Vietnam supplier talks impact of TPP, Brexit vote
Ho Chi Minh City, Vietnam-based Trangs Group, a large supplier of branded and private label frozen seafood meals, is expanding its production capacity despite uncertainly in the global economy, and especially in Asia.
SeafoodSource recently talked with company chairman David Ho about the company’s expansion as well as the impact of the Trans-Pacific Partnership and the result of the United Kingdom’s vote to leave the European Union on Vietnamese exporters.
Blank: Trangs Group supplies many retailers in the United Kingdom. How is the Brexit vote impacting your business?
Ho: Initially, there was a lot of backlash, especially with the [value of the] pound falling. However, a lot of our business has been locked in for the next few months. Also, for our product categories, we are fortunate that we have thought ahead and not put all our eggs in one basket. We primarily produce value-added seafood products but we do vegetarian value-added products as well. If the pound does continue to drop, we will have discussions with clients and may move ahead with more products with less protein content such as shrimp.
I think the effects will be felt sometime next year. Retail prices will have to reflect what’s happening with the pound at the time.
Blank: How will the TPP benefit your business?
Ho: Since we produce highly-processed products, we don’t have tariffs and duties as much as the fresh commodities exporters. However, the TPP as well as European Union free trade discussions, are attracting a lot of foreign investment. With more investment, it will help the economy of Vietnam flourish, and we will piggyback off of that. Also, we will start exploring more commodities and value-added commodities such as shrimp, if everything goes ahead.
Blank: How is Trangs Group expanding its business in the U.K. and Europe?
Ho: We do private label for retailers, which traditionally has been frozen value-added product in the U.K. In the last two years, we have seen high demand in the chilled category and we have an even assortment of frozen and chilled at the moment. As to our expansion in Europe, we are looking at partnering with a few different co-packers. Our strategy is to do a lot of chilled product, in which we bring in the product frozen and then have it refreshed.
Blank: How is Trangs Group expanding its production capacity to meet growing demand in the U.S. and Europe?
Ho: Our new plant in Vietnam will be a driving force for us. We are building the plant, which is around 30,000 square feet, from scratch so we can control the manufacturing lines. We are looking at segregating three, maybe even four manufacturing areas. The idea is being able to have four different manufacturing lines with no cross contamination, which will allow us to come up with a lot of new product development. By the end of this year, we will be functional with cold storage, and will probably be fully functional in the second quarter of 2017.
Blank: How is the company’s U.S. business growing?
Ho: In the U.S., we have a smaller base but we are really gaining traction. We are focusing on a lot of private label products, similar to the U.K. We see a trend towards the growth of private label in retail, caused by the consolidation of the retail segment. More supermarket purchasing power means there is a real opportunity for retailers to scale their private label programs to become points of competitive advantage.
Further to this, we have seen an increased emphasis within the U.S. on food safety, sustainability and social and environmental responsibility, which has benefitted us as we have focused on these factors for many years before expanding into the U.S. On top of this, we are growing the visibility of our Ocean House brand and are seeing this translate to increasing volumes, especially in club stores.