Export value of all Vietnamese shrimp products to all major destinations increased YoY in H1 2022. In the first six months of 2022, the US remained the largest importer of Vietnamese shrimp, but experienced the slowest YoY growth amid the four major destinations: US, the European Union, Japan, and China. Of the main four, China experienced the fastest growth rate, at 88% YoY. 

• Market Dynamics

Farmers: Small size farmers represent 70-80% of the total market share, whereas only 20-30% is represented by big farmers. However, as more and more big farms buying small farmers and M&A is going on between small farmers, the percentage of big farmers is increasing recently.

Processing: Vietnam is a major exporter of shrimp itself, but it also imports unprocessed frozen shrimp from Ecuador and India. Vietnam is one of the top 5 importing countries of Ecuadorian and Indian shrimp, with USD 308 million and 193 USD million, respectively.

• Increased investment in shrimp processing facilities: As Vietnam becomes one of the world-leading suppliers, there has been a strong flow to increase investment in shrimp processing facilities. During the pandemic era, 6 processing facilities opened, with a combined capacity of 100,000 tonnes.

Competitive Landscape (Subjective): Compared to Indian and Ecuadorian shrimp, Vietnamese shrimp show higher prices as more delicate farming technology is applied and feed quality is higher. 

• Supply Chain Composition

Feed Mills & Hatcheries -> Farm -> Factory -> Export Company (Most big exporters own their processing facilities)

Feed mills & Hatcheries: The feed industry in Vietnam is dominated by foreign companies

• Feed price overall is high compared to other major producing countries.

• Large commercial hatcheries sell high-quality seeds.

• In terms of hatcheries, Viet Uc Seafood represents 25% of the total market, and the other 2,500 small hatcheries claim 50% of the market.

Farmers: Vannamei is farmed in North Central and Southern Vietnam, and Black tiger shrimp can only be farmed in Southern Vietnam.

• Farmers sell their products directly to the processing facilities with few to no brokers/agents in between.

Processing facilities: 100 Shrimp processing companies in Vietnam and half of them are located in the Mekong Delta region.

Exporters: As for the big farms/exporters, they are able to supply year-long and also, since they have their own packing facilities, farm, and hatcheries – More flexible

• Except for the big exporters, Exporters often buy from other farmers to meet demands with a short-term contract.

Farmers source shrimps from the sea or a farm and for exports, the main varieties are Black Tiger and White Leg. There is no specific seasonality for shrimps as these are available year-long. Most of the time, farmers sell their products directly to the processing facilities with few to no brokers/agents in between. However, farmers/suppliers do not usually export directly. As for the big farms/exporters, they are able to supply year-long and also, since they have their own packing facilities, they are more flexible in terms of order specifications and timeline. Exporters with their own farms often need to buy from other farmers or cooperate with farmers from specific areas with a short-term contract to utilize the same farming system and resources.

• Supply Network

Co-ops exist among suppliers but they are very fragmented. Farmers form a co-op to be able to supply to several exporters and to have more power when negotiating prices. An example of a farmer co-op is the Shrimp and Prawn Association that is led by the Vietnamese Seafood Group.

• Major Suppliers

• Top 9 suppliers account for 82% of total exports.

• Small size farmers represent 70-80% of the total market share, whereas only 20-30% is represented by big farmers, but recently, the proportion of big farmers has been increasing as big farmers started to buy small farmers.

According to the VASEP, in H1 2022 the leading export destinations of Vietnamese Shrimp (all shrimp products) were: 1. the US, with a value of $483 million (21% of the share), 2. the European Union, with a value of $378 million (16% of the share), 3. Japan, with a value of $333 million (14% of the share), and 4. China, with a value of $333 million (14% of the share). Other major importers include South Korea and the UK.  

Vietnamese Shrimp is available all-year round, but there is a high season and a low season depending on the region.

1. Receive the order specifications -> 2. Check the resources and material prices -> 3. Quote price to buyer -> 4. Sign contract -> 5. Collect shrimp materials -> 6. Process requirements -> 7. Packing -> 7. Warehouse stocking -> 8. Loading to the container -> 9. Ship to buyer

Deals are mostly done in CIF or FOB terms.

•Quality Issues

The most common quality-related issues are regarding freshness and size. 

•Checking Process

Quality check is done on the manufacturing level and the yield rate is one of the most important factors when inspecting shrimps. Third-party inspections may be required depending on the buyer. If there are issues with the quality of the shrimp as reported by the buyer, the buyer would need to send evidence of the issue (photos), which the processing facility would then check. If the issue occurred during transportation, the logistics company would be contacted. 

The global export value in 2020 was USD 16 billion, showing a 113% increase over the previous 10 years. Vietnam was ranked third in export value (USD 1.75 billion), following India (USD 3.8 billion) and Ecuador (USD 3.5 billion) in 2020.

According to data from the Vietnam Association of Seafood Exporters (VASEP), Vietnamese exports of all shrimp products totaled $416 million in June 2022, representing a decline of 1% YoY. This was the first annual decline in 6 months. Most of the decline can be attributed to a sharp decrease in exports to the US, which totaled $96 million, down 36% YoY.

In May, the same association reported that shrimp exports to the US were expected to slow down as the US had already a high inventory of this commodity. The association also mentioned that inflation has started hitting consumer demand for shrimp.

All in all, Vietnamese shrimp exports are expected to continue slowing down in the months to come, amid ongoing challenges with raw material supply and the slowdown in US demand. That said, there’s an expectation for a recovery in exports to the US from September toward the final months of the year. Total exports for 2022 are still expected to reflect an annual increase of 10%, fueled by the exports recorded in H1 and stable to higher demand out of Japan and China.