Vietnam: An Emerging Market for U.S. Pork

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Source: Pork Checkoff

Vietnam is an important emerging market for United States agricultural exports. In 2017, the U.S. exported over $11 million of fresh/chilled/frozen bone-in hams and shoulders to Vietnam, making it Vietnam’s second largest trading partner for pork products behind China/Hong Kong. Vietnam also imports bellies, prepared/preserved hams, and pork variety meats from the U.S. The National Pork Board (NPB) realizes the importance of the Vietnam market for pork exports and is working in collaboration with the U.S. Meat Export Federation (USMEF) to increase the U.S. market share of pork and pork variety products across Vietnam. In 2018, NPB is investing $255,000 into the ASEAN region, which includes Vietnam. This investment is enhancing and elevating U.S. pork marketing and consumption across the region.

 

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Exports of U.S. pork continue to grow in Vietnam.
Source: Organisation for Economic Co-operation and Development

Overview of Vietnam

Located on the South China Sea, Vietnam is the third largest U.S. pork export market in Southeast Asia. It has a population of over 94 million people with a per capita GDP of $2,546. With a growing middle class and booming economy, Vietnam’s demand for animal protein continues to increase. Currently, the top U.S. commodity exports to Vietnam are cotton, tree nuts and soybeans. However, pork consumption is expanding in Vietnam and the country has become an important emerging market for U.S. pork and pork products.

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According to the USDA, in 2017 U.S. agriculture exports to Vietnam totaled $2.5 billion, making it the 11th largest market.
Source: United States Department of Agriculture (USDA)

Domestic Industry

Vietnam produced over 7.7 million pounds (3,500 metric tons) of pork in 2017 and is forecasted to increase overall production in 2018. The consistent increase of domestic pork production as well as other animal production can be most attributed to the robust economy and rapidly growing middle class in Vietnam and across Southeast Asia. Overall, animal protein consumption has increased in Vietnam over the last 10 years. Fish and pork are the two most widely consumed animal proteins in Vietnam with pork ranking as the second highest-consumed protein behind fish.

Vietnamese Protein Production

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Animal protein production continues to grow in Vietnam, attributed to its growing middle class. Source: OECD

Vietnamese Protein Consumption

vietnam-per-capita-consumption
Animal protein consumption in Vietnam has grown steadily over the last 10 years.
Source: OECD

Retail Sector

Vietnam’s food retail market is composed of four types of distribution but is dominated mainly by small traditional traders. However, modern retail channels are expanding to keep pace with consumer demand (Table 1). In fact, Vietnam is forecast to be the fastest growing convenience store market in Asia by 2021 with a growth rate of 37.4 percent. In 2017, Vietnam grocery sales totaled over $70.9 billion dollars, up 35.7 percent since 2013. Further, predictions indicate that modern food retailers will account for roughly 20 percent of sales by 2025. Retailers such as Co-op Mart, MM Mega Mart, Vincom, and Vinmart are key players in the supermarket and wholesaler sector, while B’s Mart, Circle K, Co-op Foods, Shop & Go, and Vinmart+ largely dominate the convenience store sector (Table 2). In addition to these outlets, wet markets range from large scale to smaller “mom and pop” stores and the Vietnamese government estimates that over 8,500 wet markets exist today in the marketplace.

 Table 1: Vietnamese Retail Channels (sales in trillion VND)
Source: USDA, Euromonitor (The World’s Largest Market Research Store) and USMEF.
Table 2: Examples of Vietnamese Supermarkets and Convenience Stores
Source: FAS analysis of Global Trade Atlas (GAIN Report)

Looking Ahead

U.S. market potential in Vietnam depends heavily on the willingness of consumers to purchase previously frozen pork in wet markets and supermarkets. However, evidence from Hong Kong and Singapore suggests that frozen pork will displace fresh pork if the discount is 25 percent. Vietnamese production costs are 75 percent higher than the U.S. production system, and if economic barriers were removed and the currency allowed to float, then U.S. pork could capture a significant share of the market. Long-term opportunity exists, possibly 10 percent of the total market or 661 million pounds (300,000 tons) worth $600 million.

Upcoming Mission to Asia

This year, the National Pork Board International Marketing Committee selected a mission trip that includes visits to Vietnam, Singapore, Hong Kong, and Macau. This mission will provide an overview of pork demand in both developing and developed markets for U.S. pork. Throughout the trip, the delegation will have the opportunity to visit both traditional wet markets, modern supermarkets and convenience stores where pork products are being sold and witness the U.S. pork marketing program in the region that is being pursued by USMEF. Attendees will also be meeting with U.S. Embassy staff, specifically Foreign Agricultural Service attachés and participate in a trade reception that allows both U.S. producers and packers the ability to meet one-on-one with international buyers and key stakeholders in the region.

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