Vietnam is a global leader in the production and export of Robusta coffee and pepper. However, foreign companies are increasingly dominating the market share for these commodities.

Rising Prices and Foreign Dominance

In comparison to the previous year, pepper prices have increased by 30%, and coffee prices have surged by over 100%. This price hike has attracted numerous domestic and international businesses to buy, process, and export these high-profit agricultural products.

Foreign Companies Take the Lead

For pepper, Vietnam has been the world leader in production and export for the past 20 years. However, according to the Vietnam Pepper Association (VPSA), foreign companies are leading the pepper export market in the first two months of 2024. Nedspice Vietnam (Netherlands) tops the list with 3,555 tons, a 44% increase from last year, followed by Olam Vietnam (India) with 3,229 tons, up 32%.

In contrast, Vietnamese companies like Trân Châu and Phúc Sinh have seen declines in their export volumes, with Trân Châu exporting 2,265 tons (down 33.4%) and Phúc Sinh 1,744 tons (down 31.5%). Previously, Trân Châu and Phúc Sinh were top exporters of Vietnamese pepper.

Foreign Investment in Coffee

In the processed coffee sector, companies with foreign direct investment (FDI) dominate the market. According to the Vietnam Coffee-Cacao Association (Vicofa), in the first five months of the 2023-2024 coffee season (October 2023 to February 2024), most of the top exporters of roasted and instant coffee are FDI firms. Nestlé Vietnam (Switzerland) leads with around $57.5 million, followed by Outspan Vietnam (India), Ngon Coffee (India), Trung Nguyên Group (Vietnam), and others.

In previous seasons, FDI companies held significant market shares, with FDI accounting for approximately 33.1% of green coffee exports and 71.7% of processed coffee exports in the 2022-2023 season.

Challenges for Vietnamese Companies

Nguyễn Ngọc Luận, CEO of Toàn Cầu Global Trade Co. (Meet More coffee brand), explains that establishing an instant coffee plant is costly, with initial investments around 1,000 billion VND. This poses a significant barrier for Vietnamese companies, while foreign firms with extensive experience and capital advantage dominate the market.

Vietnamese Companies' Strengths and Opportunities

Despite these challenges, Vietnamese companies lead in green coffee exports. In the first five months of the 2023-2024 coffee season, Vĩnh Hiệp Co., led by Thái Như Hiệp, is the top exporter with 81,025 tons. Other leading Vietnamese exporters include Intimex Group, Tuấn Lộc Commodities, Simexco Daklak, and Intimex Mỹ Phước.

Bùi Chí Bửu, former Director of the Southern Institute of Agricultural Sciences, acknowledges that while foreign investments benefit the development of Vietnam's agricultural sectors, Vietnamese companies remain flexible and effective. Many Vietnamese firms also buy coffee and pepper from countries like Brazil and Indonesia for processing and export.

Conclusion

Overall, while foreign investments bring significant benefits to Vietnam's agriculture, including improved development and competitiveness, Vietnamese companies still play a crucial role in the sector, particularly in green coffee exports. The challenge remains in balancing domestic advantages with the growing influence of international players.

Source: Vietstock