Although Vietnam's cashew nuts dominate in the European market, they are only in raw form, with very few processed products. Photo: D.Nguyen

Top export market

According to the Ministry of Industry and Trade, in 2021, the EU is the second largest cashew nut export market of Vietnam with export proportion accounting for 23% of the total volume and 22% of the total value of the industry. Specifically, cashew nut exports to the EU reached 135 thousand tons, worth US$ 816 million, up 16.5% in volume and 8% in value compared to 2020.

“Europe is a very important market to Vietnam's cashew industry even during the recent Covid-19 period. In 2021, the countries that import the most cashews in the European region include: the Netherlands, Germany, the UK, France, Spain, Finland and Belgium,” said Mr. Dang Hoang Giang, General Secretary of the Vietnam Cashew Association Nam.

In the first four months of 2022, statistics from the General Department of Customs showed that Vietnam's cashew nut exports reached 153.35 thousand tons, worth US$ 913.5 million, down 5.2% in volume and down 4.1% in value compared to the same period in 2021. Notably, cashew exports to many countries in the European region recorded quite high growth compared to the same period last year. For example, exports to the UK reached US$25.339 thousand, up 16.4%; Exports to Germany reached US$37.178 thousand, up 12.9%; Exports to Italy reached US$20.954 thousand, an increase of more than 110%.

According to Ms. Nguyen Thi Thu Thuy, Deputy Director of the Export Support Center, Bureau of Trade Promotion (Ministry of Industry and Trade), the tax rate for cashew kernels and products processed from cashew nuts imported into the EU from Vietnam has been reduced to 0% immediately after EVFTA came into effect.). This is an important milestone and a great opportunity for cashew enterprises because before the EVFTA was implemented, the tariff on cashew nuts imported into the EU from Vietnam fluctuated from 7 to 12%.

“In Western Europe, Vietnam's cashew nuts are exported to countries: Germany, the Netherlands, France and Belgium. Of these, the cashew industry was well exploited the Dutch and German markets. These are also important commercial hubs for imported cashew nuts for re-export. For Eastern Europe, Vietnamese cashew nuts are present in many countries such as Russia, Poland and Ukraine,” Ms. Thuy added.

Mr. Dang Hoang Giang analyzed that currently, the food consumption trend of the European market focuses on factors with products such as: focusing on health; convenience and technology; alternative proteins (vegetable origin); sustainability and waste reduction; and looking for new flavours and experiences. Meanwhile, cashew nuts are one of the products with high nutritional content, low glycemic index beneficial for health, and at the same time, this is also a product with many flavours, suitable for preferences, preferred by European consumers.

“With FTAs such as EVFTA, Vietnam-UK FTA (UKVFTA), tariff barriers are removed, cashew nut import tax into the EU market of 27 countries and the UK market are all equal to 0% are quite favourable factors to promote the export of this item in the near future," said Mr. Giang.

Competition pressure

In addition to the favourable factors, it is worth noting that in exporting cashew nuts to the European market, Vietnamese products are facing fierce competition. Although Vietnam's cashew nuts dominate the market, it is only in raw form, with very few processed products, especially roasted and spiced products according to customer's taste.

Mr. Vu Anh Son, representative of the Vietnam Trade Office in France, said that the supply chain of cashew nuts in France has changed markedly with the decline in market share of Vietnam.

Looking at the story of rice and giving a warning for cashew products, Mr. Son stated: "If in 2013 there was almost no appearance of Cambodian rice in France, it would only be 5-7 years after this country become the largest rice exporter to France and a very large rice exporter to the EU. The story of Cambodia's rice exports can also be repeated with cashew exports".

He also mentioned that the possibility of EU enterprises investing in the African region is not excluded to diversifying the supply of cashew nuts, avoiding dependence on Vietnam and Asian countries. The EU, especially France, has a very special relationship with Africa; not only has a geographical location and transport routes closer than Vietnam, but also Africa and France have historical links.

Pointing out the difficulties and shortcomings of Vietnam's cashew industry today, according to Mr. Dang Hoang Giang, the production and deep processing capacity is limited, especially in the roasted and flavoured cashews according to the tastes of European consumers. At the same time, the marketing stage and grasping customer tastes are still weak.

“Vietnamese enterprises are limited in their ability to promote their brands and communicate through e-commerce. From a farming perspective, it is currently difficult to expand the area, domestic production cannot meet the local source of raw materials, and many raw things must be imported abroad," said Mr. Dang Hoang Giang.

“Cashew nuts, especially spiced cashews, are becoming more and more popular among EU consumers. In addition, cashews are also an ingredient in many healthy foods and functional products such as cashew milk and cashew yogurt. The variety of products made from cashews also increases the demand for this item in the EU market. Therefore, domestic enterprises that want to maintain their market share in this market need appropriate research and investment," the representative of the Vietnam Trade Office in France said.