Domestic sugar under pressure on home turf

A sugar production line in the southern city of Bien Hoa. (Photo: VNA)

Domestic sugar producers have been facing mounting pressure in competition with imported sugar in recent years.

According to the Vietnam Sugar and Sugarcane Association (VSSA), there has been a surge in supply since the beginning of 2023 while retailers were sitting on a large stockpile left over from the previous year. It has resulted in an excess in supply in the market, which was already saturated and hindered by low demand.

The VSSA said in a recently released report that the country's domestic supply last year was estimated at 2.8 million tonnes, significantly higher than demand, which was estimated at 2.1-2.3 million tonnes. The association expected the surplus to last for the foreseeable future as imported sugar continued to trickle in.

For the long term, however, the association said there is a risk of market disruption should the surplus prevail, which will likely force domestic producers to cut prices, even lower than production costs to compete or reduce buying prices from sugarcane farmers.

Industry experts said imported sugar often had the upper hand due to lower prices.

Ninh Thị Hue, a merchant at Tan Hiep Market in the southern city of Bien Hoa, said her customers often prefer imported sugar while buying in large quantities. For example, her quotes for imported sugar were at around 20,000 VND while domestic brands typically were at 24,000-25,000 VND per kilogramme.

While being sold at a higher price point, there was not much of a difference in quality between imported and domestic brands. This has pushed most consumers, who require large quantities, to go for imported sugar.

Industry experts have long voiced their concern over a lack of strong domestic brands, as well as an inadequate distribution network to reach consumers.

A number of domestic producers, however, had taken the initiative to build their own network by collaborating with major retailers and e-commerce platforms.

"We are working with 122 distributors and running a network of 53,000 retailers across the country, which accounts for around 80 per cent of our sales last year," said Le Van Tien, sale-director of Thanh Thanh Cong-Bien Hoa JSC.

He said his firm has started expanding on popular e-commerce platforms such as Lazada, Tiki, Sendo and Shoppee in recent years.

He said Vietnamese consumers still have a preference for domestic sugar but it's crucial for producers to introduce new lines of products and bring down prices to compete against imported sugar./.