VIETNAM PEPPER INDUSTRY REPORT Q2/2018 -...

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VIETNAM PEPPER INDUSTRY REPORT Q2/2018

Content

Part Page Part Page

Abbreviations 3 3.2. Value chain of the industry 27

Executive summary 4 3.3. Current situation of production 30

1. Business environment 6 3.4. Consumption 34

1.1. Macroeconomic situation 6 3.5. Pepper Import – Export 36

1.2. Legal framework 10 3.6. Price movement of some types of pepper 42

2. World pepper market 15 4. Industry overview 46

2.1. Current situation of production 15 4.1. SWOT Analysis 46

2.1.1. Definition and classification 16 4.2. Planning Pepper industry 48

2.1.2. Production 19 5. Enterprise analysis 51

2.2. Consumption 22 5.1. Enterprise introduction 51

3. Vietnam pepper market 24 5.2. Enterprise analysis 63

3.1. History of industry formation and development 24

Abbreviations

MAMPUMalaysian Administrative Modernisation and

Management Planning UnitSB State Bank

WASIWestern Highlands Agriculture and Forestry Science

InstituteSB State Budget

IASVNInstitute of Agricultural Science for Southern

VietnamGDVC General Department of Vietnam Customs

IPC International Pepper Community GSO General Statistics Office of Vietnam

ASTA American Spice Trade Association JSB Joint Stock Bank

IPSARDInstitute of Policy and Strategy for Agriculture and

Rural DevelopmentCO., LTD Company Limited

VIRIVietnam Rural Industries Research and

Development InstituteSBV The State Bank of Vietnam

Nedspice Nedspice Processing Vietnam Company Limited CB Commercial Bank

VIRACVietnam Industry Research and Consultancy

Joint Stock Company MARD Ministry of Agriculture and Rural Development

Executive summary

• Pepper industry is one of the agricultural sectors that make an important contribution to the entire agriculture in Vietnam.

• Common pepper products in the world market are black pepper and white pepper.

• Today, pepper, a high-end spice, is the most commonly used spice in the world and plays the leading role (about 34%) in total spice production

value traded in the world.

• Global demand for pepper has been increasing, which makes pepper trade also dynamic.

• The global pepper price depend on the variations of pepper prices in major pepper exprorters.

Content is intentionally removed for demo purpose

• Vietnamese pepper is now exported to nearly 80 countries and territories all over the world.

• The average pepper export price of Vietnam was booming in the period 2012-2015, after a sharp fall in two consecutive years from late 2015 to

• The export turnover of many enterprises declined because the average export price of pepper in 2016 had continuously decreased since the end of

2015, affecting the business results.

Executive summary

1. Business environment

1.1 Macroeconomic situation

1.2 Legal framework

Content

Source: VIRAC, GSO

GDP growth, 2012 – 3M/2018

Gross output of agriculture, forestry and fishery at comparative

prices (2010), 2015 - 2018

the gross domestic product (GDP) in Q1/2018 was estimated to increase

by 7.38% in comparison with the same period in 2017.

The VND / USD exchange rate has been quite stable and still supported by a

plentiful supply of foreign currencies

VND/USD exchange rate, 2013-3/2018

Source: VIRAC, GSO

Average lending rate, 2012 – Q1/2018

Value share of pepper industry contributing to Vietnam’s export turnover,

2010 – 3M/2018

Source: VIRAC, GDVC

billion USD

Source: VIRAC, GDVC

Import - Export, 2015 – Q1/2018

billion USD billion USD

1.2 Legal framework

Content

1.2 Legal framework

Group of regulations on production and business of pepper industry

1.2 Legal framework

Group of regulations on import and export of pepper industry

1.2 Legal framework

Group of regulations on tariffs of pepper industry

2. World pepper market

2.1 Current situation of production

2.2 Consumption

Content

2.1 Current situation of production - 2.1.1. Definition and classification

Definition

Classification

Indicator Black pepper White pepper

Differences betweem black pepper and white pepper

2.1 Current situation of production - 2.1.2. Production

Global pepper production by type, 2012-2017eThousand tons

Source: VIRAC, IPC

• Strong growth in area and productivity will increase world pepper

supply in the upcoming years.

