SATRA Saigon Trading Group
17 STAPIMEX Soc Trang Seafood Jsc
18 SOE State-owned Enterprise
19 VEGETIGI Tien Giang Vegetables & Fruit Jsc
20 Tbd To Be Determined
21 US$ US Dollar
22 VASEP Vietnam Association of Seafood Exporters and Producers

7
Contents
Section 1: Vietnam Food Processing Market Overview
1.2 Market Size
1.4 Major M&A

8
Food processing market is comprised of 4 segments: Processed Seafood, Processed
Meat, Milk Products and Processed Fruit and Vegetables
Figure 01: Market Structure
Market Structure
Food Processing
Processed Meat
Processed Seafood
Milk Products
Processed Fruit and
Vegetables

9
Contents
1.2 Market Size
1.4 Major M&A

10
Vietnamese food industry witnessed steady growth over the last few years fueled by
increasing expenditure of consumer
Market Size & Segmentation
Figure 02: Total Food consumption 2011-2015
Source: StoxPlus, BMI
18.8
21.2
23.6
27.6
32.1
0
5
10
15
20
0
5
10
15
20
25
30
35
2011 2012 2013 2014 2015
US$bn
Food Consumption (USbn) % y-o-y
Figure 03: Average food and total expenditure per capita, 2006-
2014
Source: GSO, StoxPlus estimate
0
500
1000
1500
2000
2500
2006 2008 2010 2012 2014
'000VND
Food Expenditure Total Expenditure

11
Key Development Milestones of Vietnam Food Processing Market
Figure 04: Food processing industry key development milestones (including major companies in each segment)
Source: StoxPlus
1957
20162014 2015
1954 1990 2001 2011 2016
We are here
Vinamilk
1976
1995
CP Vietnam
1998
2001
Vissan
1970
20091954

12
Food processing industry is divided into 4 segments
FOOD PROCESSING
PROCESSED SEAFOOD
PROCESSED FRUIT AND VEGETABLES
PROCESSED MEAT
Milk products

13
Besides processed seafood, most food processing segments have grown, on average,
15% annually since 2011
Figure 05: Food processing market size, 2011-2015
Source: StoxPlus
Processed Seafood Processed Meat
Milk products
Processed Fruit &
Vegetables
Food
Processing
CAGR
CAGR CAGR
CAGR
*CAGR is calculated for period 2010-2014. The sharp
decline in 2015 is excluded as an outlier.

14
Contents
1.2 Market Size
1.4 Major M&A

15
Vietnamese food processing industry is still fragmented and mainly focuses on
preliminary processing stage
Value Chain Structure
Production
Local Trading
& Processing
Secondary
Processing
Packaging Distribution Export/Retail

16
Contents
1.2 Market Size
1.4 Major M&A

17
Vietnam food processing industry witnessed some major M&A deals, especially from
South Korea
Major M&A
Acquirer Country Target company Deal value Year
1 South
Korea
2015
2 Japan 2015
3 Thailand 2015
4 South
Korea
2015
5 Vietnam 2016
Figure 06: Significant M&A deals in food processing industry, 2015-2016
Source: StoxPlus

18
Contents
Section 2: Segment Analysis
2.2 Processed Meat
2.3 Milk Products

19
Vietnam seafood domestic production continues the upward trend with total volume
of *** million tonnes in 2015
Processed Seafood
Figure 07: Domestic production of seafood, 2011-2015
Figure 08: Growth of Vietnam seafood market
• Vietnam seafood production consists of two main components,
namely (i) wild-caught and (ii) farm-raised. As of 2015, total
production volume reached *** million tonnes, of which approx.
***% are wild-caught.
Source: StoxPlus, VASEP
Seafood Industry

20
Both imported and exported seafood are used mainly as raw materials for
reprocessing
Processed Seafood
Figure 09: Vietnam seafood import and export value
Source: StoxPlus, General Customs
Seafood Industry

21
Processed Seafood
Figure 10: Domestic production of processed seafood, 2011-2015
Source: StoxPlus, MARD
Supply
Domestic production of processed seafood was equivalent to ***% of total seafood
production, of which ***% went into export

22
The *** regions possess a much higher capacity as well as more diverse product
types
Processed Seafood
Figure 11: Capacity of seafood processing companies, 2015
North
Average Real Capacity/Designed
Capacity of Region
Mekong Delta
Southeast
%
Central
Types of Business
Average Capacity
(MT/year)
State-owned
Private/JSC
FDI
Main processed products:
Supply

