Firms fish for stake in sauce market
The fish sauce market is witnessing increasingly fierce competition between many famous brand names that use both industrial and traditional methods like Unilever, Masan Consumer, Phu Quoc and Phan Thiet.
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Among seasonings, fish sauce is considered to have the greatest potential with consumption increasing year after year: 15,434 tonnes in 2005, 75,000 tonnes in 2016 and an expected 98,770 tonnes in 2022.
According to a study by Kantar World panel, 95% of Vietnamese families use fish sauce in their meals and per capita consumption is around 4 litres a year.
Not surprisingly, more and more players have been entering the market.
The competition first intensified when two major brands, Unilever’s Phu Quoc-Knorr and Masan Consumer’s Chinsu, made an entry.
Until then most of the sauces in the market were made in the traditional method and on a small scale.
In 2002 Knorr, a German brand owned by the Anglo-Dutch company Unilever, built a bottling plant on Phu Quoc Island and has since been selling Phú Quốc fish sauce made by local producers and bottled on the island under its own Knorr brand.
The brand’s entry into the market was backed by a marketing campaign with slick television advertisements inviting Vietnamese consumers to "taste the legend."
Unilever was the pioneer in making fish sauce in an industrial production line.
In 2007 Masan Consumer began to sell bottled fish sauce products, soon overtaking Knorr Phu Quoc to reach the No.1 position, and the battle of the fish sauces began in earnest.
Masan built a series of large modern fish sauce plants in Binh Duong and Nghe An and a cellar for giant wooden barrels containing fermenting anchovies.
It has one of the largest fish sauce production plants on Phu Quoc Island and a giant cellar with hundreds of barrels that is now being made even bigger.
Masasn’s Chinsu and Nam Ngu fish sauces, made on an industrial scale, have rapidly become popular and now account for a nearly 70% market share, also thanks to the company’s big advertising budgets and low prices.
Masan has been followed into the market by many other brands also producing industrially.
In 2009 the Ngoc Nghia Group, a company that manufactured packaging for food products, decided to enter the fish sauce industry by buying a stake in the Hong Phu Food Joint Stock Company and beginning to produce the Kabin and Thai Long brands of sauce.
Not wanting to be left out, noodles and vermicelli giant Acecook entered the market in early 2010 with its De Nhat brand of fish sauce.
The rapid development of industrially produced fish sauces was mostly at the expense of traditionally made products.
According to Euromonitor data, Vietnam’s fish sauce market was worth VND11.3 trillion (US$502.22 million) in 2015, of which industrial production accounted for 76%.
Many of the traditional producers have reverted to selling their pure fish sauce to industrial producers, who then make and sell products under their own brands.
Le Cam Thuy, deputy director of Cam Van Fish Sauce based in Nha Trang, said the reason the fish sauce market is enticing to investors is the high potential profitability.
“If produced industrially, one litre of pure fish sauce can be made into several litres with an aromatic flavour that consumers will like.”
Yet, not all entrants have actually managed invested to make profits.
Ngoc Nghia Company, for instance, has spent considerably on marketing to promote its products and has a 3% share of the market. But it also has accumulated losses of nearly VND800 billion ($35.55 million).
In spite of having a massive distribution network and a famous brand name, Acecook was unable to sustain its fish sauce business, and in 2013 had to sell De Nhat to Nam Phương Viet Nam Company, which renamed it Barona.
Difference
The question is, why have industrially produced fish sauces taken over from traditional ones though the latter has been successful for centuries?
Many analysts attribute this to consumers’changing tastes.
“To answer this question in detail, however, we must know what is the industrial fish sauce and what is traditional fish sauce.”
Many people think traditional fish sauce or fish sauce is made using only “fresh fish (mainly anchovy) mixed with salt and put in a traditional wooden barrel”, while its industrial cousin has additives.
But Pham Ngoc Dung, former chairman of the HCM City Fish Sauce Producers Club, who has 38 years’experience in the industry, said there are no pure fish sauces sold in the market now though many companies claim so.
“Firstly, the price of pure fish sauce is so high that not many consumers can afford them: one tonne of fish can give a maximum of 200 litres of pure fish sauce.”
Thus, the price of pure fish sauce is five to seven times higher than one processed with additives, and the income of most consumers is still very modest, he said.
“Secondly, most fish sauce firms now, including Phu Quoc, Phan Thiet and Nha Trang, have to use additives to make their products palatable since pure fish sauce is often very rough and salty.
“All fish sauces are produced with fish, salt and additives, but some are produced in traditional conditions and others in modern industrial conditions, “he said.
But producers must know what chemicals can be used and how much to ensure not only good taste but also consumers’health, he said.
Nowadays people pay a lot of attention to eating healthily and are focused on food safety, he said.
Bui Huy Nhich, head of Masan Fish Sauce Laboratory, said, “To make good fish sauce, it is very important to have fresh fish, mainly anchovies, since they often give high acidamin.
“The fish for production at Masan is caught from the sea near the barrel house. To ensure freshness, the fish is salted immediately after being caught.
“Before being put into barrels, fresh anchovies must pass through some rigorous checks for other fish, salinity, freshness and dryness to ensure top quality.
“The salt used for aromatising the fish is also very important. Masan often uses salt from Ba Ria-Vung Tau Province since it does not have acridity of calcium, bitterness of potassium or hotness of magnesium.”
Invest in technology
Faced with the rapid growth in popularity of industrially produced fish sauces, traditional manufacturers have also increased investment in production technologies to improve the quality and polish the image of their products.
Lien Thanh Fish Sauce Company, which is more than 100 years old, has spent a considerable amount to modernize its production lines, rebuild distribution networks and improve packaging.
Vo Van Dai, chairman of Dien Chau Van Phan Fisheries Company, said, “Knowing that many people still prefer pure fish sauces, we continue to produce them.
“However, we combine traditional and advanced methods to produce our fish sauce to ensure quality but also reduce labour and operation costs, making it affordable for many consumers.
“The result is that we are able to achieve annual growth of 20-25%, and produce 1.5 million litres now.”
Bui Thi Sach, chairwoman of Thanh Phat Fisheries Joint Stock Company, which produces the Nam Phan brand of fish sauce, said, “To ensure product quality, we check four samples of our fish sauce every three months and spend millions to examine each sample.”
Le Quoc An, director of Ca Na Nol Fish Sauce Company, said that in addition to regularly improving product quality his company now has to spend double on better packaging to make the company’s products more eye-catching and replacing plastic bottles with glass bottles to protect the aroma.
As a result, sales are grown by around 20% a year, he added.
