Vietnamese shrimp company Minh Phu Seafood has outlined plans to increase both its domestic sales and its sales to China, as competition has intensified in the U.S., according to CEO Le Van Quang.
The U.S. has traditionally been a key market for Minh Phu shrimp, but in recent years, the company has faced heavy competition from firms from Ecuador and India, which have aggressively upped their sales to the U.S. by offering low prices and even tolerating losses to expand their market share, Quang said at the company’s 2024 annual stakeholders meeting in June.
Minh Phu’s sales to the U.S. fell to USD 103.4 million (EUR 96 million) in 2022 and then again to USD 100.6 million (EUR 93.5 million) in 2023, representing 16.7 percent and 22.3 percent of total sales in those years, respectively, falling from annual market shares of between 38 percent and 40 percent, respectively, in the past.
Conversely, Ecuador’s shrimp sales to the U.S. have continued to grow, with the latest data showing the country’s exports to the U.S. increased 41 percent year over year in April and May of 2024, according to a 1 July Shrimp Insights blog post.
One significant disadvantage for Minh Phu and other Vietnamese shrimp exporters is the high raw material prices that farmers in Vietnam face compared to Ecuador and India.
Production costs in Vietnam are approximately 30 percent higher than in India and Indonesia, where shrimp-farming densities are lower. As for Ecuador, Vietnam's production costs are often double those of farmers in the South American nation due to significantly lower survival rates in Vietnam.
To alleviate this, Minh Phu is banking on its new shrimp farming model, MPBio, to substantially reduce production costs, enabling the company to compete more effectively in the future.
For now, though, besides heavy competition, the U.S. has also established some of the highest standards for antibiotics and other regulations for imported shrimp.
For example, in March of this year, the U.S. Department of Commerce announced that most of Vietnam’s shrimp companies, including Minh Phu, will face a countervailing duty of 2.84 percent when shipping their products into the country.
Minh Phu is aiming for its U.S. sales to comprise around 20 percent of its total sales this year. At the same time, it is rolling out plans to target other markets where competition is lower.
That plan has led to the emergence of markets like Australia and New Zealand, which together, despite being smaller markets, comprised 20.5 percent of Minh Phu's total sales in 2023, Quang said.
The company also plans to increase its sales to China, targeting a market share of somewhere between 10 percent and 20 percent of total annual sales – up from just 0.56 percent, or USD 3.5 million (EUR 3.2 million), in 2022 and 0.68 percent, or USD 3.1 million (EUR 2.8 million), in 2023.
China is an attractive market, according to Minh Phu, due to its high consumption rates and the fact that it shares a border with Vietnam, which helps mitigate the risks associated with long-distance shipping.
Minh Phu primarily exports value-added and individually quick frozen (IQF) vannamei and black tiger shrimp products to China, but mostly avoids sending raw shrimp due to intense competition from Ecuador and India in that market segment, Quang told SeafoodSource.
Minh Phu also plans to focus on increasing domestic sales by working more closely with the Bach Hoa Xanh supermarket chain, which operates around 1,700 stores nationwide, to distribute its shrimp. The two companies signed a strategic partnership in March to sell Minh Phu products across the country.
That deal, along with increased sales to various hotels and restaurants in Vietnam, should help increase the company’s domestic presence, Quang said.
Through these initiatives, Minh Phu hopes to raise its domestic sales from a current 1 percent of total sales to between 5 percent and 10 percent in the future.
In the first six months of 2024, Minh Phu's shrimp production increased year over year, but its exports did not perform well due to shipping issues and worker recruitment challenges.
Minh Phu is hoping its operations will improve from July onward, and despite the difficulties, Minh Phu aims to export 70,000 metric tons (MT) of shrimp this year, which would represent a 73.6 percent jump from the 40,332 MT of shrimp it shipped around the world in 2023. Its projected export value in 2024 is also USD 729.6 million (EUR 678.2 million), which would mark a 63.7 percent surge from 2023’s USD 445.8 million (EUR 414.4 million).
"Many export contracts have already been signed. If exports proceed as planned, we will meet our targets, but challenges remain,” Quang said. “We are determined to stick to our plan. There are still six months left and many goals to achieve, but we must keep trying."