23
The concentration and high capacity of companies in *** and the *** are due to ***
Processed Seafood
Figure 12: Distribution of seafood processing companies, 2015
North
Mekong Delta
Southeast
Central
Supply

24
Most of the new factories are built in the South; however the biggest comes from
the leading player, ***, in Central Vietnam
Processed Seafood
Figure 13: New investments in seafood processing
No Owner Type of
investment
Location Year in
Operation
Capacity Total area
(m2)
Total
Investment
(US$)
1 New 2015
2 New 2016
3 Expansion 2016
4 New 2016
5 Expansion 2018
6 New 2016
7 Expansion 2015
8 New 2016
Source: StoxPlus
Supply

25
Growth of processed seafood sales depends mostly on growth of ***
Processed Seafood
Figure 14: Total sales of processed seafood by value, 2011-2015
Source: StoxPlus
Figure 15: Growth of processed seafood sales, 2011-2015
Source: StoxPlus
*Conversion from VND to USD might lower the growth rates by 2-3% due to
depreciation of VND
Demand

26
...while domestic market contributed little but has experienced steady growth
Processed Seafood
Source: StoxPlus
Demand
Figure 16: Domestic sales of processed seafood by volume, 2011-2015

27
*** seafood are most preferred by both markets while domestic market also
consumed a relatively high amount of shelf stable seafood
Processed Seafood
Figure 17: Breakdown of sub-segment of domestic processed
seafood by value, 2014-2015
Figure 18: Breakdown of sub-segment of export processed
seafood by value, 2014-2015
Domestic market Export market
Source: StoxPlus Source: StoxPlus
Demand

28
Processed Seafood
Figure 19: Processed seafood value chain
Domestic
Export
Distribution

29
For domestic market, processed seafood is distributed mostly through traditional
grocery retailers
Processed Seafood
Figure 20: Distribution Channels, % value 2015
Convenience
Stores
Hypermarkets
Supermarkets
Source: StoxPlus
Distribution

30
Processed seafood still has great potential with the government support if supply is
adequately controlled and anti-dumping law is successfully negotiated
Processed Seafood SWOT
WEAKNESSSTRENGTH
THREATSOPPORTUNITIES

31
DomesticExport
*** companies dominate export segment while *** is the leader in domestic with half
the market share
Processed Seafood
Figure 21: Processed Seafood Market share, % retail value 2015
Source: StoxPlus

32
The segment is dominated by *** with half the market share
Processed Seafood Competitive Landscape
Export Market Import Market

33
Overall, most processed seafood exporters had better returns compared to
companies serving domestic market
Processed Seafood
Figure 22: EBITDA % ratio of major processed seafood companies, 2015
Source: StoxPlus
Top domestic sale
Mainly export

34
Processed Seafood
Ha Long Canned Food Joint Stock Corporation
Ownership structure
Company Profiling Products and Services
Financial highlights
Source: Reported FS

35
Processed Seafood
Special Aquatic Products Joint Stock Company – SEASPIMEX VIETNAM
Ownership structure
Source: Reported FS

36
Processed Seafood
Angiang Fisheries Import Export Join Stock Company
Ownership structure
Source: Reported FS

37
Contents
2.2 Processed Meat
2.3 Milk Products

38
Vietnam domestic meat production continues the upward trend with total volume of
*** million MT in 2015
Figure 23: Domestic production of meat, 2015
Figure 24: Meat import to Vietnam, 2015
• We estimated that total meat production for three categories
namely pork, poultry and beef amount to approximately *** by
2015.
Processed Meat
Source: StoxPlus, Department of Livestock (MARD)
Source: StoxPlus, Department of Livestock (MARD) from General Customs
Volume
'000 tonnes
Price
US$/kg
Market size
US$mn
Pork
Poultry
Beef & Veal
Meat Indsutry

39
Domestic production of processed meat is still at a fairly underdeveloped stage
Figure 25: Domestic production of processed meat, 2011-2015
Processed Meat Supply

40
*** companies have a much bigger capacity than *** ones due to ***
Figure 26: Distribution of meat processing companies, 2015
Processed Meat
Capacity of Region
North
Central
South
Types of Business
Average Capacity
(MT/year)
State-owned
Private/JSC
FDI
Supply

