In a recent article, the news site highlighted the growth prospects of Vietnam’s food processing sectors and discussed how E.U. companies can capitalize on the current opportunities in the market.
Vietnam Briefing said food processing is one of Vietnam’s most important industries. The country benefits from its fertile and favorable climate, and has historically been a net exporter of food. In 2022, the agricultural sector earned a record export value of USD 53.22 billion, including a trade surplus of USD 8.5 billion.
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Carpe diem for E.U. firms to invest in Vietnam’s food processing industry
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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, which is reflected in the growing demand for food services, and high-quality agricultural products.
Vietnam’s growing middle class, which is expected to account for around 40% of the population by 2030, is becoming a major driver of the food industry’s growth.
The article cited Statista's figures that show in 2021, the food and beverage (F&B) manufacturing industry contributed USD 17 billion to the country’s GDP and created jobs for three million people. Meanwhile, the food service industry is expected to record a compound annual growth rate (CAGR) of 8.5% between 2022 and 2027, with a growing trend toward dining out.
It said there are advantages for E.U. firms investing in Vietnam’s food processing industry, one of which is the E.U.-Vietnam free trade agreement (EVFTA), which will, over the course of the next 10 years, see the elimination of almost all import duties between Vietnam and the bloc.
The EVFTA significantly improves the prospects for bilateral agri-food trade, which would see an increase in the availability of both specialty Vietnamese products in the E.U. and European products in Vietnam.
A notable aspect of the EVFTA is the inclusion of geographical indication (GI) for certain food products. The EVFTA automatically recognizes the GI of 39 Vietnamese food products and 169 European products. This will help consumers in both markets recognize the authenticity of the products and provide a leg-up for companies when it comes to marketing their products in the respective markets.
Secondly, demand for high-quality food products. E.U. investors 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 niche high-end segments present opportunities for the introduction of specialty products, such as European wines, cheeses, and processed meats.
Thirdly, Vietnam shows a robust food processing infrastructure. In addition, the relatively low labor cost in Vietnam makes it a competitive option for the location or relocation of manufacturing and processing facilities.
The article affirmed that Vietnam’s food processing industry is increasingly becoming a magnet for foreign investment, noting that the fast pace of development and strong growth prospects have already pulled in many foreign companies and fostered the growth of a range of domestic producers. Vietnamese-foreign joint ventures, and mergers and acquisitions (M&As) have also increased in number in recent years.
Source: VNA