Photo: VASEP/FIS

Vietnam's Pangasius Industry Faces Inevitable Shift: Deep Processing Becomes Key to Survival Amidst Tariffs

VIET NAM
Wednesday, July 16, 2025, 00:10 (GMT + 9)

After two decades of global dominance, Vietnam's $2 billion pangasius export industry is at a crossroads. Heavily reliant on low-value frozen fillets, the sector is now being pushed towards deep processing by fierce competition, evolving consumer demands, and new US tariffs, making this transformation an irreversible necessity.

HANOI – Vietnam's pangasius industry, a powerhouse in the global seafood market with annual turnovers regularly exceeding $2 billion USD, is facing a critical turning point. While the sector has firmly established its international position over the past two decades, its value chain remains overly dependent on low-value-added products, primarily frozen fillets (HS0304). However, mounting global pressures are now compelling a fundamental restructuring, with a definitive shift towards deep processing emerging as the only viable path forward.

"As the world moves towards increased technology, circular economy, and environmental protection, an export structure that relies too much on raw products cannot last," stated Ms. Thu Hang, editor at the Vietnam Association of Seafood Exporters and Producers (VASEP). She highlighted that fierce price competition, changing global consumer behavior, and particularly the recent 20% reciprocal tax policy from the US, are all pushing the Vietnamese pangasius industry into a period of forced restructuring.

Growth in Volume, But Value Remains "Thin"

According to Vietnam Customs, pangasius exports reached $86 million USD in the first half of June 2025, a 6% increase year-on-year. Accumulated exports up to June 15, 2025, totaled $915 million USD, up 11% compared to the same period in 2024. The frozen fillet product group (HS0304) continues to dominate, accounting for over 80% of total export value with a 10% growth rate.

However, a significant "bright spot" lies in the group of deeply processed products under the HS16 code. Exports of these products reached $24 million USD by June 15, 2025, marking an impressive 59% increase. Despite this rapid growth, these value-added products still account for only 2.6% of Vietnam's total pangasius export value. This indicates a burgeoning market demand and initial responses from businesses to diversify, but from a strategic perspective, it's just the beginning—not yet a robust enough shift to shield the industry from external shocks.

US Reciprocal Tax: An Unwanted Pressure

The recent announcement of reciprocal tariffs by the US on various Vietnamese goods, including pangasius (tra fish), adds significant pressure on export enterprises. This comes amidst unfavorable fluctuations in raw material prices, logistics costs, and exchange rates.

The 20% reciprocal tax directly impacts the high-volume frozen fillet product group. With an average industry gross profit margin of merely 8-12% (based on financial reports from major enterprises like Vinh Hoan (VHC), IDI, and Nam Viet (ANV) over the last three quarters), this tax rate could render many orders unprofitable.

For example, frozen fillet shipments to the US, with an average FOB price of $2.6-$2.8 USD/kg, will see their after-tax price increase without immediate corresponding adjustments in the US market's selling price. If businesses are forced to absorb this difference, many contracts will fall below their break-even point. This scenario forces businesses to seriously consider shifting to deeply processed products, not just for portfolio diversification, but for long-term risk spreading and cost optimization.

Transformation Through Action, Not Slogans

Some industry leaders, such as Vinh Hoan, have already taken proactive steps. Sources indicate that Vinh Hoan has announced a $26 million USD investment to diversify products and optimize costs in response to US tax pressures. Furthermore, at the SEAFOOD EXPO NORTH AMERICA 2025 fair, Vinh Hoan showcased a range of deeply processed products, including pangasius surimi, breaded pangasius in trays, and steamed pangasius dumplings, clearly signaling a strategic pivot towards HS16 product lines targeting the high-end market.

However, the number of enterprises capable of such significant investment in deep processing remains limited. Most small and medium-sized enterprises lack automated production lines, developed R&D teams, or access to distribution chains that demand convenient, branded products. This represents a critical bottleneck, slowing down and unevenly distributing the necessary product structure transformation.

Global Market Demands More Than Just Fillets

The demand for higher-processed pangasius products is not limited to the US. Markets in Europe, Canada, Japan, and Mexico are increasingly seeking pre-cooked, cleanly packaged, sauced, and portioned products suitable for modern retail and restaurant channels. The shift is from "raw seafood" to complete "seafood food" solutions.

Interestingly, US and EU importers are increasing orders for processed pangasius products primarily from Vietnam, as competing countries like India and Indonesia do not possess sufficient deep processing capacity. This presents a unique window of opportunity for Vietnam if it can accelerate its transformation.

Breaded Tartar & Mayo Sauce Pangasius Portion - Godaco Seafood

Long-Term Strategy: Consistency from Pond to Brand

The shift to deep processing cannot be isolated; it requires a comprehensive strategy spanning the entire value chain. From breeding and ASC/BAP-certified farming areas to processing plants and cold logistics chains, every step must be re-planned to align with the "deep product optimization" orientation. Raw fish must meet stringent standards for uniform size, quality, and sensory attributes to produce high-quality IQF steamed products or fish cakes.

Crucially, deep processing also necessitates a branding strategy. A marinated, tray-packed product without a strong brand remains just a processed commodity. To truly elevate its value, the Vietnamese pangasius industry must build a national brand for its processed products, mirroring the success of Chilean salmon or Norwegian cod.

Breaded Pangasius Fish Ball - Godaco Seafood

"There is no way back," affirms Ms. Thu Hang. The pangasius industry is being compelled into a phase where low-value processed products are no longer competitive. Trade fluctuations like US tariffs are merely accelerating a long-simmering process. Shifting to deep processing is not just a trend; it is a fundamental requirement for survival. Companies that hesitate to restructure their portfolios, invest in technology, and build their brands will inevitably be left behind. Conversely, those that dare to change, invest, and lead will be the ones to secure the highest value for Vietnamese pangasius in the global supply chain.

editorial@seafood.media
www.seafood.media

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