41
Vietnam only has *** companies with industrial processing capacity of *** products
per year
Figure 27: Distribution of meat processing companies, 2015
Processed Meat
Government-owned
Private/JSC
North
Central
South
Supply

42
Processed Meat
Figure 28: New investments in meat processing
No Owner Type of
investment
Location Year in
Operation
Capacity Total area
(m2)
Total
Investment
(US$)
1 Expansion P1:2015
P2:2020
2 New 2015
3 New 2016
4 New 2016
Source: StoxPlus
Supply

43
More competition resulted in *** growth rate of processed meat segment
Processed Meat
Figure 29: Total sales of processed meat by value, 2011-2015
Source: StoxPlus
Figure 30: Total sales of processed meat by volume, 2011-2015
Source: StoxPlus
depreciation of VND
Demand

44
Shelf stable meat and chilled processed meat took up more than ***% of total value
and volume of processed meat
Processed Meat
Figure 31: Breakdown of sub-segment of processed meat by
value, 2011-2015
Figure 32: Breakdown of sub-segment of processed meat by
volume, 2011-2015
Demand

45
The Vietnamese food market is witnessing an increasingly fierce competition
between sausage manufacturers
Processed Meat
Figure 33: Breakdown of Processed Poultry Product, % of sales
value, 2011-2015
Source: StoxPlus, Euromonitor
Figure 34: Market share of sausage manufacturers, 2015
Source: StoxPlus estimation
Demand

46
Vissan is a prime example showing remarkable profitability from processed meat
segment, especially in the *** category
Processed Meat
Figure 35: Breakdown of Vissan gross profit margin structure,
9M2015
Source: StoxPlu, Vissan’s annual report
Demand
Steady and high gross profit margin

47
Processed Meat
Figure 36: Processed meat value chain
Distribution

48
Processed Meat
Figure 37: CP “3F” model (Feed – Farm – Food)
• All owned by CP
CP Branding &
Marketing
Distribution

49
Similar to processed seafood, traditional grocery retailers is the dominating
distribution channel of processed meat
Processed Meat
Source: StoxPlus
Distribution

50
Processed Meat
WEAKNESSSTRENGTH
SWOT

51
Figure 39: Processed meat Market share, % retail value 2015
Processed Meat
Source: StoxPlus

52
Processed Meat
Domestic Companies Foreign-owned Companies

53
Processed Meat
Figure 40: Gross profit margin of major processed meat companies, 2014
Source: StoxPlus

54
Processed Meat
Vissan Co., ltd
Ownership structure
Source: Reported FS

55
Processed Meat
Cau Tre Export Goods Processing Joint Stock Company
Ownership structure
Source: Reported FS

56
Company Profiling Production Sites
C.P Vietnam
Key financial indicators of C.P Vietnam in 2014
Source: StoxPlus
Production sites of C.P Vietnam (food processing business)
Source: Vietnam Fishery Society, Company Website
Phu Nghia – Ha Noi
• 01 food processing plant Ben Tre
• 01 seafood processing plant
Thua Thien – Hue
• 01 frozen shrimp processing
plant
Key Financials
Processed Meat Competitive Landscape

57
Contents
2.2 Processed Meat
2.3 Milk Products

58
Vietnam domestic milk production could only fulfill ***% of domestic demand,
leading to high import value of milk and milk products
Figure 41: Domestic production of milk, 2010-2015 Figure 42: Milk and milk products import to Vietnam, 2015
Milk Products
Supply

59
As Milk products is a concentrated industry, most factories belong to a few major
players with *** owning the most factories
Figure 43: Distribution of Milk products factories, 2015
Source: StoxPlus
Milk Products
North
Central
South
Vinamilk
TH True Milk
Nutifood
Supply

60
Even though there are more factories in the ***, the ones in the *** have bigger
capacity since they were built more recently thus owning better technology
Figure 44: Capacity of major Milk products companies (mn liters),
2015
Source: StoxPlus
Milk Products
North
Central
South
Total
***mn liters
Total
Total
Supply

61
To serve the growing industry, all main players in the industry continue to expand
or build new factories to increase their capacity
Milk Products
Figure 45: New investments in Milk products
No Owner Type of
investment
Location Year in
Operation
Capacity Total area
(m2)
Total
Investment
(US$)
1
2
3
Source: StoxPlus
Supply

