The Untamed Frontier of Vietnam’s Pet Industry

2014 will be considered a benchmark year for pet ownership & industry in Vietnam. The year witnessed the first annual Vietnam Animal Welfare Conference (September) held at the historic Continental Hotel in Saigon. Guest speakers and representatives of local and international small companion animal welfare groups, farm and wildlife organizations attended a very successful two day summit. The National Dog Shows in Vietnam, held twice a year in Hanoi and Saigon, had the most participants, sponsors and audience since their beginning in 2009. The year also saw the launch of the first-ever pet magazine for Vietnam.

Pet ownership, over the last five years, has seen a cultural shift regarding the quantity, and quality. Effects of ‘Pet Humanization’ can be found in the largest cities of Saigon (Ho Chi Minh City), Hanoi, Hai Phong, Da Nang and Can Tho: approximately 20 of a 91 million population. As the amount of disposable income rises within one of the largest emerging middle classes in Asia, next to China, a fraction of this surplus of income is beginning to be spend on pets, slowly elevating their status from a pragmatic practicality to a position within the home and family. However, pet care education is still required to convince most pet owners in Vietnam to feed commercial pet foods, switching from table scraps that include too much rice, unhealthy food additives (MSG), oils and salts.

Good Growth of Pet Shops & Veterinarian Clinics, but static progress in new product introductions
The number of independent pet shops and veterinarian clinics opening in the last few years is encouraging. However, the majority carry a limited amount of available pet products in Vietnam, suffering from product differentiation. Some businesses are becoming importers but not establishing national distribution (single store usage). You must also remember that the first pet retail store in Vietnam only obtained their license in 2005.

There are few international branded pet foods that have national distribution from authorized representatives. This list includes products from Mars Pet Care(USA), Royal Canin (France), Perfect Companion Vietnam (Thailand) andInvivo (France). Other brands with limited distribution include ANF (USA) andDr. Clauders (Germany).

For pet healthcare products, Merial (France), Bayer (Germany) and Vibrac(France) along with a few Vietnamese manufactures solely producing low to economical priced healthcare products for local, and limited export markets; including Fay Pet Products (Mỹ Phẩm Hoàng Anh), Five-Vet (Central Veterinary Medicine JSC) and Bio-Pharmachemie.

Inconsistent representation of premium brands of therapeutic pet foods, pet healthcare and dietary supplements throughout Vietnam.

Passionate rising interests in Western dog and cat breeds
A snapshot from a growing number of Facebook groups dedicated to dog breed ownership includes: Northern Breeds (Husky, Samoyed, Malamute), Larger breeds (German Shepherds, Dobermans, Rottweiler, Golden Labrador Retrievers). Toy or Smaller Dog breeds (Pomeranian’s, French Bull Terriers, Maltese, Poodles, Chihuahua). And of special interest, a popular southern native breed, the Phu Quoc Ridgeback along with a breed from Northern Vietnam called ‘Bac Ha’.

A few popular cat breeds include British Shorthair & Longhair, Persians, Exotics and Scottish Folds. Sphynx and Ragdoll breeds are available, while Vietnam does not have a native cat breed.

Pet Service solutions required: Dog Grooming & Training, Pet Sitting & Accommodations
The demand for pet services are growing as more pet owners buy pedigree breeds to enhance their social status. Currently, there are no certified career training facilities for dog grooming, training or pet care consultants. For example, a young Vietnamese aspiring to become a dog groomer, possibly open a business, must attend costly schools in Thailand or Singapore. International full service pet centre franchises could establish themselves in a first-mover opportunity.

Highlights of the Pet Markets of Vietnam

  • 65% of the population are under 35 years old – the real growth in pet ownership
  • 30 years and younger: wired, networked and adopting western behaviours of pet ownership
  • Increase in Expat Pet Owners markets (80,000 in 2012) creating demand for premium products and services
  • Influential Vietnamese female segments: 31 to 44, 45 to 55 years controlling family budgets & spending with growing interests in nurturing pets
  • Retail Industry, fastest growth in Asia second to China: WTO restrictions of foreign entry ending in 2015
  • Social Media: the new online ‘meet-up’ creating popular ‘off-line’ meetings for dog, and cat, owners

What Vietnam can offer the International Pet Industry Community
Vietnam is still a frontier economy inching its way towards an emerging economy and middle income status. Over 70% of the population still live in rural regions growing food, developing handicraft industries and producing an abundance of low cost labour for manufacturing.

Vietnam has a global reputation for the production of quality home decor, gift & housewares, furniture, apparel & garments grounded in a handicraft industry that works in ceramics, tropical woods, bamboo, rattan and other water plants. The potential to produce premium brands of non-food pet products in Vietnam for export to larger pet markets in other parts of Asia, N. America and Europe is good.

Vietnam should also be considered as a source of low cost pet food production. The country is a rich source of meats, seafood, rice, fruits and vegetables (basic ingredients of pet food), along with cost effective advantages of low cost manufacturing.

The questions is; why are there very few international pet product manufacturers producing for export and satisfy the growing demand from local pet markets in Vietnam?

Benefits & Advantages of Low Cost Pet Products Manufacturing in Vietnam

  • First mover opportunity: manufacturing pet food in Vietnam
  • Create quality, inexpensive products for local and export markets
  • Low cost labour (less than Thailand and China where pet manufacturers operate)
  • Sources of quality agricultural products
  • Close proximity to emerging pet markets in China
  • Close proximity to developed East Asian pet markets: Japan, S. Korea, Hong Kong and Taiwan
  • Close proximity to emerging South East Asian pet markets (Thailand, Singapore, Indonesia, Malaysia & Cambodia)

Source: Methucung