Vietnam's Cinnamon Export Surge Surpasses China: Balancing Challenges, Unveiling Opportunities

In 2022, Vietnam's spice industry grew, solidifying its position as a key contributor to the nation's export revenue. Among the spices, cinnamon emerged as the second-largest revenue generator after pepper. Despite accounting for 18.2% of global production, Vietnamese cinnamon secured an impressive 34.4% share in the global export market in 2022. This dominance underscores Vietnam's strength in global cinnamon exports and its competitiveness internationally. Notably, Vietnam ranked as the world's second-largest exporter of cinnamon, surpassing the USD 260 million in export values in 2022, trailing closely behind China's USD 274 million in the same period.

Figure 1. Top Exporters of Cinnamon

As of Sep-23, Vietnam has become the leading global exporter of cinnamon. From Jan-23 to Sep-23, Vietnam exported 67,503 metric tons (mt) of cinnamon, marking a substantial 19.2% year-over-year (YoY) increase in volume. The substantial increase in Vietnam's cinnamon exports can be largely attributed to an uptick in production. It is forecasted that Vietnam’s cinnamon production to rise by 12% YoY to to 94,000 mt by the end of 2023. This heightened production output has directly fueled the surge in export volumes, surpassing China's export figures of 51,157 mt during the same initial nine-month period of 2023. This production boosts not only signals a potential shift in the global cinnamon export landscape but also underscores the growing recognition and dominance of Vietnamese cinnamon on the international market.

Opportunities and Challenges in Vietnam’s Cinnamon

Apart from established market destinations like India, the United States (US), and Bangladesh, Vietnamese exporters actively strive to align with the European Union Deforestation-free Regulation (EUDR) standards to extend their market reach further. According to Tridge’s representative in Vietnam, the country secured the fourth position among Switzerland's cinnamon import sources, witnessing an impressive 81.3% YoY increase, reaching USD 118,000 in turnover during the first eight months of 2023. This signifies substantial growth in Vietnam's cinnamon market presence in Switzerland.

However, Vietnamese cinnamon confronts challenges in ensuring quality assurance, particularly in the US, the second-largest importer after India. Vietnam experienced a 4% YoY decline, exporting 8,072 mt of cinnamon to the US in the first nine months of 2023, primarily due to stringent regulations on prohibited substances. In Apr-23, the Food and Drug Administration (FDA) gave an import alert to Vietnam due to the heavy metal (lead) contamination of cinnamon when imported to the US. Compliance with the FDA standards remains critical for Vietnamese cinnamon firms aiming to expand their US market share. Addressing limitations in the cinnamon industry's value chain, cultivation methods, processing techniques, and preservation practices is essential to overcome shortages of high-quality cinnamon products in the US market.

Despite these challenges, the strides made by Vietnamese cinnamon in global recognition and market expansion give an optimistic outlook for further export growth. If Vietnam continues to address quality assurance concerns and aligns with regulatory standards like the FDA's, Tridge expects a significant increase in Vietnamese cinnamon exports in 2024. Moreover, concerted efforts to meet EU standards suggest promising expansion opportunities in the European market. Combined with potential market shares in existing and emerging markets, these initiatives position Vietnam for substantial growth in cinnamon exports, asserting its role as a dominant player in the global spice trade.