62
Valued at ***US$bn, Milk products is the largest food processing segment
Milk Products
Figure 46: Total sales of Milk products by value, 2011-2015
Source: StoxPlus
Figure 47: Total sales of Milk products by volume, 2011-2015
Source: StoxPlus
depreciation of VND
Demand

63
*** dominated two thirds of the segment thanks to increasing *** consumption per
capita in the last 5 years
Figure 48: Breakdown of sub-segment of Milk products by %
value, 2011-2015
Milk Products
Figure 49: Breakdown of sub-segment of Milk products by %
volume, 2011-2015
Demand

64
Growth was experienced across all segments with *** products having the highest
CAGR during 2011-2015 at ***%
Milk Products
Figure 50: Breakdown of total sales of Milk products by value
(US$mn), 2011-2015
Source: StoxPlus
Demand
CAGR ***%
CAGR 12%
CAGR ***%
CAGR ***%

65
Milk Products
Figure 51: Milk products value chain
Distribution

66
Milk is distributed mainly in traditional grocery retailers…
Figure 52: Milk Distribution Channels, % value 2015
Milk Products
Source: StoxPlus
Supermarkets and
hypermarkets share the
equally low contribution
Distribution

67
… while Yoghurt is becoming popular in modern grocery retailers
Figure 53: Yoghurt Distribution Channels, % value 2015
Milk Products
Source: StoxPlus
Distribution

68
Milk Products
WEAKNESSSTRENGTH
SWOT

69
Vinamilk and Friesland Campina maintain their leading position with ***% total
market share
Figure 54: Milk products Companies Market share, % retail value
2015
Milk Products
Source: StoxPlus

70
Milk Products
Figure 55: Breakdown of market share per segment, 2015
Source: StoxPlusSource: StoxPlus
Milk and milk
products
Others
Cheese Yoghurt
Milk
products

71
Milk Products

72
Milk Products
Figure 56: Gross profit margin of major Milk products companies, 2013-
2014
Source: StoxPlus

73
Vietnam Dairy Product Joint Stock Company (VINAMILK)
Ownership structure
Milk Products
Source: Reported FS

74
FrieslandCampina Vietnam
Ownership structure
Milk Products
Source: Reported FS

75
TH Food Chain Joint Stock Company (TH True Milk)
Ownership structure
Milk Products
Source: Reported FS

76
Contents
2.2 Processed Meat
2.3 Milk Products

77
Vietnam fruit & vegetables sector posts a good performance in the period 2010–
2015 with export value of US$***bn in 2015
Figure 57: Fruit & vegetables import/export value in Vietnam
Figure 58: Fruit & vegetables export volume by products
Source: Vinafruit
Processed Fruit & Vegetables
Fruit & Vegetables Industry

78
Domestic production of processed fruit & vegetables depends on the growth of
export market
Figure 59: Domestic production of processed F&V, 2011-2015
Source: StoxPlus estimation
Processed Fruit & Vegetables Supply

79
Figure 60: Distribution of F&V processing companies, 2015
%
%
North
Central
South
Capacity of Region
%
Types of Business
Average Capacity
(MT/year)
State-owned
Private/JSC
FDI
Supply

80
There are only *** industrial-grade companies produce processed fruit & vegetables
in Vietnam
Figure 61: Distribution of F&V processing companies, 2015
Government-
owned
Private/JSC
FDI
North
Central
South
Supply

81
Most new investments come from companies that mainly serve the export market
Figure 62: New investments in processed fruit & vegetables
No Owner Type of
investment
Location Year in
Operation
Capacity Total area
(m2)
Total
Investment
(US$)
1 New 2017
2 New 2017
3 New 2016
4 New 2017
5 New 2016
Source: StoxPlus
Supply

82
Vietnamese customers’ *** is the biggest barrier for domestic market to grow
Figure 63: Domestic sales of processed F&V by value, 2011-2015
Source: StoxPlus
Figure 64: Domestic sales of processed F&V by volume, 2011-2015
Source: StoxPlus
depreciation of VND
Demand

83
The most popular products were *** due to its diverse uses
Figure 65: Breakdown of sub-segment of processed F&V by
value, 2011-2015
Figure 66: Breakdown of sub-segment of processed F&V by
volume, 2011-2015
Processed Fruit & Vegetables Demand

