Vietnam’s Pet Food Market for US Firms

USDA’s Foreign Agricultural Service (FAS) is investing more than US$170,000 to help US pet food producers access the Vietnamese market. In this way, 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 keep 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 a more central role in family life and this has led to an increased interest in nutrition and health of said pets.

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

Furthermore, US pet food suppliers are set to receive assistance to enter the Vietnamese market with 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 companies in Vietnam.

Opportunities

Raw materials

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

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

For example, Vietnamese businesses currently rely heavily on rice to feed their livestock. It is often more expensive than corn used in other countries and significantly increases production costs. Therefore, US companies can find a market that provides cheaper feed products–corn, for example–to Vietnamese pet food firms.

Processing technology

Another option for US investors could 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 in their production lines that limits their output, consumes excessive resources, and results in low quality products.

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

US Government support

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

In particular, FAS sponsored AFIA, to the tune of US$170,000. These funds are intended to support US animal feed producers to expand their market share in Asian markets, particularly China and Vietnam.

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

Regulations

Notably, Vietnam has several regulations that may apply to foreign companies wishing to export animal feed products to this emerging country in Southeast Asia.

Labeling

Outlined by Decree No. 43/2017/ND-CP the basic labeling requirements for pet food products imported into Vietnam. The packaging must include the following information:

• Manufacturer’s name and address;
• The company name and address of the import agent;
• The product name and information;
• Details about how to use the product;
• Storage instructions;
• The date of manufacture of the product; and
• The expiration date.

Importing pet food

Vietnam charges a 7 percent tariff on US pet food. When importing pet food into Vietnam, US businesses 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).

VAT

The Value Added Tax (VAT) for pet food products has been abolished through 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.

Major players in the animal feed market in Vietnam

Archer-Daniels-Midland Company (ADM)

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

Purina PetCare

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

Charoen Pokphand Group

Charoen Pokphand Group (CP) is a leading Thai firm specializing in food processing, mainly for animal and pet farming. The company started investing in Vietnam in 1988 and has so far expanded to more than 90 branches spread across the country.

DoggyMan HA Co., Ltd.

DoggyMan is currently one of the most popular names in Vietnam’s pet product industry. It 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.

Move forward

As the number of pet owners in Vietnam grows, the demand for pet food will continue to increase. Along this line of thinking investors will find a lot of profitable opportunities in this market with a lot of room to grow.

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