The growth opportunities for F&B sector between Vietnam and UK

With a youthful and increasingly affluent population, and the growing middle class, driven by sophisticated consumer preferences, the Vietnam market is fueling demand for high-quality and foreign-sourced products, which presents an enticing opportunity for UK food and drink exports, according to the UK - Vietnam Agri-trade Report titled “Connecting the UK and VN in Agriculture, Food, and Drinks,"  launched by the British Embassy Hanoi on May 14.

The UK-Vietnam trade relationship is commencing from a modest foundation but holds considerable growth potential, particularly in the food and beverage (F&B) sector, the report noted. 

From 2019 to 2023, UK F&B exports to Vietnam grew from $78.5 million to $154 million – a significant 97% increase. In 2023, UK F&B exports to Vietnam made up 0.5% of total UK F&B exports worldwide, and 11.1% of total UK F&B exports to Southeast Asia.

UK businesses are eager to explore Vietnam as a new market to introduce a variety of high-quality food and drinks.

UK Ambassador to Vietnam, H. E.  Iain Frew, said that the agri-trade relationship between the UK and Vietnam continues to flourish. "British consumers are already able to enjoy a wealth of Vietnamese produce, which feature abundantly throughout British supermarkets and the rapidly expanding Vietnamese restaurant scene in the UK," the ambassador said, adding that "In the opposite direction, UK produce is enjoyed by Vietnamese consumers every day, based on its reputation for high-quality, produced to world leading standards of food safety, human health and animal welfare."

Challenges exist

Despite the diverse array of goods exchanged between Vietnam and the UK, trade in food, drink, and agricultural products are currently a small portion of the overall trade portfolio.

Beverages (predominately whisky) contributed $77.6 million in 2023 sales and in doing so constitute a significant portion of UK's exports to Vietnam, yet the lack of key British agricultural export products, such as salmon, shellfish, chocolate, and cheese, underscores a gap yet to be filled by British exporters.

Similarly, at 4.8% of the UK’s import portfolio, Vietnamese agricultural products and food items are overshadowed by telecommunications and sound equipment, footwear, and clothing.

Far from being disappointing, these realities indicate that significant and substantive growth opportunities lie ahead of each nation’s respective agricultural and related goods sectors, and each will play a more significant role in shaping the bilateral trade relationship.

Bright prospects

Agriculture has a significant role in the economic dynamics of each country, as well as significant portions of their respective national identities. In Vietnam, agriculture is an economic powerhouse contributing up to 11% of GDP. 

Remarkably, Vietnam attained a historic agricultural export surplus of $12.07 billion in 2023, constituting over 42.5% of the nation's overall trade surplus. Top performers were fruits and vegetables, reaching $5.69 billion, and rice, totalling $4.78 billion, indicating a noteworthy year- on-year surge of 69.2% and 38.4% respectively.

Similarly, agriculture and the broader agri- food sector are essential hallmarks of the UK economy. With one of the most globalised economies, the UK is both an exporter and an importer of high-value, consumer-oriented agricultural goods with historical pre- eminence in global agri-food trade. It is also the world’s fifth-largest importer of agricultural goods.

In 2022, the UK imported $92.1 billion in agricultural goods and exported $34.8 billion. In the same year, food, feed, and drink exports increased 13% to $31.59 billion, and imports increased 5.3% to $73.61 billion. UK food and drink exports have also reached record highs in the first half of 2023, rising to almost $15.24 billion

Moreover, the UK - Vietnam Free Trade Agreement (UKVFTA) has been opening new avenues for Vietnamese consumers to reach high-quality British food and drink. Furthermore, the UK's impending accession to CPTPP in 2024 promises even more potential trade relations between Vietnam and the UK.

Noteworthy UK agricultural exports to Vietnam include whisky, seafood, and confectionery, while imports from Vietnam to the UK primarily comprise of tropical fruits, coffee, nuts, and seafood.

"I look forward to the continued positive trajectory on agri-trade between the UK and Vietnam," the Ambassador said.

"UK product internationally renowned for its high quality and adherence to world-leading food safety, animal health, and welfare standards," Trade Commissioner Martin Kent shared. "We’re very excited that Vietnamese consumers will soon get to experience the best of British."

Source:Vneconomy