Raising profile of processed food brands the key to growth in a market where a growing middle class wants more quality. CP Vietnam is gearing up to expand its business more with a focus on food processing from live animals, as it reaffirms its optimism about the Vietnamese economy despite the difficulties seen in 2012.<\/p>\n
\u201cVietnam will continue to be one of the biggest investment destinations for Charoen Pokphand Foods, particularly among Asean countries,\u201d said Sooksunt Jiumjaisawanglerg, chief executive of CP Vietnam (CPV).<\/p>\n
\u201cOur focus will be more on food processing and ready-to-eat food products in order to increase brand awareness as well as to complete full supply chain traceability to ensure food safety and manage reputational risks.\u201d<\/p>\n
In recent years, the issue of food safety has never been far from the headlines, be it early mortality syndrome (EMS) in shrimp or blue ear disease in pigs, Mr Sooksunt said in an interview with Asia Focus in Dong Nai province, one of Vietnam\u2019s main manufacturing centres and agricultural hubs.<\/p>\n
For this reason, he said, CP wanted to focus more on food processing to protect its brand and enhance product quality awareness. However, he acknowledged that it could take up to 10 years before ready-to-eat food products generate the same revenue as the animal feed and livestock businesses.<\/p>\n
More than 90% of CP\u2019s business in Vietnam currently derives from animal feed, farming and aquaculture. The processed food business accounts for only 3% of CPV\u2019s total revenue.<\/p>\n
Vietnam is a fast-growing market with population of about 90 million and by 2020 it is expected to reach 100 million. Given the rapid rise of the middle class and urbanisation, now is a perfect time for company to take the advantage of the opportunities presented, said Mr Sooksunt.<\/p>\n
To build the processed food business, the company plans to expand sales and distribution approaches targeting both domestic customers and foreign leisure and business travellers. Its main distribution channels are CP Fresh Mart and CP Shop outlets that sell ready-to-eat and frozen food, and its Five Star grilled chicken street stalls.<\/p>\n
The company currently has 55 CP Fresh Mart shops in Vietnam with a plan for at least 20% expansion per year, 530 CP Shop outlets and 110 Five Star kiosks.<\/p>\n
\u201cOur challenge is that we need to compete with a brand that has a very strong presence in this field, Vissan, which is the largest Vietnamese meat processing company,\u201d Mr Sooksunt explained. \u201cIt has been in the market for over 30 years. What CPV will do is focus on creating a more \u2018international taste\u2019 \u2014 a taste that everyone can eat.\u201d<\/p>\n
In a few years, he said, the company expects to bring its Chester\u2019s Grill chicken restaurant chain to Vietnam, where it believes the products will do very well.<\/p>\n
CP has two food processing plants in Vietnam, one in the north and one in the south. This year it plans to build one more plant in the south and one in the central region.<\/p>\n
Last year CPV experienced low revenue growth of 8%, reflecting the global economic slump and consequent impact on Vietnam\u2019s economy and its consumers\u2019 purchasing power. The second half of 2012 was particularly difficult because of an oversupply of animal products and rising raw material prices.<\/p>\n
Making the most effective use of its chicken output is a big challenge for CP.<\/p>\n
\u201cUnlike Vietnamese people, most western people prefer breast meat, which leaves massive amounts of other chicken products to be exported to Asia including Vietnam,\u201d explained Mr Sooksunt. \u201cIt\u2019s very important that we create public awareness and general understanding of where these products are derived from.\u201d<\/p>\n
Chicken raisers in Vietnam face losses because their costs are higher than the prices per kilogramme in the local market, while imported goods are being sold at 60% of domestic prices.<\/p>\n
Moreover, the outbreak of blue-ear disease from infected pigs transported into the country has some consumers concerned about pork products, he said.<\/p>\n
The shrimp industry, meanwhile, is trying to combat early mortality syndrome (EMS), which has caused large losses among shrimp farmers in Southeast Asia and elsewhere, with CP Vietnam no exception.<\/p>\n
However, Mr Sooksunt still strongly believes that Vietnam\u2019s aquaculture industry holds a lot of potential. With 3,260 kilometres of coastline (Thailand has about 2,600 km) plus another 112 estuaries, its fishery resources are abundant and diversified. As well, the surrounding international waters are not overfished, which sets them apart from many other marine areas.<\/p>\n
Research conducted in Vietnamese waters has identified about 130 fish species, 225 shrimp species and 600 seaweed species with high economic value.<\/p>\n
\u201cFor the aquaculture business, CP Vietnam expects to grow by at least 18% per year,\u201d said Mr Sooksunt. \u201cMost of the shrimp that we produce, 90%, will be exported to Japan given that our products could have achieved high sanitary requirements.\u201d<\/p>\n
Established in 1993, CPV\u2019s integrated livestock and aquaculture business now span the entire food production chain. The company began by producing and distributing feed before diversifying into breeding livestock and aquatic animals, followed by processing of meat and packaged food products. The company now has more than 11,000 employees, 90% of them local people.<\/p>\n
Although the rising cost of raw materials puts pressure on margins in the animal-farming business, Mr Sooksunt says it is a minor issue, especially in a country where 68% of its 90 million residents are under the age of 40. Over the next five years, Vietnam\u2019s expanding workforce is expected to drive consumer spending which would double the number of middle-class families to be as high as 14 million.<\/p>\n
\u201cI believe the worst has been passed in Vietnam. Foreign investors are starting to come back. Macroeconomic stability is starting to pick up as we can see that now many people are regaining their confidence in the country,\u201d he said. \u201cInflation is now under better control and political stability is always the government top\u2019s priority.<\/p>\n
\u201cCPV will continue to call Vietnam our second home, we have a very positive outlook in this country and believe 2013 will be better than last year.\u201d<\/p>\n
(Source: http:\/\/www.bangkokpost.com)<\/p>\n","protected":false},"excerpt":{"rendered":"
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