Organic product market expects higher growth

Thursday, May 10, 2018 08:40

Food safety continues to be a major concern for Vietnamese consumers. — VNA/VNS Photo

Food safety is one of the biggest concerns in Viet Nam. The seventh business mission, under the EU Business Avenues in South East Asia programme, will bring more than 40 organic food and beverage producers to Singapore and Vietnam to introduce their quality products to the market. The mission will be participating in EuroSphere 2018 in HCM City from May 18 to 20. A Viet Nam News reporter Vu Hoa talks with experts in the sector about potential and challenges for the organic sector in Viet Nam.

Vu Kim Hanh, president of High Quality Vietnamese Goods Business Association

Could you talk about trends and opportunities for the organic food and beverage market in Viet Nam?

Food safety continues to be a major concern for Vietnamese consumers. There has been an increased consumer demand for safe and high quality agricultural food products.

Organic food has become a hot trend in Viet Nam. According to a study on Vietnamese organic enterprises, the current market capacity is estimated to be VND3.5 trillion a year. Today, nearly 80 food and beverage enterprises in Viet Nam manufacture products that have been certified by the EU as organic, including Vinamit, Vinamilk, TH True Milk, ST24 rice, Trung An rice, Luong Quoi rice, and Betrimex. Vietnamese companies are keen to continue building on this success through partnerships with EU organic producers. These partnerships can help businesses share knowledge and expertise on organic food production and support the expansion of the organic food markets in both economies.

What are the criteria and demand for organic food labelling in Viet Nam?

Some of the common labels prevalent in the organic food market today are based on international standards such as USDA, EU, JAS. These labels are unique to their geographic origin and are governed by stringent processes and regulations.

Viet Nam is also making proactive steps to enhance the food labeling system for locally produced organic products, through the development of a national organic standard that will come into effect at the end of this year. The Ministry of Science and Technology plans to officially issue a framework to regulate the production, cultivation, husbandry, processing and labeling of organic agricultural products. In addition, the national organic standard will require production and processing systems of organic food producers to be assessed and certified.

Could you share your opinion on what Government and food and beverage businesses can collaborate on to cultivate a higher standard of food safety and healthy eating?

The Government needs to focus on educating businesses on the benefits of producing safe and organic food, the role it plays in saving the environment and opportunities in the organic food market.

Support is needed for businesses that are eager to switch to organic farming methods. Government support is especially required for businesses to adopt organic production processes, and accelerate product commercialisation and expansion.

The Government should also control food safety processes and implement strong sanctions against enterprises that deliberately violate food hygiene and safety conduct. Policy change can help to encourage more businesses to adopt safe practices in organic farming.

Over my last 20 years as a member, the goal of the High Quality Vietnamese Goods Business Association focused on ensuring and improving product quality. As a result of globalisation, Vietnamese enterprises today need to follow international standards that have stringent processes and regulations.

Bruno Angelet, Ambassador of European Union Delegation to Viet Nam

Can you explain the EU organic certification process? What are the steps taken to ensure products bearing the EU organic logo are truly organic and of high quality to end consumers?

EU organic certification encompasses an in-depth, stringent list of processes that organic food producers have to undergo yearly even after approval to ensure quality of organic food during all stages – from production and processing to control and labeling. Apart from building consumer trust, EU organic certification aims to protect the environment and the welfare of animals.

As the EU covers a wide geographical region, the European Commission appoints member states to take responsibility for organic food producers within their individual areas by carrying out annual control checks. These checks help to ensure that organic food producers continue to uphold high quality standards even after being certified.

As a result of the strict regulations and tight controls over organic food producers, more than 70 per cent of Europeans trust organic product labels today. To deepen this trust, the EU mandates organic producers to list ingredients, nutritional value figures, as well as the name of the producer, processor or distributor who last handled the item. This provides transparency while safeguarding the interests and safety of consumers.

How will EU Business Avenues help small-and-medium enterprises (SMEs) expand and meet the demands for organic produces in Viet Nam? How will this benefit Viet Nam’s organic food industry?

After 25 years of deepening economic interaction between European and Asian companies, EU Business Avenues has become a leading business platform supporting successful cross-region partnerships. The Organic Food & Beverage Mission was organised to help European SMEs penetrate the Singapore and Viet Nam markets and eventually the wider Southeast Asia region.

The Organic Trade Association estimates that Vietnamese consume 1.7 million euros worth of organic products each year, highlighting a growing demand for organic food and a strong potential for European SMEs to bridge the gap in the market. While the area allocated for organic farming has continued to expand 3.6-fold since 2010 to more than 76,000 ha in 2017, Viet Nam still lacks quality control, certification standards and regulations to govern the production of organic food.

There is a significant opportunity for European SMEs to penetrate Viet Nam’s organic food market with stringently certified products, thus helping to raise quality standards and ensuring food safety requirements are being met. This year’s business mission will bring over 40 organic producers to Viet Nam to meet local distributors, exporters and importers, supermarket and retail chains, as well as hotel, cafe and restaurants (HORECA) buyers at Euro Sphere 2018 in HCM City from 18 to 20 May 2018.

Joonas Püvi, Manager of Salvest Ltd

What do you think of the potential in Viet Nam’s organic food market today?

We see a great potential in Viet Nam’s organic food market, especially within the organic baby food sector. As part of our involvement in EU Business Avenues’ Organic Food & Beverage Mission to Viet Nam, Salvest was provided with a team of expertise from a coaching network who educated us on the market and potential opportunities.

We learned that approximately 50 per cent of the entire Vietnamese population is under 30-years-old, highlighting an increase in the overall birth rate over the past couple of decades. Consecutive GDP growth also shows an overall increase in demand for products, including baby food, signaling an opportunity for us to introduce Salvest to consumers. Disposable incomes have also increased, and consumers are willing to pay more for better quality food products, especially baby food. Young parents today are generally well-educated and therefore, tend to make informed decisions on the type of food that’s best for their babies.

What kind of business opportunities are you looking for when coming to Viet Nam?

In Viet Nam, we are mainly looking for distributors who share our values and will be able to bring our products to consumers in the country. Ideally, our partner should have an established position in food distribution and a robust network within the Vietnamese market, and hopefully around the region.

At Salvest, we also believe that our partner relationships are more than just collaborating to sell a product, but to also transfer knowledge. We aim to contribute our years of experience in exporting products to several markets and support new partners with sales and marketing activities to collectively build awareness for our organic food products. — VNS

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