Renewable energy, barrier to economic development (Apr 2015)
January 19, 2017
What will happen to the fast food market when occupied by two major chains?
January 19, 2017

The advantages of foreign brand products in Vietnam functional food market (May 2015)

14-07-2015

 

According to Vietnam Association of Functional Food (VAFF), Vietnam functional food market reached 650 million USD, ranked 3rd in the ASEAN market. The y-o-y average growth rate of the market is expected to be 20% in the next 10 years. Due to the easy procedures for registration and import, in 2013, the market has nearly 7,000 types of products doubling from 2011, the number of players in the industry also doubled from 2012 to 3,500 companies.

In 2012, although multi-level marketing represented 55% of the whole market sales, there are many reports about issues related to unofficial prices, widespread of counterfeit products, and losing customer’s trust. The business in retail stores also grew up. According to last year’s survey targeting customers in 20s, the most popular distribution channels are drug stores (61.7%), retail shops (41.7%) and multi-level selling system (10%).

Imported products accounts 44% of functional food market in term of quantity in 2009 and the figure increased dramatically to 81% in 2013. Moreover, local made products don’t get high credits in customers perspective due to lack of modern production technology, high quality imported products become customers’ favor. Additionally, with normal rate of import tariff (15-30%), the competitiveness of imported products is not low.

 

The investment of large companies is also increasing. Considering about foreign investmentin multi-level marketing channel, there are many U.S. companies such as Amway, Unicity which own manufacturing plants in local area; while Herbalife, Nu Skin focus on sellingimported products. GlaxoSmithKline (GSK)–a British pharmaceutical company- has cooperated with a Vietnam company named Savipharm in production and distribution. At the same time, local companies such as Vinamilk, Saigon Food also enter the market while taking advantage of their large scale distribution channels throughout Vietnam. Moreover, ECO Pharma which was established in 2008 ranks in top 10 fatest growing companies in Vietnam 3 years consecutively from 2012. The companies specializes in supplying imported Functional Food from the U.S.through its stores system and pharmacies, carried out many large-scale advertisements to promote sales of natural products and thus in 2012,the company’s sales revenue was 45 million USD, went up 165% compared to the previous year.

So what is the trend for Japanese companies in this market? In recent years, the number of ventures entry to the market is increasing. Though Japan ranks 4th after the U.S., South Korea and Australia in terms of quantity, these companies have not invested in large scale as well as gain any significant achievement yet. Looking at the success of other companies, we can see that in order to gain the market shares despite of late entry into the market, building up strategy including advertising and marketing in large-scale is necessary.

*Including supplement, healthy foods which have function to support and maintain good health (functional drink is excluded in this article).

 

Number of product types in Vietnam function food market (2009 – 2013)

Source: Vietnam association of functional foods, 2014

 

B&Company Vietnam