The battle in the fish sauce market

Competition for fish sauce market share is becoming fierce as traditional fish sauce companies change their designs and flavors, while big brands continue to increase investment.

Before 2002, the market only had the concept of traditional fish sauce with two main ingredients: fish and salt. Meanwhile, fish sauce produced on an industrial chain has less fish and is mixed with some necessary additives.

With the Phu Quoc fish sauce brand - Knorr, Unilever is the first enterprise to shape the production and business of fish sauce in the direction of an industrial chain. However, due to the product positioning in the high-end segment, the price is not cheap. That is also the reason why fish sauce with this brand has not created a revolution in the market.

It was not until 2007, when the bottled fish sauce brands of Masan Consumer Corporation were launched, that the war really began. With the fish sauce brands Nam Ngu and Chinsu, Masan not only overthrew the number one position of Phu Quoc - Knorr but also created a wave in the market when its market share increased rapidly thanks to its production scale, low price advantage and large advertising costs.After Masan, other fish sauce brands were continuously born, along with massive advertising and powerful marketing strategies.

In 2009, Ngoc Nghia Company - a business that got rich by producing packaging for leading names in the beverage and food industry... also decided to invest in the fish sauce industry. By contributing capital to Hong Phu Food Company and investing in professional production lines, not long after, Ngoc Nghia launched two fish sauce brands Kabin and Thai Long.

Another giant in the food industry is Acecook Company with full resources from technology, finance, market understanding, distribution system... in early 2010 also decided to join the market with the brand name De Nhat fish sauce. Micoem launched Ong Tay fish sauce...

In the near future, Masan will triple the capacity of its current fish sauce factory.

However, not every business investing in fish sauce production is successful.The evidence is that since entering the market, Ngoc Nghia has not made a profit in any year, and has even continuously lost more than expected, from tens of billions to 200 billion VND per year.Although this loss is explained by the nature of the consumer goods industry, with new products requiring large investments in advertising and sales, it also creates disagreements among the company's shareholders.

Not so smooth, after the massive media campaigns for the product De Nhat fish sauce, by the end of 2013, Acecook quietly transferred this brand to Nam Phuong Vietnam Company. The product was then also renamed Barona fish sauce.

In the market, although there are many fish sauce brands produced on industrial chains with quite systematic investment, the market share is still mainly concentrated in the hands of one manufacturer. In 2012, when Masan's fish sauce market share reached its peak, reaching 70% of the total market revenue, other businesses such as Hung Thinh, De Nhat, Hong Hanh, Muoi Thu, Micoem, 584 Nha Trang, Thanh Ha... only accounted for a market share of 1-5%. Notably, some fish sauce products that were once advertised quite strongly such as Kabin and Phu Quoc - Knorr are no longer in the top 10 of this statistic.

The fierce competition from big brands has also caused traditional fish sauce - most of which operate on a fragmented basis - to falter for many years.When industrial fish sauce appeared, only a few large enterprises producing according to traditional recipes survived in Phan Thiet (Binh Thuan), Nha Trang (Khanh Hoa), Cat Hai (Hai Phong)..., while small establishments mainly sold raw materials or wholesaled by the barrel, so revenue was not high.Consumer tastes have also changed, preferring fish sauce mixed with more spices.Competing directly with big brands is considered too risky for traditional fish sauce.

Lien Thanh Company, a fish sauce manufacturer established more than 100 years ago, was also forced to invest in production lines, rebuild its distribution system, and improve its packaging and identification system. However, this unit also showed signs of running out of steam due to the huge advertising costs. In addition, talented employees also left the company to join its competitors.

Data from market research firm Euromonitor shows that the size of the Vietnamese fish sauce market in 2015 was VND11,300 billion, of which industrial fish sauce accounted for 76% and traditional fish sauce only reached 24% market share.

An expert in the industry said that many fish sauce businesses in Phu Quoc, Nha Trang, Binh Thuan such as Lien Thanh, Hung Viet, Hanh Phuc... are also facing many difficulties.According to him, one liter of pure fish sauce is purchased by manufacturers for 30,000-50,000 VND and then processed and mixed into 5 liters of industrial fish sauce.

However, according to Mr. Pham Ngoc Dung, an experienced expert in the field of fish sauce production: "Currently, there is no State document with the phrase 'traditional fish sauce' and 'industrial fish sauce', but only the general standard that fish sauce must reach 10 degrees of nitrogen, and if it is below 10 degrees of nitrogen, it is called dipping sauce. Also according to the understanding of many people, "traditional fish sauce" is fish sauce that only contains fish, salt and water, if it has additives, it is called "industrial fish sauce". However, most fish sauce production enterprises today, including Phu Quoc, Nha Trang, Phan Thiet fish sauce, all use flavor enhancers to reduce the taste, because pure fish sauce is raw fish sauce, with high saltiness.

Regarding additives, Mr. Dung noted that additives are not chemicals but spices used in permitted doses to bring flavor to food and ensure the health of users. With permitted doses and guaranteed sources of additives, additives will help increase quality without losing the essence of the product.

Sharing the same view, Ms. Le Thi Nga - Senior Product Research and Development Director of Masan said: "Over the past 10 years, we have continuously learned and researched about Vietnamese cuisine as well as the science of the fish sauce industry. And we have discovered truths that people may not know: not all high protein products are delicious, not all high protein products are good and not all salty products are clean".

According to this director, since 2008, Masan has invested in a fish sauce fermentation factory in Phu Quoc and is currently operating with a scale of up to 448 fermentation tanks and a total capacity of 10,000 tons of fish. With its current capacity, Masan Phu Quoc factory annually supplies about 15% of the total demand for raw fish sauce for Chin-su and Nam Ngu fish sauce products. In addition, to meet the large demand in production, the company also cooperates to purchase fish sauce from reputable suppliers. It is estimated that each year, this company buys about 60% of the total fish sauce output from the main fish sauce producing regions in Vietnam (Phu Quoc, Kien Giang, Nha Trang, Phan Thiet, etc.), meeting 85% of Masan's total demand for raw fish sauce.

The company representative said that according to the plan, Masan will soon triple the current capacity of the factory and become the largest factory in Phu Quoc island district in 2017-2018.

Faced with strong investment from industry giants, recently, many traditional fish sauce producers have made more thorough preparations and calculations, improved designs, tastes, and sought and expanded markets. Nha Trang 584 Seafood Joint Stock Company, with its traditional fish sauce products, has sold 20% of its capital to PAN Food Company. This is one of the moves showing that traditional fish sauce producers have moved towards professional operations.

"Traditional fish sauce producers have sought to bring their products to modern distribution channels such as supermarkets and convenience stores. With limited financial resources and unable to pursue expensive advertising methods, they choose social networks and forums to market at the lowest cost," said Ms. Nguyen Thi Tinh, Chairwoman of the Phu Quoc Fish Sauce Association.

She also said that geographical indications are also one of the professional ways to help traditional fish sauce brands gain a new position. In the first half of the yearIn 2016, the number of geographical indication stamps issued for Phu Quoc fish sauce increased by one and a half times compared to the same period last year.

A report on market share of consumer goods in Vietnam by Massan Consumer published in April also showed that the company's fish sauce market share currently accounts for 67.8% (Nielsen report updated 2015).According to Nielsen Market Research Company, from now until 2022, the Vietnamese condiment industry will continue to grow at a rate of 25-32% per year, with fish sauce being the most competitive product. Therefore, the market share map of fish sauce in the coming time may continue to fluctuate.

According to VNE