Foreign Investors Eye EU Trade Tariff Breaks
The food and beverage industry in Vietnam is growing at an average rate of approximately 7 percent, making it one of the fastest-growing sectors and contributing to 15 percent of the country’s GDP in 2019. This growth has attracted numerous foreign businesses, with Korean and Japanese investors leading the way.
With the EU-Vietnam FTA in effect, the F&B market is expected to open further to EU businesses, bringing in new investment inflow for the foreseeable future. To learn more about the benefits of the EVFTA on the F&B industry, our Business Intelligence Assistant Manager – German Desk, Do Thanh Huyen, conducted a webinar on how investors can qualify for preferential tariffs for the F&B industry.
Vietnam’s F&B industry represents significant opportunities for EU investors, with a growing middle class expected to reach 33 million by the end of 2020. This population is increasingly conscious of their dietary needs and wants to avoid negative impacts on their health.
Related: Vietnam tightens tax rules for foreign e-commerce firms
There are currently over 9,000 food manufacturing companies in Vietnam, dominated by businesses with less than 50 employees. Vietnam is a net exporter of food, but imports are growing faster than exports. A typical monthly household consumption expenditure per capita is around $111.
Several trends are emerging in the F&B industry in Vietnam, including an increase in supermarkets and a focus on healthy food. However, there has also been an increase in popular fast food chains and food delivery apps. The top five export products from the EU to Vietnam are mainly meats, beverages, dairy products, fish, and products such as flour, starch, and pastry products.
Millennials are the largest consumer group in Vietnam, and consumers buying imported products come from urban areas with higher social classes. Traditional F&B retail outlets, such as small shops and wet markets, are common, but modern F&B outlets, such as hypermarkets and supermarkets, are increasing, particularly in urban areas.
Related: Vietnam Sees Growth in Medical Tourism Sector
E-commerce channels are also becoming more popular, with COVID-19 providing opportunities for e-commerce retail. Key players in this category include Tiki, Sendo, Lazada, and Shopee.
Exporters need to prepare a commercial invoice, a packing list, certificate of non-preferential origin, proof of preferential origin, and certificate of free sale to export F&B products to Vietnam. Depending on the product, there may be further specific requirements.
As the F&B industry in Vietnam continues to grow, more foreign investors will take advantage of the opportunities presented by the EVFTA.
