Korean Companies Must Hurry to Enter Vietnam Processed Food Market

[Asia Economy Reporter Hwang Yoon-joo] Recently, the processed food market in Vietnam has been rapidly growing, leading to claims that it is promising for Korean companies to enter.

According to the 'Vietnam Processed Food Market Trends and Implications' report released on the 26th by the Korea International Trade Association's International Trade and Commerce Research Institute, the size of the Vietnamese processed food market in 2019 was $17.1697 billion, growing at an average annual rate of 6.8% over five years since 2014. By product category, functional beverages and convenience food products showed remarkable growth, including sports drinks (15.8%), cereals (12.4%), yogurts (11.8%), and energy drinks (11.5%).

Korea's processed food imports to Vietnam increased 2.4 times in five years, from $59.68 million in 2013 to $144.95 million in 2018. Major imported items include mixed drinks such as rice and ginseng, gim (seaweed), red ginseng tea, ramen, and powdered milk. In particular, Korean ramen accounted for $13.08 million, representing 55.7% of Vietnam's ramen imports, making Korea the top ramen importer.

The report stated, "Due to Vietnam's economic development, income growth, rapid urbanization, and high economic participation rate of women, three trends?'convenience,' 'high quality,' and 'emergence of the new generation'?are appearing in the processed food market," and also presented entry strategies.

First, as the market for breakfast substitutes among urban office workers is expanding, Korean products such as seonsik (powdered grain drinks), juk (rice porridge), home meal replacements (HMR), meal kits, and instant cooked foods are expected to be promising. It suggested targeting modern distribution channels such as convenience stores, which expanded from about 1,500 stores in 2016 to over 3,000 stores by May 2019.

Next, with increasing interest in health and awareness of food hygiene and safety, it recommended focusing on developing functional premium products fortified with nutritional components, obtaining food safety certifications to strengthen the image of safe food, and utilizing digital content marketing through YouTube, Facebook, and web dramas to target the emerging major consumer group, Generation Z in their teens and twenties.

Senior Researcher Son Chang-woo said, "It is important to localize products to suit Vietnamese consumers' tastes while maintaining uniqueness to establish a differentiated image," adding, "Since Vietnamese consumers have high trust and favorability toward Korean products, it is worth expecting market expansion by our companies."

This content was produced with the assistance of AI translation services.