84
Figure 67: Processed fruit & vegetables value chain
Distribution

85
Source: StoxPlus
Distribution

86
WEAKNESSSTRENGTH
SWOT

87
Figure 69: Processed Fruit & Vegetables Market share, % retail value
2015
Source: StoxPlus

88

89
Figure 70: Net profit margin of major processed fruit & vegetables companies, 2013-2014
Source: StoxPlus

90
Vietnam National Vegetable, Fruit and Agricultural Product Corporation JSC (Vegetexco)
Ownership structure
Source: Reported FS

91
An Giang Fruit-Vegetables and Foodstuff Joint Stock Company (ANTESCO)
Ownership structure
Source: Reported FS

92
Contents
Section 3: Macroeconomics & Regulatory Framework
3.1 Macroeconomics
3.2 Regulatory Framework

93
0%
5%
10%
15%
20%
25%
30%
Q1/05
Q2/05
Q3/05
Q4/05
Q1/06
Q2/06
Q3/06
Q4/06
Q1/07
Q2/07
Q3/07
Q4/07
Q1/08
Q2/08
Q3/08
Q4/08
Q1/09
Q2/09
Q3/09
Q4/09
Q1/10
Q2/10
Q3/10
Q4/10
Q1/11
Q2/11
Q3/11
Q4/11
Q1/12
Q2/12
Q3/12
Q4/12
Q1/13
Q2/13
Q3/13
Q4/13
Q1/14
Q2/14
Q3/14
Q4/14
Q1/15
Q2/15
Q3/15
Q4/15
Q1/16
Q2/16
GDP Growth CPI
Macroeconomics
Vietnamese economy to slow down after a strong year
Figure 71: Vietnam’s GDP growth (q-o-q) and CPI over the last 11 year
Source: StoxPlus, GSO
GDP Growth 1H2016
↑ 5.55%
CPI 1H2016
↑ 2.35%
Well performed
Struggled
Restructured & recovered

94
No. Country No. of projects US$mn
1 South Korea
2 Japan
3 Singapore
4 Taiwan
5 Hong Kong
6 China
7 BritishVirginIslands
8 Malaysia
9 Cayman Islands
10 Other
TOTAL
Macroeconomics
Foreign direct investment (“FDI”) to climb up in 1H2016
Figure 72: Registered and disbursed FDI in Vietnam, 2015-1H2016
Source: StoxPlus, MPI
Registered 1H2016
US$11.3bn (↑105%)
Disbursed 1H2016
US$7.3bn (↑15%)
Figure 73: Registered FDI into Vietnam, 1H2016
Source: StoxPlus, MPI

95
Macroeconomics
Figure 74: FMCG growth 2015 vs. 2014
Source: StoxPlus, Nielsen
Figure 75: Value contribution by categories
Source: StoxPlus, Nielsen
Q4 2015 +/- vs Q3 2015
VIETNAM +
INDONESIA +
THAILAND +
PHILIPPINES -
MALAYSIA -
TAIWAN +
HONG KONG -
SINGAPORE -
CHINA -
FMCG: Vietnam’s volume growth 2015 vs. 2014 is only behind Thailand and
Philippines

96
Contents
3.1 Macroeconomics
3.2 Regulatory Framework

97
The government has set clear goals for segments within the food processing industry

98
The government has set clear goals for segments within the food processing industry
(cont.)

99
Hygiene and Food safety is becoming a main focus of regulation

100
Hygiene and Food safety is becoming a main focus of regulation (cont.)

101
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Publishing License No. 2651 – 2016/CXBIPH/95 -47/HĐ dated on August 13th, 2016

‹#›
Contact us at StoxPlus
Lan Nguyen
Managing Director
+84 (0) 43562 69 62 (ext. 109)
+84 (0) 964 946 760
lan.nguyen@stoxplus.com
Hoang Le
Associate Research Manager
+84 (0) 43562 69 62 (ext. 109)
+84 (0) 985 152 028
hoang.le@stoxplus.com
Head Office
5th Floor, Anh Minh Building
36 Hoang Cau Street
Hanoi, Vietnam
+ 84 (4) 3562 6962
Ho Chi Minh City Branch
2nd Floor, May Plaza
63D Vo Van Tan Street, District 3
Ho Chi Minh City, Vietnam
+84 (8) 3823 3485

Vietnam Food Processing Market 2016

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