The food and processing industry is the backbone sector of the country's economy, shaping the agri-food market, and food and economic security. Investments in food stocks will not cease to be relevant due to the stability of the market. Now there are many companies in the food industry claiming to be regional or world leaders. Consequently, their stocks are opportunities for effective investment.
Major industries for investing in the food stocks market
Gainy often find investors interested in the following food industries:
- pasta manufacturing
- flour milling (mills)
- vegetable oil production
- production of canned vegetables, canned fish (canned peas, mushrooms, corn, sprats, sardines, etc.)
- confectionery production (chocolate candies, chewy, waffles, chewing gum, etc.).
- snacks made by extrusion, rice, wheat, rye bread.
Also considered the purchase of the following companies:
- Operating ATP with a HUNDRED of trucks.
- Production of napkins, garbage bags.
What food market criteria investors should pay attention to
What does the market look like in which you will get a substantial return on your investment?
- Great potential for growth in production capacity (sometimes even just underutilized production lines);
- Large market that opens with a competent marketing campaign;
- Relatively low level of remuneration to employees, relatively low operating costs;
- Many enterprises represent practically a closed production cycle from feed production to obtaining processed products;
- Potentially high margins for certain types of products (there are still niches for the introduction of new types of products);
- The peculiarities of requirements for crop production allow obtaining raw materials without GMI, which is very much in demand in foreign markets.
When companies decide to place capital in a particular region, Gainy pays attention to a favorable tax climate, the passage of administrative procedures and the reduction of bureaucratic delays. In this way, investors can see as accurately as possible the potential profit from their financial investments and the payback period.
Food industry stocks in Vietnam – one of the successful investment cases
The main reason for this growth is said to be the variety, abundance and affordable export price of products made in Vietnam, which, in turn, is due to the favorable climate and agricultural orientation of the country's economy.
The report cites the Vietnamese government's policies as another factor in the development of the food industry. Under the national development strategy, the food industry has been selected as one of the priority sectors for economic development. This policy is reflected in Vietnam's provision of income tax exemptions for enterprises operating in the food and canning industry.
Also, important is the conclusion of free trade agreements, which have greatly contributed to an increase in the amount of frozen agricultural products imported into Vietnam.
Turning to the reality of Vietnam's investment market, among the large number of foreign investors holding shares in the country's large agricultural corporations are companies from Korea, Japan, Singapore, Thailand, and the United States.
A significant event was the implementation of a multi-million-dollar investment project by the famous Korean company “CJ Group”. During this process, the company conducted a series of mergers and acquisitions, greenfield investments, and joint ventures in all areas of the food industry, namely, food production and distribution, as well as catering.
At the same time, the variety of food products and the development of the restaurant business. It has a favorable impact on other interrelated areas, such as online food delivery, opening new attractive areas of investment for domestic and foreign investors.
All of this certainly paints a bright outlook for investment in Vietnamese food stocks in the coming years.
The global trend of food industry development: the importance of investment
Digital technology offers unique opportunities to improve food production and trade, especially for smallholder farmers, and in helping to achieve the Sustainable Development Goals. Indeed, the challenge is now to provide enough food of adequate quality to feed an ever-growing, aging, and migrating population.
Today, of the world's 7.7 billion people, 588 million live in extreme poverty, 820 million suffer from hunger and 2.5 billion suffer from some form of micronutrient deficiency.
Populations are also growing, aging, and migrating to cities, which affects agricultural production and food demand. This changes the way market chains work, but it also changes the world around us due to overexploitation of natural resources and potentially catastrophic land degradation, as well as the effects of climate change on global food security.
In addition, inequality, discrimination, and violations of human rights, including the right to adequate and safe food, are intensifying the impact, especially on small farmers.
Against this backdrop, the agri-food system is in dire need of innovative solutions, and digitalization is one approach.
The benefits of a digitized food industry
Digitalization increases connectivity in the agri-food system and reduces inefficiencies, as the Internet provides access to technical information and encourages collaboration and communication throughout the value chain. Big data provides insight into productivity improvements and decision-making with real-time alerts, such as natural disasters. Open information sharing also helps increase transparency and trust between buyers, producers, and investors. This makes the market even more reliable.
Nevertheless, the agri-food system lags other sectors in adopting digitalization. One reason is individuality, and often small farms are less willing to embrace new digital technologies than large farms. Nevertheless, small farmers play a vital role because they account for 80% of global food production.
Venture capital funds are investing in the digital agriculture revolution. Corporations, small farms, and large companies are becoming a platform for long-term global investment.
Will investment help grow the market
- Big data analytics, such as IoT and sensors, can help collect real-time data and perform advanced crop analytics to provide farmers and others in the value chain with insight and access to data to inform decision-makers. It improves productivity through real-time weather alerts to better adapt and be resilient to the effects of climate change.
- Blockchain technologies can improve food traceability, reduce food waste, and increase transparency and trust in the value chain. Deep learning, machine learning, and artificial intelligence (AI) can help with advanced crop management, disease detection, species recognition, and water, soil, and forestry management. Digital solutions may also become necessary to improve the accuracy of monitoring, reporting, and validation of climate change mitigation measures in agriculture and land use.
Digitalization improves communication between all actors in the agri-food system and reduces inefficiencies and barriers in different ways. Farmers and large companies can receive and share technical information, even internationally, which increases productivity, sustainability, and access to markets.