Oct 27, 2012

Vietnam - Manufacturers fear products to be unsold in Tet season

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VietNamNet Bridge – Food companies still keep diffident when preparing for the year-end production and Tet sale season. Anticipating the low demand, they do not intend increase the output.

Saigon Food has just kicked off the year-end production season after thorough consideration of the market conditions and expected purchasing power.

Le Thi Thanh Lam, Deputy General Director of Saigon Food, said since the demand has been very week, the company does not intend to make big amounts of goods for Tet sale, revealing that the production scale would be the same as the last year’s.

“Consumers still have been fastening their belt. We still obtained the 15 percent growth rate, but this has been attributed to the increase in the number of retail points and the launching of new products,” Lam said. “We dare not set up overly big production plan for the 2013 Tet, or products would be unsold.”

In principle, the demand for goods would be higher on Tet holiday, but consumers would prioritize to spend money on the most essential goods, which means that the demand for frozen food would not increase sharply.

“What worries us most is the abundance of goods, not the shortage,” said Truong Chi Thien, Director of Vinh Thanh Dat Company, adding that the volume of goods to be prepared for Tet sale would not be higher than that of the last year.

Bidrico, a drink manufacturer, and Huynh Gia Huynh De both have also confirmed that the business plan scale would be the same as the last year’s.

Vissan, which has made heavy investment in the distribution network and restructured its operation, has set up the modest growth rate of 10 percent in comparison with the last Tet. The food supplier plans to sell 1010 billion dong worth of products on Tet days.

Saigon Co-op, the biggest retailer in HCM City, has joined the Tet price stabilization program initiated by the HCM City authorities. It plans to store the volume of goods worth 3350 billion dong for Tet sale, Pham Ton Company 814.5 billion dong, the Saigon Food Technology 231 billion dong and Ba Huan Company 165.2 billion dong.

Though the volume of goods to be stored for Tet sale under the program is double the assigned plan, big enough to control 50 percent of the market, the enterprises all said that the goods have been prepared for the price stabilization program, while the general output of enterprises does not increase.

Chau Nhat Trung, Director of Huynh Gia Huynh De, said that the low demand, plus the new consumers’ habit of not storing too much food for Tet parties both have made businesses think that there would be no sharp demand increase on Tet days.

Thien agrees, saying that the company has to offer preferences and launch a lot of sales promotion programs to attract buyers. Therefore, he believes that the goods short supply and the price increases would not occur.

Vissan has also confirmed that it has to slash the pork and beef prices. Meanwhile, Saigon Food has failed to raise the sale prices.

In fact, Saigon Food attempted to raise the sale prices by 10 percent, but supermarkets have refused the price increase, saying that the prices should be kept stable to stimulate the demand. Meanwhile, Lam said, the input costs have increased so dramatically, from the labor cost to seafood materials, from petroleum prices to electricity.

Doanh Nhan

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