1 February 2019
Prospects for the food processing industry in Vietnam look promising

food processing industryRecent statistics show that the food processing industry in Vietnam is thriving. Not only do reports show great progress over a 5-year period in this arena in Vietnam, but businesses and neighbouring countries are also looking to invest as the industry marches forward.

Basics of the food processing industry

So what actually constitutes the global food processing industry? In the era of advanced technology, fast food and packaged consumer products, it is all about getting food to market. No longer are we talking about ingredients being sold individually on market stalls (although of course this is important too), it is more about the coming together of many different ingredients, processes, and services to create a final food product. There are three stages in the food processing industry:

  • Primary food processing: This is the stage where raw agricultural products and livestock are prepared for human consumption.
  • Secondary food processing: This is the stage where food is created from ingredients which are ready to use. For instance, baking bread is secondary food processing.
  • Tertiary food processing: The commercial production of what is normally called processed food. This stage includes ready meals, fast food and airline meals.

 

Healthy growth for the last five years

Depending on the scale of the operation, Vietnam’s food processing sector can be divided into the following categories:

  • Large domestic companies (either private, joint stock, or state-owned)
  • Foreign invested companies or joint venture companies
  • Medium-sized domestic food processing companies with a local or regional presence
  • Small-scale domestic companies or cottage industries in the “unorganized” sector
food processing industry

Seafood processing equipment. in Vietnam

Recent reports and studies suggest that the food processing industry in Vietnam is really going from strength to strength:

  1. In the biggest city (Ho Chi Minh city) in Vietnam, the food processing industry grew by 8.7 per cent.
  2. Products created by the industry are sold at 2,280 convenience stores in the city. This is an increase of 507 stores since 2017.
  3. The industry is attempting to keep up with market demand. Vietnam’s consumption of processed food has increased by 6.66 percent.
  4. The working sector in Vietnam is enjoying increased annual incomes. This factor coupled with the fact that there is an increasing trend to eat ready-made meals has led to the value of food consumption taking a greater and greater part of the country’s gross domestic product (GDP).
  5. The BMI (Business Monitor International) informed prophesy made in 2015 has proved to be right. The food industry has grown by an estimated 10.9 per cent every year.
  6. Between 2013 and 2017 Vietnam’s consumption of processed food grew by an average of 9.68 per cent per year. To meet this demand, industrial production also increased by 6.8 per cent. In the first 9 months of 2018, the consumption of processed food increased by a whopping 8 per cent.
  7. Development of the industry in Vietnam is helped by preferential tax policies (the government recognizes this is an industry for investment over the next 5 years). This includes an import tax exemption for technologies to upgrade the production chain in Vietnam1.

Japan offers expert advice

It is also great news that Vietnam are not just receiving investment in the form of finance. Neighbouring countries are offering practical assistance as well. Japanese experts, aware that most of Vietnam’s exports historically have been raw food products with low value, have highlighted various factors to keep development in the food processing industry buoyant. On 20th December 2018, Japanese and Vietnamese experts met together at an important seminar to discuss the infrastructure and future growth of the food processing industry in Vietnam in Mekong Delta city. Overall, Japanese industry and government experts highlighted specific areas to enable the Vietnamese food processing industry to progress at a greater rate:

  1. Upgraded tools and mechanisms for processing need to be put into place
  2. Authorities need to communicate public awareness of safe use of pesticides (currently Japanese importers say pesticide levels are above permitted levels).
  3. To enhance agricultural processes there is a need to build ice storage systems to prevent post-harvest losses
  4. To ensure the whole system is robust, there is a need to pay specific attention to legal frameworks (inc. Health and Safety) and human resources via the state’s assistance programmes.

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1https://www.retailnews.asia/vietnams-food-processing-industry-an-appetizing-option-for-investors/

 

2 https://en.vietnamplus.vn/japan-helps-vietnam-advance-food-processing-industry/143943.vnp