Building Vietnamese shrimp brands in the EU market

Shrimp farming area meets ASC standards of Sao Ta Food Company - a member of PAN Group. Photo: PAN Group

Exports achieve positive growth

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), Vietnam shrimp exports to the EU only declined in August and September because processing factories had to reduce operating capacity in order to prevent the Covid-19 pandemic. All over the months were unaffected and grew positively.

For the vast majority of 2021, shrimp export value reached USD 3.5 billion, up 3% over the same period in 2020. In particular, the US, EU, and Australia markets were the fastest growing shrimp export markets.

According to Mrs. Kim Thu, shrimp market expert of VASEP, the EU is the second largest shrimp import market of Vietnam, accounting for 15%. Since the beginning of the year, Vietnam's shrimp exports to the EU market have recorded a promising growth rate and the demand for shrimp imports continue to increase.

Many industries are taking advantage of the opportunity from the EVFTA Agreement to increase exports to the EU market, and as a result the Vietnamese shrimp industry has also experienced positive growth in this market, after just one year after the agreement. That is a good sign for domestic shrimp businesses.

However, in order to continue to expand this market, increasing exports and building a stronger brand for Vietnamese shrimp in the EU market will be necessary.

According to the Sao Ta Food Joint Stock Company, Vietnamese shrimp brands mainly benefit from simple processed products, including fresh shrimp of all kinds as well as HLSO, PTO and PD. These items have enjoyed preferential tax rates of 0% ever since the EVFTA agreement came into effect.

It is worth noting that in the EU market, the products of Vietnam have to compete with formidable rivals such as India, Bangladesh, Indonesia and other strong competitors that have emerged in the last 2 years. Ecuador reigins supreme in the shrimp market, with the advantage of low shrimp prices and easy transportation.

Meanwhile, the cost of shrimp farming in Vietnam is quite high, raising raw shrimp prices, leading to less desirable prices for consumers.

Compete with quality

Vietnam is doing better in convincing EU customers about quality and food safety, so India, the former top shrimp supplier to the EU, is beginning to lose its monopoly on the market.

The above competitive advantage brings another challenge to the Vietnamese shrimp industry, ensuring quality standards follow the strict requirements of the EU.

According to the analysis of the Sales Department and the Sao Ta Food Joint Stock Company, the EU is a market with strict technical barriers, especially, the allowable level of residues for banned antibiotics is very low. Vietnam has mainly a small shrimp farming model, so quality control is still limited, thus supplies that meet quality standards for the EU market are still modest.

Therefore, in order to continue to increase shrimp exports to the EU market in the near future, the problem of quality needs to be addressed.

In addition, the EU market is increasingly tightening traceability, concerned mainly with sustainable products. As a result, more and more EU customers are demanding that their shrimp products must have ASC certification – the global certification for responsible aquaculture.

In the past, many shrimp exporters have taken advantage of high processing skills and focused on developing deep-processed products, such as Nobashi shrimp and fresh breaded and fried shrimp. They have many ways to increase product value and will need to ensure these meet EU standards if they want to prosper there.

Businesses believe that in order to further promote Vietnam's shrimp exports, it is necessary to have solutions at the macro level. For example, improving the quality management policy in aquaculture to create more and more sources of raw shrimp that meet EU export standards.

Besides that, it is possible to build concentrated shrimp farming models, linking small farmers to build farms that meet international standards. This will help increase ASC shrimp output for export as well as to not only fully meet the EU's traceability requirements but also create conditions to raise the level of Vietnamese shrimp. An equally important factor is the cooperation of all businesses to ensure the trust of quality, food safety, and responsibility of suppliers to jointly build Vietnamese shrimp brands in the EU market.