Growth in world's new pepper growing area over the years, 2014 - 2017e

Source: VIRAC, Nedspice

Structure of global black pepper production by country, 2017e Structure of global white pepper volume by country, 2017e

2.1 Current situation of production - 2.1.2. Production

• In the past, India, Malaysia, Indonesia, Brazil were the leading pepper producers in the world, surpassing other countries. However, since 2005, Vietnam has

risen to become the world's largest pepper producer and has maintained its status for 12 years.

Source: VIRAC, Nedsprice Source: VIRAC, Nedsprice

2.2 Consumption

Content

2.2 Consumption

Pepper consumption worldwide, 2012 – 2017e

Thousand tons

Pepper consumption structure by region, 2017e

Hot-growth phenomenon of pepper can lead to imbalance in supply

and demand in the future when supply growth exceeds demand growth.

2.2 Consumption

Pepper consumption in world’s largest pepper producing countries, 2016 – 2017e

Thousand tons

• Pepper consumption in major pepper producing countries such as Vietnam, Indonesia and Brazil has been increasing, but the growth rate and

pepper consumption in these countries is much lower than that of other pepper importing countries such as The United States, Germany,

Netherlands., etc.

3. Vietnam pepper market

3.1 History of industry formation and development

3.2 Value chain of the industry

3.4 Consumption

3.5 Pepper Import - Export

3.6 Price movement of some types of pepper

Content

In Vietnam, wild pepper was found before the 16th century, but it was not until the 17th century that pepper trees were widely grown.

1910-1970 1983-1995

1996-1999

2000-2005 2007-2015 2016-nay

Content

3.4 Consumption

Processing

Distribution

Marketing

Source: VIRAC

Value added chain model for agricultural products

Value chain of pepper industry

Source: VIRAC

Value chain mapping of pepper industry

Content

3.4 Consumption

Industry scale%

Pepper cultivation area in Vietnam, 2009 - 2017

Source: VIRAC, MARD

Thousand hectares

Source: VIRAC, VPA

Structure of pepper cultivation in Vietnam, 2017Content is intentionally removed for demo purpose

Main pepper growing regions in Vietnam

• Central Highlands

• The Southeast

Pepper supply in Vietnam is likely to be surplus in 2018 mainly due to the

following reasons :

Pepper production in Vietnam, 2011-3M/2018e

Thousand tons

Source: VIRAC, MARD

Pepper structure by type, 2016

Source: VIRAC, IPC

Content

3.4 Consumption

Thousand tons

Pepper consumption in Vietnam, 2011-2017e

• Pepper consumption in Vietnam has increased over the years

because the spice using habits of Vietnamese people are gradually

changing

Distribution structure of pepper volume in Vietnam, 2016

Content

3.4 Consumption

Pepper exports and export turnover in Vietnam, 2011 –

3M/2018

Source: VIRAC, GDVC

Thousand tonsmillion USD

By the end of March 2018, Vietnam had exported 60.03 thousand

of pepper

Source: VIRAC, GDVC

Structure of Vietnam’s pepper importers by volume, 3M/2018

Content is intentionally removed for demo purposePepper export volume by country, 3M/2018

Source: VIRAC, GDVC

In the first two months of 2018, the value of exported black pepper reached over 97 million USD

Structure of exported pepper by type, 2M/2018 Structure of exported pepper by processing step, 2016

Content is intentionally removed for demo purposeSource: VIRAC, TrademapSource: VIRAC, GDVC

Top 10 largest pepper export enterprises in Vietnam, 3M/2018

Source: VIRAC, GDVC

Structure of Vietnam’s pepper export by type of enterprise,

2013 – 3M/2018

Source: VIRAC, GDVC

Pepper export price has continued decreasing for the recent two years;

therefore, pepper export value of most enterprises fell despite an increase

in volume.

The proportion of FDI enterprises’ contribution to Vietnam’s export is

gradually decreasing

thousand tons

Vietnam’s pepper import, 2010 – 2017e

Source: VIRAC, GDVC

Source: VIRAC, Uncomtrade

Structure of Vietnam’s pepper import by type, 2016

Source: VIRAC, Uncomtrade

Nội dung được xóa nhằm mục đích demo

It is estimated that Vietnam imported 30.27 thousand tons of pepper in 2017

Top pepper importing countries by value,(USD), 2016 - 2017

Content

3.4 Consumption

Region January February March April May

Time and schedule of pepper harvest of Vietnam’s pepper regions

Source: VIRAC, IPSARD

Note: x little harvest; xx consolidated harvest; xxx very consolidated harvest.

