PAN Food leverages safety certification to win tough export markets

Six months following its receiving of the FSSC22000 certification, PAN Food’s production and quality management system has now been stabilised, with its food safety management kept in line with the certification scheme.

PAN Food’s food quality defection rate has now been reduced from 22 per cent during the first run-in months to below 5 per cent. The firm aims to lower the rate to 3 per cent in 2020.

“We decide to adopt FSSC 22000 Framework with the support from IFC for our newly built factory. This certification would really make us stand out among other Vietnamese food producers and would make conversations with our international partners much easier as we share our commitment to global leading food safety standards,” said CEO Nguyen Quoc Hoang at PAN Food Manufacturing.

According to Hoang, food safety is a founding block for any producer seeking for sustainable and growing business. Adopting food safety is an investment rather than expense and companies will get the due return as food safety can help them reduce losses, increase sales and unlock potential markets. Sustainability practices will also help lower expenses for recalls and protect the brands and secure their businesses.

PAN Food, in this case, plans to construct two new confectionery factories following the launch of its very first FSSC 22000 certified factory.

PAN Food constructed a modern factory in Long An province to produce long shelf-life sponge cakes in late 2017. 90 per cent of its products are consumed domestically while 10 per cent is for export purpose. As the company aims to improve exports into new markets, IFC has advised PAN Food to get FSSC 22000 certification – an independent and high demanding system that controls and minimises food safety hazards – for its existing and upcoming factories.

“We will definitely follow this model and pursue FSSC22000 for the new lines. The set-up of the remaining lines largely depends on the market demand. So we think food safety standards play a very important role in helping us access new markets and expand our business,” noted Hoang.

The company’s production has increased by 60 per cent year-on-year and it expects to bolster its exports by 40 per cent this year with an inclusion of Japan as the new target market.

In 2018, PAN Food exported some $4.5 million worth of products to mainly East Asian markets such as China, the Philippines, Taiwan and Hong Kong. The year was seen as a ‘market exploratory’ year for the company as its production had just started. The lack of food safety certifications was identified as a challenge to enter new markets.

The Southeast Asian region, meanwhile, has the second highest burden of foodborne diseases per population according to the World Health Organization (WHO). Vietnam is ranked 65st out of 113 countries for Quality and Safety by the Global Food Security Index 2018.

The International Food Policy Institute’s (IFPRI) Global Food Policy Report 2015 identified the emerging economies, most of which are in Asia, as the global hot spots for foodborne diseases, with Vietnam being one of them.

Vietnam’s food sector has the average annual growth rate of 15 per cent, being one of the top-growing markets in Asia. But, inadequate safety standards are said to hinder the sector’s sustainable growth, reducing market opportunities for local food producers and significantly affecting consumers’ health.

“As Vietnamese consumers grow more aware of food safety and are demanding it, the only way to go ahead for food producers is improving their standards. Food safety practices make good business sense, besides being the right thing to do,” said Rana Karadsheh, IFC Asia director for Manufacturing, Agribusiness and Services.

A 2018 World Bank Group study reported that unsafe food sickens 600 million people and costs about $100 billion annually in lost productivity and healthcare, in emerging markets. It costs Vietnam alone $700 million annually.