2018 Confectionery Packaging Trends
From the beginning of 2015 to now, import taxes on confectionery products from ASEAN countries have decreased to 0-5% (according to Vietnam’s ATIGA tariff reduction roadmap for 2015-2018). The domestic confectionery market has faced an influx of imported products from many countries in the region, such as Malaysia, Indonesia, and Thailand. These imported products are diverse in design, type, and quality. According to market research by BMI (Business Monitor International – one of the world’s leading market research organizations with a range of macroeconomic, financial market, and all industries research services in nearly 200 countries worldwide), the domestic market’s consumption demand is forecast to reach VND 40,000 billion by 2018.
Vietnam has a large and young population, with per capita consumption of confectionery products only over 2kg/person/year, which is low compared to the world average of 3kg/person/year. And 65% of the rural population has a very modest consumption of confectionery products compared to their potential. The market share of domestic confectionery brands such as Bibica, Hai Ha, and Huu Nghi accounts for only about 12%, while foreign brands gradually dominate the market.
Kinh Do Group has transferred 20% of its confectionery business to Modeleze International. Lotte Group also holds 44% of Bibica’s shares, while PAN recently increased its ownership in BBC to 43.73% in late October 2016. In the context of increasing integration, the pressure to compete with imported confectionery products is becoming more intense, and the possibility of being acquired by foreign investors is also growing.
Confectionery products do not require high technology and are not essential goods in daily life, but their revenue is significant and growing. The Vietnamese confectionery industry has had a high and stable growth rate in recent years, with an annual output of over 150,000 tons and a revenue of VND 27 trillion in 2014. The yearly average industry revenue growth rate in 2010-2014 was 10%, while this figure was 35% in 2006-2010. It is forecasted that from 2015-2019, the growth rate will be around 8-9%.
The packaging industry is interested in developing confectionery and working closely with this industry. Many research units evaluate the Vietnamese packaging industry to have a relatively large scale (approximately USD 6.3 billion according to Stoxplus’s calculation in 2014) with many products. The industry’s growth rate is 5-16% as it is a supporting industry and closely relates to important initiatives such as confectionery, alcohol, pharmaceuticals, or cosmetics.
According to MBS’s analysis report, the packaging industry’s growth will maintain at a two-digit level shortly due to high growth rates in consumer goods industries. However, the scale of domestic packaging companies is not large, with only about 10-20 companies having annual revenues of over 30 million USD and many companies with payments below 5 million USD. Packaging companies are evaluated to have low bargaining power when negotiating with partners.
In addition, companies in the industry also face significant risks from exchange rates and limitations in production. The reason is that most machinery, production lines, and raw materials are imported.
Companies are increasingly focusing on packaging as a basis for enhancing competitive capabilities. Packaging is related to product preservation and cost and is a significant part of a brand’s identity.
HOANG VUONG PAPER PACKAGING CO., LTD.
With more than six years of experience in the paper packaging industry and establishing a brand reputation in the market. Hoang Vuong Paper Packaging Co., Ltd. is proud to be a private packaging company in Vietnam that accompanies many big brands inside and outside the country.
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