Carpe diem for EU firms to invest in Vietnam’s food processing industry (Photo: VNA)Hanoi (VNA) – The EU firms have an especiallyadvantageous position to enter Vietnam’s food processing market due to theclose trade ties between Vietnam and the bloc, as well as a favourable image ofEuropean products among Vietnamese consumers, according to Vietnam Briefing news site.
In a recent article, the news site highlighted thegrowth prospects of Vietnam’s food processing sectors and discussed howEU companies can capitalise on the current opportunities in the market.
Vietnam Briefing said food processing is one of Vietnam’s most importantindustries. The country benefits from its fertile and favourable climate, andhas historically been a net exporter of food. In 2022, the agricultural sector earned a record export value of 53.22 billion USD, including a trade surplus of 8.5 billionUSD.
However, growing domestic demand is now contributing to the country’s own food manufacturing and processing industry.As income levels across the country rise, so does domestic consumption, whichis reflected in the growing demand for food services, and high-qualityagricultural products.
Vietnam’s growing middle class, which is expected toaccount for around 40%of the population by 2030, is becoming a major driver of the foodindustry’s growth.
The article cited Statista's figures that show in 2021, the foodand beverage (F&B) manufacturing industry contributed 17 billionUSD to the country’s GDP and created jobs for three million people. Meanwhile,the foodservice industry is expected to record a compound annual growth rate (CAGR) of 8.5% between 2022 and2027, with a growing trend toward dining out.
It said there are advantages forEU firms investing in Vietnam’s food processing industry, one of which is the EU-Vietnamfree trade agreement (EVFTA), which will, over the course of the next 10years, see the elimination of almost all import duties between Vietnam and thebloc.
The EVFTA significantly improves the prospectsfor bilateralagri-food trade, which would see an increase in the availability of bothspecialty Vietnamese products in the EU and European products in Vietnam.
A notable aspect of the EVFTA is the inclusion ofgeographical indication (GI) for certain food products. The EVFTA automatically recognizes the GI of 39Vietnamese food products and 169 European products. This will help consumers inboth markets recognize the authenticity of the products and provide a leg-upfor companies when it comes to marketing their products in the respectivemarkets.
Secondly, demand for high-quality food products. EUinvestors may also be able to capitalize on the growing taste for high-end,high-quality, and organic products in Vietnam. In the food service industry,consumers are keen to explore new cuisines and ingredients, while nichehigh-end segments present opportunities for the introduction of specialtyproducts, such as European wines, cheeses, and processed meats.
Thirdly, Vietnam shows a robust food processinginfrastructure. In addition, the relatively low labour cost in Vietnam makes ita competitive option for the location or relocation of manufacturing andprocessing facilities.
The article affirmed that Vietnam’s food processing industry is increasinglybecoming a magnetfor foreign investment, noting that the fast pace of development and strong growthprospects have already pulled in many foreign companies and fostered the growthof a range of domestic producers. Vietnamese-foreign joint ventures, and mergers and acquisitions (M&As) have also increased in number in recent years./.
