In Vietnam, where per capita income is $ 2,000 per person per year, olive oil is considered a food reinforcement, and it is consumed almost as a medicione, ie, a tablespoon a day. Thus, despite the penetration of the product, it fails to account for 1% of the total sales volume of fats and oils, a market dominated mostly by vegetable oils.
These are some of the findings resulting in a report on the market for olive oil in Vietnam developed by ICEX Export and Investment which highlights that, despite being a well known and appreciated product, it faces two major constraints: price and distribution channel.
Furthermore, according to the document, public and legal administrations are conducive to the entry and consumption of olive oil and does not charge any tariff or para-tariff regulation for heavy sales agents.
This country is also devoted to health, beauty and lifestyle of the country, and through its Government it recommends the use of olive juice, preferably virgin olive oil from Spain. However, its use is a significant sacrifice for families because of its price.
Regarding distribution channels, these are now in the first phase of transformation from traditional to modern channels including supermarkets, hypermarkets and convenience stores. In fact, modern channels represents 5% of the total distribution in Vietnam, although this is not an obstacle to be the main gateway for food imports.
In this sense, the report suggests the existence of a bottleneck “that is rapidly saturated when a product is already inside the distributor’s catalog in sufficient quantity.” This is the case of olive oil, in which the supply overwhelms the small number of importers.
Thus, although there is a significant demand for liquid gold, international (mostly Spanish) tender outweighs. In this situation, the importer ends up being responsible for controlling the market access which, in many cases, mean that new firms expel the already established brands.
This means that in Vietnam, where Spain dominates 50% of the sector, the entry of new Spanish olive oils is carried out at the expense of kicking out others already in their place. Therefore, ICEX warns that, as long as this bottleneck that restricts the number of operators and sales exists, Spanish companies must be aware of the increased risk of perverse cannibalism.
ICEX recommends an entry strategy that should focus on price, packaging and labeling, as well as the ability to complement other products such as preserves or sauces; but in no case with wine.
Article sourceOlive oil is considered a food reinforcement In Vietnam,