• In Vietnam, pepper harvest time is also relatively different among the main cultivated areas.

• The weather in 2017 is signaling unfavorable conditions for new pepper trees.

Average monthly export price of pepper, 1/2017- 3/2018

USD/ton

Source: VIRAC

USD/ton

Export price movement of pepper in Vietnam,

4/2017-4/2018

VND/kg

The wholesale price of black pepper by month, 1/2017 - 3/2018

Source: VIRAC, MARDSource: VIRAC, MARD

The wholesale price of black pepper by week, 1/2018 - 3/2018

4. Industry overview

4.1 SWOT analysis

4.2 Development planning of pepper industry

Content

Strengths: Weaknesses:

Opportunities: Threats:

4.1. SWOT analysis

Content

4.1 SWOT analysis

Promoting production linkages, ensuring food hygiene and safety, aiming at sustainable development

Increasing trade and integration

5. Enterprise analysis

5.1 Enterprise introduction

5.2 Enterprise analysis

Content

TOP PEPPER EXPORTING ENTERPRISES IN 2016

Enterprise Name Address Tax code

Net Revenue

(billion VND) Total assets

(billion VND)2015 2016

Intimex Group

Olam Vietnam Co., Ltd.

Phuc Sinh Joint Stock Company

Petrolimex International Trading

Joint Stock Company

Hanoi Investment Trading and

Import & Export Company Limited

Nedspice Processing Vietnam

Company Limited

Pearl Trading Service and Import

Export Joint Stock Company

Harris Freeman Vietnam Company

Limited

Lien Thanh Joint Stock Company

DK Commodity Co., Ltd.

Intimex Group

Olam Vietnam Co., Ltd.

Phuc Sinh Joint Stock Company

Petrolimex International Trading Joint Stock Company

Hanoi Production Services Import Export Joint Stock Company

Nedspice Processing Vietnam Company Limited

Pearl Trading Service and Import Export Joint Stock Company

Pearl Corp

Harris Freeman Vietnam Company Limited

Lien Thanh Joint Stock Company

DK Commodity Co., Ltd.

Contents

Net revenue from goods sold and services provided, 2015-2016

Source: VIRAC

billion VND

Gross profit and gross profit margin of enterprises, 2016

billion VND %

Source: VIRAC

Sales expenses/Net revenue, 2015-2016

Source: VIRAC

Administrative expenses/Net revenue, 2015-2016

Source: VIRAC

Financial expenses/Net revenue, 2015-2016

Asset structure, 2016billion VND

Source: VIRAC

Cơ cấu Source vốn, 2016

billion VND

Source: VIRAC

Solvency, 2016

Source: VIRAC

Asset use efficiency, 2016

Lien Thanh Phuc SinhHaprosimex

CorporationPitco

Harris

Freeman DK Nedspice Olam Intimex

Profit after tax

Debt to total assets ratio

Debt to equity ratio

Report Disclaimer

Report disclaimer

This document has been prepared in good faith on the basis of information available at the date of publication without any independent verification. VIRAC has

produced this report for private circulation to professional clients only. All information and statistical data herein have been obtained from sources we believe to

be reliable and made to ensure the accuracy of the contents of the pages of the report at the time of preparation. Such information has not been independently

verified and VIRAC makes no representation or warranty, whether express or implied, of any kind with respect to the document and its contents, information and

materials. The content found in this report is proprietary to VIRAC and is provided solely for your personal and non-commercial use. You agree that you will not

use this report for any purpose that is unlawful and that you will not reproduce the report or redistribute it outside your organization, or place it on a website for

public access without the express written permission of VIRAC.

SHOULD YOU NEED ANY ASSISTANCE, PLEASE CONTACT US:

VIETNAM INDUSTRY RESEARCH AND CONSULTANCY (VIRAC JSC.,)

6th Floor, Anh Minh Building, 36 Hoang Cau, O Cho Dua, Dong Da, Hanoi, Vietnam

Website: http://virac.com.vn/

Email: viracresearch@virac.com.vn | Tel: +84 463289520

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