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Overview of Vietnamese spice market

Overview of Vietnamese spice market

Thursday 04, 11 2021
The competition on the spice market of Vietnam is a fierce battle between potential foreign businesses and experienced local businesses.

According to recent statistics from Nielsen Market Research Company, Vietnam's seasonings and sauces market will grow by an average of 25-32% each year from now to 2022. This is a potential market in which Vietnamese enterprises are trying to compete with foreign enterprises.

Spices consumption habit of Vietnamese people

Data from a scientific report on the spice industry in Vietnam and the world under the Institute of Tropical Biology shows that on average, Vietnamese people consume about 450,000 tons of spices each year.

Tropical Biology

As for seasoning products, a 2013 survey by the market research company Kantar Worldpanel showed that each year Vietnam consumes about 1,500 tons.

Having been on the market for more than a decade, seasoning powder has become a substitute for monosodium glutamate (MSG) in many Vietnamese cooking recipes. Dominationg this market are the brands: Knorr (Unilever), Maggi (Nestlé), Aji-Ngon (Ajinomoto) and Miwon. It is worth mentioning that the condiment that changes this cooking habits of Vietnamese consumers comes from American investors.

seasoning powder

In fact, the seasoning powder market also had the participation of domestic investors, who quickly gave up the game. For example, when Unilever launched Knorr seasoning, Masan also had Chinsu seasoning. However, only 5 years later when the market share was always less than 5%, Masan decided to withdraw from this market.

 Market share of spices and seasonings 

While foreign brands are exclusively dominating Vietnam’s seasoning powder market, in the sauce and chilli sauce market, Vietnamese businesses are quietly competing to assert their position with big names such as Masan Consumer, Cholimex Food, Trung Thanh, and Nam Duong.

According to Nielsen's report, the most used sauces in Vietnam are fish sauce and soy sauce. In particular, Masan Consumer (Masan Group) currently holds the largest market share. According to Masan Group's 2015 financial report, the chili sauce and ketchup market is about 847 billion/year VND. The growth rate of output is 11%/year and of value is 20%. The growth rate of chili sauce is forecasted to increase because of the  rising consumption demand in rural areas and production facilities.

Cholimex Foods

Cholimex Foods also proves the attractiveness of the market, when the chili sauce segment is contributing good revenue to the toal sales of this company. In recent years, Cholimex Foods has achieved an average annual growth rate of approximately 30% in revenue and profit. This brand is closely following Masan Consumer with a market share of 37% (that of Masan is 43%). Besides, Cholimex's market share is still quite stable when it is selected by Pizza Hut Vietnam fast food restaurants as a supplier for their store system.

In addition, Saigon Co.op also jumped into this segment by cooperating with Wilmar International Limited (Wilmar) to establish the joint venture Nam Duong International Food Co., Ltd., producing sauces, spices, and sauces with brand name Nam Duong.

The question is, apart from the big brands, is there room for other brands in the spice and sauce market?

Vietnamese brands are still faced with several challenges. For instance, if they want to enter the supermarket system, they will have to pay for trade discounts up to over 25%. At the same time, the fact that Vietnamese consumers always prioritize foreign products over domestic ones is still the biggest barrier, causing Vietnamese businesses to face with many obstacles right in their home market. Therefore, domestic businesses that want to survive and develop must find a niche, redirecting to selling in restaurants, bars, hotels and other provinces.

Compiled by VietnamCredit

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