Insight – Australian peaches and nectarines on the menu for Vietnam’s affluent consumers
23 February 2022
Australian peach and nectarine exporters now have market access to Vietnam. This comes after Australia and Vietnam finalised a new protocol following 5 years of negotiations.
Access to the Vietnam market is a major boost to exporters’ market diversification efforts. The new protocol gives Australia a first-mover advantage over competitors to cement market share.
It is also timely. Under the Regional Comprehensive Economic Partnership, which came into force on 1 January 2022, Australian exporters pay no tariffs on peach and nectarine exports to Vietnam.
$64 million in peach and nectarine exports
Australian peach and nectarine exports were valued at $64.0 million in 2021. Major export markets in 2021 include:
- China ($37.3 million or 58% of exports)
- Singapore ($5.1 million)
- Hong Kong ($3.6 million)
- United Arab Emirates ($3.3 million)
- Malaysia (A$3.0 million).
Figure 1: Australian peach and nectarine exports, top 5 markets
Source: Global Trade Atlas, © IHS Markit (2022), accessed February 2022.
A growing market for fruit
Vietnam was Australia’s fifth largest export market for fruit, worth $1.2 billion in 2021 (Source: Global Trade Atlas, © IHS Markit (2022), accessed February 2022). It is expected to become an important new market for Australian peaches and nectarines.
The size of the Vietnam market for peaches and nectarines has grown rapidly. The market experienced a 20% CAGR between 2016 and 2020, albeit from a low base. It is expected to continue growing over the next 5 years (Source: Euromonitor International, accessed February 2022).
China is the predominant supplier of peaches and nectarines to Vietnam. Australia’s southern hemisphere competitors include Chile and South Africa.
Young, affluent population to fuel spending
Vietnam’s per capita gross income is set to more than double over 2021–2040, a faster rate than the regional average (Source: Euromonitor International, accessed February 2022). The increase is underpinned by rapid economic growth, strong domestic demand, and high levels of foreign direct investment into manufacturing, which is in turn, increasing manufacturing exports.
The World Bank predicts that over half of the Vietnamese population will enter the global middle class by 2035. This will fuel further growth in demand for imported fruits, driven by Vietnam’s young, increasingly wealthy consumers. These consumers are willing to pay more for imported food, particularly naturally healthy, immune-boosting products with clean and green credentials.
Growth in modern retail channels, particularly supermarkets and convenience stores, and a rapid shift to e-commerce will support consumer expenditure on fruit. Spending on fruit is expected to experience a 7.4% CAGR between 2021 and 2025 (Source: Euromonitor International, accessed February 2022).
Vietnamese consumers perceive Australian fruit to be safe and of high quality. This allows for premium positioning, particularly against competitor fruit which is viewed as “less safe”.
Vietnamese consumers are known for their love of food. Consumer spending on food and alcoholic beverages is forecast to reach around US$4,500 per household in 2040 (Source: Euromonitor International, accessed February 2022). This makes Vietnam a priority market for Australian food and beverage exporters over the coming years.
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