What potential does Myanmar offer food exporters?

The boom in tourism in Myanmar has inflated local demand for international food brands, while the local food manufacturing base remains very limited in scope. Tourism is expected to continue to grow after the country’s first democratically elected government came into power in April. Myanmar’s ministry of hotels and tourism announced a record 4.6m international tourists in 2015, which was up from 790,000 in 2010. 

Myanmar is a challenging market but infrastructural and regulatory improvements could promote a local branded food manufacturing base, which may ultimately serve domestic demand for branded food, as much as visiting consumers. 

just-food spoke to four Myanmar food industry experts about the potential of this burgeoning market. 

Wang Ji Lun, operations director at Premium Distribution in Myanmar

For the last four years this branded food distribution company’s sales have grown at an annual rate of 30%-40%, explains Wang. New products have motored this growth. “In the past, not many people knew about Myanmar but more and more companies now want to export. We have a lot of new lines and we’re seeing increasing demand for existing products. There is a growing expat population and the local consumer class is starting to be exposed to new brands because regional travel is so much easier than in the past. When local consumers return home, they look for a specific brand of food,” she says.

Europe, China and Thailand are Premium Distribution’s three top sourcing locations. “Premium handles more middle to high-end imported products. We are starting to see that there is a customer base that wants items such as artisan cheese, fresh oysters and truffles.”

Wang says 70% of the company’s products go to major urban centres Mandalay and Yangon. She adds there is now a “huge demand” in “other areas due to the increase in tourism”.

Customs delays remain a constant challenge, with ever-changing regulations being hard to follow. One such change concerned meat imports, notes Wang. “We’d been importing meat for a year and then overnight a new regulation came into effect that only allowed imports if you operated a farm in Myanmar. This happened at the end of last year. It was very difficult for our customers whose whole business is about meat.”

Looking ahead, she predicts continued growth in the market for international food brands that deliver consistent quality. But it will take time. “Myanmar is the sort of place that requires patience,” she says. And while “there are customers who are willing to pay a premium price for quality”, at present, she does not “think the middle class has grown very much”. For this to happen, “there are still many things that the government needs to do”, she suggests. “The manufacturing sector is very limited but I think there will be an explosion in the range of products made in Myanmar in the coming years.”

Oliver Esser, president of the Myanmar Chefs Association

The rise in tourism has resulted in growth in the Myanmar’s foodservice sector – an area of demand that food makers are increasingly working to meet.

“The increase in competition between local and international branded foods began two-and-a-half years ago, when the government relaxed import policies,” Esser notes. Several countries, especially Australia and the US, started exporting beef, lamb and poultry to the country.

“I came to Myanmar 21 years ago, shortly before the military government banned all [food and drink] imports except for beer and soft drinks. This caused certain industries, such as dairy, to grow domestically – although it never met local demand.”

Today, international beef and lamb brands are in strong competition with each other within Myanmar, he says, which has led to brands undertaking more advertising and vocational training for chefs.

Thailand’s CP (Charoen Pokphand Group) has the biggest share in the poultry market, he notes, which has historically been strongly linked to the Myanmar military.

“Our association welcomes international brands because of the training they provide to local staff in cooking and hygiene. However when it comes to fresh items, I think that a brand such as Fresco [locally sourced, organic fresh produce] should be protected. Myanmar should think twice about flying things in – and Fresco creates local jobs,” he tells just-food.

However, his sympathy for local manufacturers only goes so far: “There are a lot of local companies in various sectors complaining that they cannot compete against foreign companies and that they lose staff to them. My response is that they had decades of isolation, during which time they could have brought in experts to develop their sectors but nobody made the effort. Big business remains in the rich people’s hands but when land prices start to drop, I think we’ll see a lot of foreign companies buying land to build factories.”

Ko Kyaw Zaya OO, manager of New Age Food Products, Myanmar

Ko Kyaw Zaya Oo set up a branded food import business seven months ago because it seemed a more efficient way to supply the five hotels he owns outside Yangon. He and his business associates now plan to start supplying branded foods to Myanmar retailers via the business, New Age Food Products.

New Age Food Products already supplies restaurants in Yangon and other hotels. The family’s company also runs a travel agency and with tourism booming due, its managers identified a gap in the market between hotels and suppliers. “Our hotels are three and four-star and we like to use only quality products for our guests, but sometimes we found that we couldn’t get the brands we wanted,” says the executive.

“We import directly from manufacturers and distributors in the region,” he adds, noting the company’s exclusive rights to distribute preserves, jellies and savouries made under the Tiptree brand by Britain’s Wilkin & Sons.

“Most of our suppliers are from Singapore because the goods arrive here quickly.” The company imports the UK’s Taylors of Harrogate teas from distributors in Singapore, for example, to avoid direct freight charges from Britain.

“But in future, if we have the demand, we might contact UK suppliers directly. Our biggest problem is with Myanmar’s FDA [food regulator]: they require a lot of documentation and sometimes it takes two-to-three months to get the recommendation letter. We also have to provide the FDA with a sample weighing 1.5kg, which is a lot. We prefer UK products because the quality is the best and the price is affordable.”

Patricia Ho, market development manager for Asia Pacific, McCormick & Co.

Patricia Ho, Asia-Pacific market development manager for US-based flavourings manufacturing company McCormick & Co. tells just-food that the company has witnessed growing demand for its products in Myanmar.

“McCormick began exporting herbs and spices to Myanmar several years ago when a demand for these products started increasing. McCormick will continue to look at Myanmar as a potential growth market in the long term,” she says.

Myanmar’s consumer spice market is somewhat crowded. Local cuisine is heavily reliant on a variety of herbs and spices and the sector is marked by a large number of cheaper well-established domestic players as well as a host of international ones, Ho says. However, she notes: “McCormick offers some specialty seasoning blend products that are not available from domestic spice manufacturers.”

She also observes that products from the US are generally well-positioned to export high quality herbs and spices, with many brands being well known in Myanmar, despite its relative isolation from global consumerism.

She adds that McCormick is the only imported herbs and spice brand in Myanmar to distribute and market its products both to supermarket chains and foodservice customers.

McCormick promotes its products through in-store displays, cooking demonstrations and in-store sampling.

When asked what the most challenging aspect of doing business in Myanmar is, Ho replied: “Every region or country has their own opportunities in doing business. McCormick works with local partners to familiarize and educate the best practices in each region.”

 

Source: Just Food

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