Vietnam’s Pet Food Market for US Firms

The USDA’s Foreign Agricultural Service (FAS) is investing more than US$170,000 to assist US pet food producers to access the Vietnam market. In this light, we look at how this market is developing.

The trend of raising pets in Vietnam is growing rapidly. According to a survey by TGM Pet Care, 67 percent of respondents in Vietnam own pets and up to 53 percent of those people are raising more than one, with dogs and cats being the most popular.

Moreover, the relationship between Vietnamese pet owners and their pets is changing with their furry friends taking an ever more central role in family life and this has sparked increased interest in the nutrition and health of said pets.

And it is this that has facilitated rapid growth in Vietnam’s pet food industry. In fact, according to American Animal Feed Industry Association (AFIA) data, Vietnam’s total pet food imports have grown by 69 percent in the last five years.

Furthermore, US pet food suppliers are set to receive a boost to enter the Vietnam market to the tune of US$170,000 in funding from the USDA’s Foreign Agricultural Services.

With this in mind, we look at the opportunities for US pet food firms in Vietnam.

Opportunities

Raw materials

American investors can find attractive investment opportunities by supplying raw ingredients for pet food manufacturers.

Many pet food producers in Vietnam currently lack the necessary technology to manufacture additives and specialized nutritional supplements for people’s pets. As a result, these raw ingredients are often imported.

For example, Vietnamese enterprises currently rely heavily on rice to feed their animals. This is often more expensive than maize used in other countries and significantly increases production costs. Therefore, US firms may find a market providing cheaper feed products–maize, for example–to Vietnamese pet food firms.

Processing technology

Another option for US investors may be to provide high-quality processing equipment and machinery to domestic production facilities.

Currently, pet food processing companies in Vietnam are limited by older technology on their production lines which limits their output, consumes excessive resources, and results in low-quality products.

This is leading domestic buyers to choose foreign pet food–a trend local firms may be looking to arrest.

US Government support

The USDA’s Foreign Agricultural Service (FAS) is investing more than US$203 million to assist agricultural groups in expanding export markets for US agricultural products and food.

Specifically, the FAS has sponsored the AFIA, to the tune of US$170,000. These funds are earmarked to support US animal feed producers to expand their market share in Asian markets, China and Vietnam specifically.

This should see easier market access for US pet food firms in the near future.

Regulations

Notably, Vietnam does have some regulations that may apply to foreign firms looking to export animal feed products to this burgeoning Southeast Asian nation.

Labeling

Decree No. 43/2017/ND-CP outlined key labeling requirements for pet food products imported into Vietnam. Packaging must include the following information:

• The manufacturer’s name and address;
• The company name and address of the import agent;
• The product name and information;
• Details regarding how to use the product;
• Storage instructions;
• The date the product was manufactured; and
• The expiry date.

Importing pet food

Vietnam charges a 7 percent levy on US pet food. When importing pet food into Vietnam, US enterprises must comply with the customs procedures outlined in Circular 38/2015/TT-BTC. This includes providing the following documentation:

• A customs declaration,
• A commercial/sales contract,
• The official invoice,
• A packing list,
• A certificate of origin (if any)
• The bill of lading,
• Quality inspection records, and
• A catalog of goods (if any).

Value Added Tax

The Value Added Tax (VAT) for pet food products was eliminated by amendments to the Law on Value Added Tax outlined in Law 71/2014/QH13. This law applies to both imported and domestically produced animal feed products.

Key players in the Vietnam animal feed market

Archer-Daniels-Midland Company (ADM)

ADM is one of the world’s largest nutrition firms, specializing in both human and animal nutrition. ADM provides a variety of products in Vietnam and is headquartered in southern Vietnam’s Ho Chi Minh City.

Purina PetCare

Purina PetCare is a member of the Nestle Group. Purina provides its premium pet food product Purina Pro Plan in Vietnam. This product is increasingly popular with Vietnam’s pet-owning consumer class on the back of growing disposable incomes and an affinity for high-end products.

Charoen Pokphand Group

Charoen Pokphand Group (C.P) is a leading Thai firm that specializes in food processing, mainly for livestock and pet farming. The company began investing in Vietnam in 1988 and has so far expanded to more than 90 branches spread around the country.

DoggyMan H. A. Co., Ltd.

DoggyMan is currently one of the most popular names in Vietnam’s pet product industry. This is a Japanese pet food manufacturing company that offers a range of pet products such as chewable dog treats and chips. DoggyMan has had an office in Vietnam since 2015.

Mars Petcare

Mars Petcare is a leading pet food company from the US. A subsidiary of Mars Incorporated, Mars Petcare distributes several well-known international brands in Vietnam such as Pedigree, Whiskas, Royal Canin, and Temptations.

Moving forward

As the number of pet owners in Vietnam expands, the demand for pet food will continue to increase. Along this line of thought investors can find a myriad of profitable opportunities in this market with plenty of room to grow.

For more information on Vietnam’s pet food market, contact the business advisory experts at Dezan Shira and Associates.

• Previous Article German-Vietnamese Cooperation on the Exchange of Skilled Workers
• Next Article Thai Nguyen’s Development Master Plan for 2021 to 2030