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Frozen food producers vying for ‘every inch of ground’ in supermarkets   2010-05-25 - Saigon tiep thi

Frustrated that they’re squeezed for display space in Vietnam’s supermarkets, frozen food firms are establishing new distribution channels, reports Saigon Tiep Thi.

 

 
Head to head in the freezer

 

Tran Van Lap, an executive at Cau Tre Processing and Export Company, recalls that 10 years ago only Cau Tre brand spring rolls were displayed in the frozen foods case of the Co-op Mart Cong Quynh (District 1, HCM City).  Now there are now so many spring roll brands displayed there that Lap cannot remember all of them.

 

Le Thi Thanh Lam at SG Fisco Seafood Company tells a similar story.  Several years ago, Fisco’s seafood products covered a large area in the Co-op Mart frozen food case.   Now they share space with competing brands: Phi Long, An Vinh, Cholimex and Hai Nam.  Lam believes that it’s the shrinkage of display space that’s constrained SG Fisco’s sales at the supermarket these last two years.

 

Some companies call the competition for ‘every inch of ground’ in supermarkets a deterrent to development of new products.

 

Though Cau Tre now has 40 products, only two-thirds can squeeze onto the shelves of a typical supermarket.  Fisco can find shelf space for only half of its 20 products.  Agifish An Giang typically finds room for only 30 of its 50 products at the supermarkets, while only a few of the wide variety of Vissan brand specialty meat products can be sold though supermarkets.

 

Not surprisingly, these food companies have thought of establishing distribution channels of their own. However, it is not so easy to do. Thanh Lam said that her company, SG Fisco, was not successful when it opened its own stores.  The stores sold relatively few products because they were not diversified enough to satisfy  customers.  Lam said that costs of the exclusive outlets were relatively high, so Fisco did not succeed in underselling similar products offered in the supermarkets.

 

Seeking new distribution channels

 

Van Duc Muoi, General Director of Vissan, considers supermarkets to be an important marketing channel.  However, he quickly adds, to increase competitiveness Vissan is expanding its retail network, now sixty stores nationwide.  It is also selling products directly to schools and cafeterias, which brought in revenues of 188 billion dong in 2009.

 

A retail store requires a cold storage display chest which costs some ten to13 million dong, business premises and staff.  It must display a lot of products, enough to meet a family’s demand for meals.  That’s not difficult for Vissan, which distributes thousands of food products, from meat and seafood to processed vegetables, condiments and sauces.

 

Vietnam’s General Statistics Office records that in 2009, the total revenue of the processed food industry was some 297 trillion dong and that Vietnam has 5982 processed food producers.   A market survey conducted recently guesses that if small establishments are also counted, Vietnam has 8000 establishments that make processed food.

 

Emulating Vissan, other producers plan to develop a retail network of their own, but few such shops have been opened so far. The main obstacle is finding a range of products to sell.   Agifish An Giang executive Nguyen Van Ky explains that “we have some 50 products.  If we open retail shops but sell only seafood there, we will not succeed.”

 

Producers are realizing that they need to cooperate with each other. For example, Fisco products are now found on sale in Vissan, Foocomart or Cau Tre retail shops.

 

Cau Tre’s Lap said that some of its retail shops in the centre of HCM City have sales of a hundred million dong a month, comparing favorably to the company’s sales through supermarkets.  The company has just begun to market its products in Cambodia as well.

 

Three or four years ago, Fisco’s revenues depended entirely on supermarket sales, but now the supermarkets only contribute 60 percent.  For Cau Tre, it’s 40 percent and for Vissan, only 20 percent.



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