Tuesday, 21 May 2019

Foreign investors make beeline for Vietnam’s food sector

Updated at Saturday, 22 Sep 2018, 07:57
The Hanoitimes - The country’s food industry has lured foreign investments, especially through merger and acquisition (M&A), thanks to its large population and growing consumer demand fueled by the rapid growth of the middle class.
Reports from the recent M&A Forum showed that essential consumer goods, including food, drink and household utensils, have contributed significantly to Vietnam’s M&A market in recent years.
South Korea’s CJ Group invested in Cau Tre Export Processing JSC
South Korea’s CJ Group invested in Cau Tre Export Processing JSC
The reports noted some typical deals in the food sector, such as South Korea’s CJ Group acquiring a 65 percent stake of Minh Dat Foods Co., Ltd and a 47.33 percent stake of Cau Tre Export Processing JSC, Japan’s Earth Chemical buying out A My Gia Joint Stock Company, South Korea’s Daesang Corp wholly acquiring Duc Viet Food JSC, Singapore’s Fraser & Neave Ltd. acquiring a 5.4 percent holding of Vinamilk and the US’s KKR acquiring 7.5 percent of Masan Group.

CJ Group, which has so far poured some US$600 million into Vietnam, said that it believes the country’s food and beverage sector will continuously thrive thanks to improved product quality and the Vietnamese government’s efforts in international economic integration.

In addition to the consumption in the domestic market, CJ is also aiming to export to global major markets, CJ said, adding that it will continue to invest strongly in Vietnam with various forms of investment such as Green Field, M&A and establishment of joint ventures as it does not want to miss any good M&A opportunities to grow stronger in the Vietnamese market.
Besides South Korean investors, the Japan External Trade Organization (JETRO) said that more Japanese enterprises also want to invest in Vietnam’s agriculture, including food.
Hironobu Kitagawa, Chief Representative of the JETRO office in Hanoi, said Vietnam has many advantages for agricultural development, but its potential has not been fully utilized. Japanese investors have a lot of experience in high-tech agriculture development, and they want to invest in Vietnam and bring into play their strengths.
Huge growth potentials
Stephen Liang, assistant executive director of the Hong Kong Trade Development Council, said that Vietnam has a diverse and well-developed agricultural and food industry that offers vast opportunities to companies in the food industry, from sourcing to processing.
Statistics show that over the past five years, consumption of processed foods has increased by 9.68 percent per year, and consumption of beverages by 6.66 percent per year.
According to estimates by BMI Research, Vietnam’s food industry will reach annual growth rate of 10.9 percent during the 2015-2020 period, which will promote business opportunities and trade and investment for Vietnam-based food companies.
The potential of the food sector lies not only in domestic consumption but also in exports. A diverse range of Vietnamese agricultural products are exported to over 100 nations and territories.
Meanwhile, Vu Ba Phu, head of the Trade Promotion Agency under the Ministry of Industry and Trade, said that Vietnam has been a member of the World Trade Organization since 1997 and has signed 10 free trade agreements with other countries.
This enables Vietnam-based food processing businesses to expand their market size, enhance export output, and reduce the import expenses of raw materials, machinery, and equipment, which will be manifest in product prices and the sector’s improved competitiveness, Phu noted.
To boost the development of the food industry, Phu said that the Ministry of Industry and Trade will continue to work with the Ministry of Planning and Investment and the Ministry of Agriculture and Rural Development and other agencies to offer the most favorable conditions for investors in the processed food industry.
Besides, the Trade Promotion Agency will also focus on organizing more trade promotion activities for enterprises in the food industry, he said.
Anh Hong
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