HANOI -- Vietnam Meat Industries, or Vissan, aims to parlay food safety into a competitive advantage in an increasingly globalized home market. And a recent deal with a major local player is key to this strategy.
Vissan declared at 455 butchers around Ho Chi Minh City on April 15 that it would sell only pork in compliance with Vietnamese Good Agricultural Practices, or VietGAP, a food safety certification based on the GlobalG.A.P. standard.
Vissan formed a capital and business tie-up earlier this year with Masan Group, a major Vietnamese private-sector food processor. This definitely helped the state-owned meat company obtain VietGAP certification.
Masan is at the forefront of food safety management in Vietnam. A subsidiary is believed to have begun supplying Vissan with animal feed produced with detailed attention to food safety.
Vietnamese consumers have food safety on the brain these days following such scandals as the use of suspected carcinogens and the sale of expired imported meat. In this environment, offering peace of mind with VietGAP is a great way to attract customers.
Vissan is the leading meat company in Vietnam, controlling 24% of the domestic market. Masan dominates the fish sauce market here, with a roughly 80% share. Escalating competition from abroad has driven these two major players into each other's arms.
The Vietnamese public spent $27.6 billion on food in 2015, according to the General Statistics Office -- up 50% from 2010. Steady economic growth of around 6% a year, an expanding middle class, and a population nearing 100 million all make the Southeast Asian nation's food market appealing to foreign businesses.
In meat, companies from Germany, Thailand and Japan have entered the fray in the past five years or so. Thai conglomerate Charoen Pokphand Group now runs nine Vietnamese factories, churning out meat products as well as animal feed. Among Japanese companies, NH Foods has established a presence.
Vietnam will likely face more intense waves of globalization and free trade, with the launch of the ASEAN Economic Community late last year and the signing of the Trans-Pacific Partnership free trade agreement.
The Masan deal will likely prove vital for Vissan as competition heats up. The meat company's own extensive sales network already covers 130,000 locations, including 100 directly run stores and 1,000-plus distributors. But the more, the merrier.
With modern logistics networks yet to take root in Vietnam, a food company's strength hinges on the number of retail stores in its sales network. Vissan and Masan have 370,000 between them -- a presence likely to help as they duke it out with foreign rivals.