Vietnam’s animal-based agri-food sector represents approximately one-third of the nation's US$100 billion food and beverage market, making it a cornerstone of the economy. Yet, beneath this significant market value lies a landscape of intense competition and considerable volatility. The value chain, spanning from feed production to retail, is served by a mix of powerful foreignfirms and large domestic players, creating constant competitive pressure.
Profitability is a primary challenge. Gross margins vary dramatically—from as low as 5% in highly commoditized segments to over 35% in more value-added areas, exposing businesses to significant financial risk. Furthermore, the industry is grappling with challenges ranging from reliance on imported raw materials and fragmented distribution to rising demands fortraceability and safety.
To thrive in this demanding environment, a 'business-as-usual' approach is insufficient. Sustainable success requires a clear strategy focused on operational excellence and targeted growth. This report provides an analysis of the value chain, dissects these key challenges, and presents a framework of actionable levers to help companies build resilience and unlockprofitable growth.
Understanding the landscape: The Animal-based Agri-Food Value Chain in Vietnam
PwC's work with leading 'Feed-Farm-Food' (3F) players provides the insights to help clients navigate market pressures and unlock value across the entire animal-based agri-food value chain.
Navigating the Headwinds: Key Challenges Across the Value Chain
There are challenges across this value chain which primarily stem from global factors, infrastructure, efficiency and risks/compliance.
- Raw material Sourcing & Pre-processing
- Feed Manufacturing & Processing
- On-farm Feeding & Animal Production
- End Product Primary Processing & Distribution
- Secondary Processing (RTE, RTC, etc.)
- Retail
Raw material Sourcing & Pre-processing
Common challenges in Vietnam:
- Heavy reliance on imported raw materials (corn, soybean), making it vulnerable to global price fluctuations.
- Inconsistent quality of domestic raw materials, lack of standardization.
- Challenges around logistics and storage infrastructure. Global supply chains remain unstable, affecting costs and delivery timelines
- Stringent sustainability policies and antibiotic regulations, placing increasing pressure on raw material.
Feed Manufacturing & Processing
Common challenges in Vietnam:
- High and volatile input costs.
- Intense competition between local and foreign-invested companies.
- Increasing requirements for animal food safety and traceability.
- Limited research on cost-optimized nutrition strategies.
On-farm Feeding & Animal Production
Common challenges in Vietnam:
- Predominantly small-scale farming, making disease control difficult.
- Low adoption of advanced technologies, resulting in low
- productivity.
- Weak value chain integration and limited eco-farming models.
- High risk of disease outbreaks and biosecurity challenges.
- Lack of traceability and consistency in imported breeds.
- Shrinking land availability and rising environmental costs
End Product Primary Processing & Distribution
Common challenges in Vietnam:
- Fragmented slaughtering facilities, often failing to meet hygiene standards.
- Lack of a fully integrated cold chain system.
- Fragmented distribution channels with weak linkages.
- Higher domestic pork production costs than key global competitors.
- New livestock laws requiring stricter farm standards and traceability, pushing
- businesses to invest in technology and transparency management
Secondary Processing (RTE, RTC, etc.)
Common challenges in Vietnam:
- Growing demand for processed products, but consumer habits still favour fresh products.
- High investment costs for processing technology.
- Competition from imported processed foods.
Retail
Common challenges in Vietnam:
- Growing modern retail is growing but dominance from traditional channels.
- Rising demand for traceability and quality certifications.
- Shifts in consumer behaviour post-COVID (focus on safety and convenience).
Source: PwC research and analysis, TechnoServe, World‑Grain , IFPRI GFPR , FAO, Wiley, FoodResearchLab, Phap Luat news
The Path to Growth: Strategic Levers for Value Creation
To tackle these challenges, companies must pursue strategic value creation while asking critical questions about strategic alignment, revenue growth, margin optimisation, and governance among others.
By harnessing a wide array of industry practices, companies can enhance efficiencies and address the key questions, paving the way for significant value creation across these levers.
Strategic alignment
- Aligning products with market demand and revenue/profit pools
- Market development
- Product portfolio innovation
- Value chain expansion through Mergers & Acquisitions
Revenue growth
- Product portfolio diversification
- Pricing strategy
- Channel development and cross-channel positioning
- Promotions & marketing strategy
- Leveraging partnerships and alliances
Gross Margin Variability
- Yield improvement
- Process optimisation
- Cost control measures
- Strategic Sourcing / supplier contract re-negotiation
- Feed formulation optimisation
- Lean manufacturing practices
Indirect spends optimisation
- Marketing ROI and volume growth correlation
- Manufacturing overheads reduction
- Operations streamlining
- Other SG&A spend optimisation
- Voice of customer research
Asset efficiency
- Asset rationalisation
- Inventory optimisation
- Energy saving technologies
- Modernisation and technology upgrades
- Portfolio divestment
Governance
- Compliance frameworks
- Time motion studies to align tasks with Roles & Responsibilities
- Financial governance and Risk management protocols
- Accounting Health Check
Your Transformation Partner: How PwC Can Help
PwC’s Transformation Team helps clients translate these efficiencies and strategic opportunities into sustainable growth
We provide end-to-end support in the value enhancement journey, starting with rapid diagnostics to strategic implementation andcontinuous performance optimisation.
Diagnostic Solutions ❯
Conduct performance assessments using value chain centric diagnostic tools.
Benchmark against industry standards to uncover opportunities.
Identify inefficiencies and potential growth areas through analytics.
Tailored Strategy Development ❯
Develop robust improvement strategies aimed at enhancing operational efficiency and optimising capital use.
Enable clients to navigate competitive pressures with data-driven insights and strategic guidance.
Value Enhancement ❯
Focus on leveraging rapid diagnostics to boost shareholder value and increase market competitiveness.
Implement industry-leading practices for cost reduction and revenue enhancement tailored to client needs.
