Exit your shell to develop business: Vietnam 'pepper king'

Actively approaching new markets at the same time as producing products with added value for export were among the efforts by Vietnamese pepper supplier Phuc Sinh Group to experience 2022, a year with serial challenges, to set a record revenue of $220 million.

Vietnam’s 2022 pepper exports were affected by China's 'zero Covid' policy and other global fluctuations like the conflict between Russia and Ukraine, high inflation in many countries, and the devaluation of many currencies against the U.S. dollar. Besides, Vietnamese pepper was facing fiercer competition from Brazil and Indonesia which offered more competitive prices.

Under these circumstances, Phuc Sinh, dubbed the “pepper king” of Vietnam, had its own ways to navigate the headwinds.

Market access counts

Vietnam has long retained its position as the world’s largest pepper producer and exporter. Phuc Sinh chairman Phan Minh Thong told The Investor that his company hit a revenue record of $220 million in 2022, up 30% on the year before. He added his firm also gained access to more markets.

It is adaptability and being dynamic that helped the pepper exporter pursue market expansion during tough times, according to him. "Our business history of 21 years includes being a leader in the Vietnamese spice sector and a top pepper exporter in the world. We have overcome a lot of challenges, going through three crises worldwide to date."

Thong said his company has never stopped approaching new export markets across the world, seeking to adapt to different market cultures in Europe, the U.S., North America, Middle East, different parts in Asia, and elsewhere.

"Securing customer acceptance is not easy, so we have to always innovate and improve product quality and improve both packaging and production process."

As the global pandemic broke out worldwide during 2020, markets almost disappeared as vaccines, medicine and essential foods became top priorities. Business returned in 2022 but headwinds like global uncertainties still existed, with Phuc Sinh taking advantage of returning demand to increase supply.

"After the pandemic, we left no stone unturned to reach smaller customers around the world," said Thong.

Phuc Sinh Group’s 2022 exports to Europe increased by 40%, and growth for both the Americas and Asia was 30%, placing total revenue at $220 million.

Come out of your shell

Despite the Russia-Ukraine conflict, Phuc Sinh in 2022 found new markets like Qatar, Dubai, and Saudi Arabia.

"We exported Vietnamese premium coffee products to these markets, and they love them very much. Coffee, not pepper, is part of our new product launch efforts. We built factories to produce new products in 2022," Thong said.

In fact, the "pepper king" has exported large amounts of Vietnamese coffee to overseas markets. It is among Vietnam’s top four coffee exporters, with 60,000 to 70,000 tons of coffee beans shipped annually. Phuc Sinh is also making efforts to expand in the Vietnamese coffee market, where competition is a quite challenging game amid the presence of both domestic and international brands.

Vietnam is the world’s second-largest producer of coffee after Brazil and the biggest supplier of robusta coffee, but the domestic market has seen a long tradition of consuming unbranded products. Phuc Sinh considers this as a market gap to make inroads to, therefore it supplies high-quality products. Its Phuc Sinh Son La coffee factory in the northern mountainous province of Son La started operations in 2018.

The company has launched premium arabica coffee products to inaugurate a new business line. It has built up cooperation ties with coffee farmers to assure stable supply of quality coffee beans while partnering with corporate growers to continually improve bean quality and expand their growing areas.

Thong predicted Vietnam’s exports of spices and foods would see a better year in 2023, and expected an export revenue of $305 million this year for Phuc Sinh Group, much higher than $220 million last year, thanks to diversified products and export markets.

"You must come out of your shell to reach beyond. More international markets mean many more opportunities."

In April 2022, Phuc Sinh launched a new product series including K Pepper (a cold-dried red pepper product) and K Fitter Blue Son La coffee; K Happy & K Life, K Black, and K Morning coffee; together with Son La Cascara Blue tea.

Blue Son La coffee is made from arabica coffee beans planted in Son La. Meanwhile, Cascara tea is the only product in Vietnam made from 100% ripe red arabica coffee hulls, which are picked directly from the trees, and Colombian technology is used to peel the bean’s hull and dry it to make the tea.

Coffee hull used to be waste but has become a high-value drink made by Phuc Sinh. Its Cascara tea was allowed to enter European markets in February 2022.