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Exporting pepper and spices: Improving quality, targeting the high-end market segment 

 Wednesday, March 27,2024

AsemconnectVietnam - This year, pepper and spice prices are forecast to increase. Improving quality, targeting the high-end market... is a long-term step that enterprises are implementing.

Enterprises have orders until the end of the second and third quarters
As one of the leading agricultural export enterprises in Vietnam, with main products being cinnamon, star anise, pepper, coconut rice, cashew nuts and coffee,... Ms. Le Thi Mai - General Director Tuan Minh Trading and Production Company Limited - shares positive signals from the export market in general and spice products in particular.
According to Ms. Le Thi Mai, up to this point, enterprises has signed orders with customers in the EU until September 2024. Currently, enterprises is focusing on preparing goods sources to be able to promptly deliver orders this March 2024 with an export volume of 500 - 600 tonnes.
This year, pepper and coffee prices are forecast to increase. This brings both opportunities and challenges for agricultural export enterprises. Ms. Le Thi Mai said, with a wide and sustainable customer base from all continents around the world, in order to prepare a quantity of goods that meets both quantity and quality for partners, enterprises have built plan to collect raw materials in advance.
“For agricultural products, purchase of agricultural products depends on the season, for example, cinnamon crop will start purchasing from April to June, while pepper crop will start from March and April. When the season comes, enterprises has prepared financial resources and focused on collecting cinnamon trees in the raw material areas of Yen Bai and Lao Cai; Dak Nong, Dak Lak with pepper trees and coconut rice in Ben Tre", Ms. Mai shared and said that in 2023. Tuan Minh's revenue reach 30 million USD, the market is favorable, enterprirses sets a revenue target. Exports increase by 20% in 2024, this number will increase to 50 million USD in 2025 and reach 100 million USD in 2030.
Of course, the market is not all rosy. Currently, enterprises are also facing problem of rising transportation costs and increased prices of purchased raw materials. “From the end of 2023 until now, shipping freight rates have increased dramatically. Even freight rates to the US and EU markets increased by 100%. With Middle East market, enterprises are affected by the Red Sea issue, shipping rates on some routes passing through the region have doubled," Ms. Mai said.
With 6 factories, Prosi Thang Long Company currently exports products such as cinnamon, star anise, cashew nuts and pepper to nearly 100 markets around the world. The company's products have now entered demanding markets such as the EU and US. In 2023, exports volume reached over 30,000 tonnes of agricultural products.
Ms. Nguyen Thi Thanh Huyen - Deputy Director of Prosi Thang Long Company - said that up to this point, we have received a number of orders for the second quarter of 2024. Not worried about orders but what enterprises worried about is the 'wave' of price increases in the pepper industry that puts enterprises at risk in meeting partners' orders. "There is a situation where it is difficult for enterprises to buy goods, partly due to the sharp increase in pepper prices, so farmers are limiting their sales", Ms. Huyen shared.
Similarly, Ms. Trinh Thanh Thao - Director of Viet Linh Trading Co., Ltd. - also excitedly said that at the beginning of the year, enterprises deployed 2 quite large orders with an output of 100 tonnes of pepper, onion and cinnamon products for export to the Middle East market. Enterprises has exploited orders for April 2024. However, Ms. Trinh Thanh Thao admitted that forecasting agricultural product prices is always very difficult to predict, because prices fluctuate continuously. This requires agility and accurate judgment from enterprises.
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Currently, in the world's spice basket, pepper accounts for a large proportion and plays an important role in culinary culture. In particular, pepper products are promoted for processing in pharmaceuticals, cosmetics and health care. The pepper market size is valued at 5.43 billion USD, forecast to grow on average more than 20% in a period of 2024 - 2032.
Vietnamese pepper industry accounts for 40% of output and 60% of the world market share. However, according to Mr. Le Hoang Tai - Deputy Director of Department of Trade Promotion (Ministry of Industry and Trade), in current world context, spice and pepper industry faces many challenges from market fluctuations, geopolitical instability, supply chain disruption, rising inflation. The US, EU, Middle East markets... increase demand for products that meet sustainability. This is a challenge but also an opportunity for countries exporting pepper and spices like Vietnam.
According to Ms. Hoang Thi Lien - President of Vietnam Pepper and Spice Association, sustainability and comprehensiveness are two pillars of pepper industry in the coming period. In particular, role of enterprises is very important in training and educating farmers on sustainable production, training farmers so that they do not use pesticides and chemicals in production.
"Sustainability and inclusivity cannot be achieved overnight but require a long-term commitment, a commitment to creating a sustainable future. Let's share experiences to achieve sustainability together and integrity", Ms. Hoang Thi Lien emphasized.
Regarding this, from a business perspective, Ms. Le Thi Mai shared that in the past, enterprises mainly focused on low-end and mid-end market segments such as India and the Middle East, then in the past 5 years, Enterprises invest in factories that achieve international standard certifications such as BRC, Halal, FDA, ISO, HACCP, Kosher, FSMA. With a closed production process from collecting and pre-processing standard raw materials to production process into high-quality products for export, the enterprise targets high-quality export customers such as the EU, America.
“Develop marketing plans, participate in exhibitions and trade promotions in domestic and foreign markets to be able to reach high-end customers and grasp consumer trends and requirements of customers", Ms. Mai shared and said that enterprise is also aiming to link with farmers in raw material growing areas to develop organic products to meet high-end market segment.
Besides efforts from enterprises, according to Ms. Le Thi Mai, majority of agricultural export enterprises are small and medium-sized enterprises. Therefore, we hope to have companionship of agencies from central to local levels, especially to access loans with preferential interest rates to have prices and improve competitiveness of products. At the same time, enterprises can increase production scale, diversify products, etc. thereby achieving growth goals as well as meeting orders that the enterprises has signed.
Besides, enterprises still lack information about the market, so it is recommended that authorities regularly provide information support to grasp situation. Since then, it has gradually affirmed its position in the world's leading pepper production and export, currently ranked 3rd in production and number 1 in the world in cinnamon export; Ranks 3rd in the world in production and 2nd in export of star anise.

Source: Vitic/ congthuong.vn
 

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