Vietnamese cashew seizes growth opportunities in the UK with UKVFTA advantages

Despite shifting market dynamics and stringent trade policies, Việt Nam’s position as a leading supplier of cashews to the UK remains strong.

Cashews, a key export commodity of Việt Nam, continue to play a significant role in the country's trade with the UK.

Despite shifting market dynamics and stringent trade policies, Việt Nam’s position as a leading supplier of cashews to the UK remains strong, bolstered by the UK-Việt Nam Free Trade Agreement (UKVFTA) and rising demand for high-quality nuts in the British market.

Data from Việt Nam’s General Department of Customs shows that the country exported over 17,000 tonnes of cashews in the first ten months of 2024, valued at US$87.3 million, a year-on-year increase of 9.6 per cent in volume and 9.9 per cent in value.

This growth is driven by Việt Nam's unparalleled processing capacity and global dominance in cashew production, coupled with the UK’s reliance on imports for its cashew needs.

According to the International Trade Centre, the UK imported 6,060 tonnes of cashews in the first quarter of the year, valued at $33.48 million, marking a 20.4 per cent increase in volume and 14.4 per cent in value year-on-year.

Việt Nam accounted for 91.63 per cent of the UK’s total cashew imports during this period, reinforcing its position as the dominant supplier.

However, the average import price of Vietnamese cashews to the UK declined by 3.3 per cent to $5,484 per tonne, reflecting broader price trends in the global market.

Despite this, Việt Nam's market share grew due to its ability to maintain competitive pricing and consistent supply, while other suppliers like Côte d’Ivoire and India saw significant price drops, but contributed relatively low volumes.

“The UK stands out as a crucial market, boasting a population exceeding 67 million, high income levels and consistent consumer demand,” Đặng Hoàng Giang, General Secretary of the Việt Nam Cashew Association (VINACAS), told Việt Nam News.

“Each year, the UK imports between 17,000 and 19,000 tonnes of various types of cashew nuts, with a trade value of nearly $100 million annually, positioning it among Việt Nam’s top ten export markets for cashew nuts.”

Opportunities under UKVFTA

The UKVFTA offers substantial benefits for Vietnamese cashew exporters. The agreement eliminates tariffs on both raw and processed cashew products, providing a competitive edge over non-FTA countries.

However, compliance with stringent rules of origin is crucial. For example, whether they are shelled or unshelled, the key factor for determining their origin under the UKVFTA is purity. Also, the amount of non-native sugar used should not surpass 20 per cent of the product's weight. Furthermore, the shelling process is considered a basic processing step and doesn't affect the product's origin.

So, if a company imports unshelled cashew nuts from Cambodia to Việt Nam, shells them there, and then ships them to the UK, these shelled nuts won't be considered as having UKVFTA origin.

To meet the UKVFTA's origin criteria, both shelled and unshelled cashew nuts must have a pure origin in Việt Nam.

In terms of processed cashew nuts, the UKVFTA permits the use of non-native cashew nuts from countries other than the UK and Việt Nam, as long as the non-native sugar used in production doesn't exceed 20 per cent of the product's weight.

The UK market offers advantageous factors, including consumer awareness of health and the consumption of plant-based products with high nutritional value, such as organic cashews, said Giang.

According to Statista, the UK market, valued at $1.56 billion in 2023 for all nut products, is projected to grow annually by 4.99 per cent through 2028.

British consumers are increasingly drawn to flavoured and roasted cashews for snacking and unsalted and raw cashews as a healthier alternative to salted snacks.

To capitalise on these trends, exporters must adapt to evolving consumer preferences by offering diverse product options, including premium, health-focused, and ready-to-eat varieties.

However, challenges persist. The UK enforces strict food safety standards, aligning with European Union (EU) and the United Nations Economic Commission for Europe (UNECE) regulations, Giang said.

The head of VINACAS added that logistics costs and intense competition are also challenging the country’s UK cashew exports.

“Shipping to the UK is expensive due to long distances, raising product prices and affecting competitiveness. Meanwhile, in the UK market, Vietnamese businesses compete fiercely on price and quality against not just local produce but also goods from countries like India, Brazil and Africa,” said Giang.

Adherence to quality, hygiene and sustainability criteria is essential for market entry. Moreover, understanding the distribution landscape, ranging from retail chains to speciality stores, is critical for penetrating the market effectively.

Strategic recommendations

Giang suggests Vietnamese exporters implement advanced processing technologies to meet international standards, ensuring consistency and safety, while focusing on branded, value-added products for premium retail channels rather than bulk commodity sales.

To leverage UKVFTA benefits, companies need to fully understand and comply with rules of origin to maximise tariff advantages, he said, adding that investing in market studies to identify trends and establish direct connections with UK importers and distributors is also necessary.

"Digital marketing, including collaborations with UK-based influencers and e-commerce platforms, can widen reach and visibility. Participation in UK food fairs and exhibitions can also facilitate direct connections with distributors and retailers," Giang said.

Additionally exporters should highlight eco-friendly production methods to appeal to socially conscious consumers.