Ample room to increase shrimp consumption in H2

How do you assess the current global shrimp market?

Currently, global shrimp production is around 5-6 million tons per year, with an average annual growth rate of 5%. The leading shrimp farming nations with high growth rates are Ecuador and India. Ecuador has seen strong growth since 2018, followed closely by Vietnam and Indonesia.

In terms of processing, Vietnam and Thailand are noteworthy for their intensive capabilities. China is a major shrimp farming nation, as well as a significant importer. It also has one of the world's highest shrimp consumption rates.

Regarding exports, Ecuador has recorded an increase compared to the same period last year, while India and Vietnam have seen a decline.

Where is Vietnam's shrimp industry currently positioned in the international market?

The industry's growth rate is around 8% annually, which is higher than the global average. Vietnam continues to maximize its strengths in meticulous and intensive processing. Currently, the country holds the leading position in markets such as Japan, South Korea, the UK, and Australia.

Vietnam is also making efforts to maintain its market share in China. China primarily imports raw shrimp for processing and domestic consumption. Additionally, the industry is aiming to sustain its market share in the U.S., focusing on intensive processing.

Vietnam's seafood exports, including shrimp, in the first half of the year were down 27% year-on-year, reaching approximately $4.2 billion, according to the VASEP. Shrimp exports amounted to nearly $1.6 billion, a decrease of over 31% compared to the first half of 2022. What are the current challenges facing the shrimp sector, and how do you see the prospects for exports from now until the end of the year?

Inflation and the global recession have led to decreased demand and increased supply, especially from Ecuador, resulting in low shrimp prices. Vietnam's shrimp prices are currently low, while production costs remain high.

Regarding the outlook for the end of the year, there are several reasons to be hopeful. Firstly, domestic commercial shrimp prices are low, which could stimulate shrimp purchasing power.

Shrimp farmers in Ecuador and India are also facing difficulties. The extremely low shrimp prices are making it challenging for farmers to sustain their operations. Due to these low prices, wholesale buyers have increased their inventories.

The peak harvest season is over. In the future, supplies of commercial shrimp will decrease, leading to higher prices. As a result, wholesale buyers will increase their purchasing activities because buying at this time will be advantageous.

What were Sao Ta's results for the first six months of this year?

According to consolidated figures, the production of finished shrimp reached approximately 85% of the tally in the same period last year. It was around 80% for both sales and pre-tax profit.

While the results may not have met expectations, they can be considered a bright spot compared to the overall industry performance. For example, the sales volume of the shrimp sector decreased by 31% compared to the same period the previous year.

In the first five months of the year, sales volume reached only 70% compared to the same period last year. However, in June, there was a significant increase in consumption. This positive performance in June is a bright spot and a promising start for a period of acceleration going forward.

What are Sao Ta's strategies in the context of high inflation with consumers in export markets still tightening their spending?

Sao Ta has to focus on meticulous cost analysis and savings in order to minimize expenses. One fundamental solution is to increase shrimp farming, take control of the raw materials, and reduce the cost of the final product. We are willing to collaborate with major partners in difficult times to retain consumers.

We believe that in this phase, retaining consumers is more important than immediate profits. We will also intensify our export efforts in the Japanese market.

How will Sao Ta boost exports to the Japanese market? Why has the company choosen this direction?

Last year, exports to Japan accounted for 34% of Sao Ta's total export revenue. In the first half of this year, that figure has increased to 40%. The Japanese market provides favorable conditions for quick negotiations and easy access to market information, allowing Sao Ta to stay updated on market trends. The market also offers secure and fast payment methods, thereby minimizing risks.

However, while Sao Ta focuses on the Japanese market, it still considers major markets such as the U.S., EU, and UK, as well as potential markets like South Korea and Australia.

Does Sao Ta intend to enhance its exports to China?

China’s strong purchasing power and focus on pre-processed products create a demand that is fulfilled by thousands of their recycling companies, catering to a vast domestic market (and a portion of exports). Chinese consumers like prawns because when they are boiled, their color turns red. Ca Mau and Bac Lieu are abundant in this kind of shrimp. Soc Trang on the other hand, is known for white leg shrimp.

Therefore, Sao Ta considers China a potential market and is looking for business opportunities there. In particular, in October, Sao Ta plans to attend a large seafood fair in Thanh Dao, China, with the aim of exploring trade opportunities and expanding its presence in the Chinese market.

What is Sao Ta aiming for by 2025 in terms of revenue and profit?

The challenges we've faced this year have made the plans for 2025 somewhat uncertain. Despite these challenges, Sao Ta has set ambitious targets for 2025, including a revenue goal of $300 million and pre-tax profit of VND500 billion ($21.14 million). Sao Ta is also aiming to maintain its position among the top 3 Vietnamese shrimp businesses and retain recognition as a sustainable enterprise, a title it achieved in 2020, 2021, and 2022 as assessed and recognized by the Vietnam Chamber of Commerce and Industry (VCCI).