3. Market Overview and Competitor Analysis
This section would present the current market status of Ling Zhi in Vietnam, what are the pain points of customers and will be followed by the list of current major players in this market.
3.1. Ling Zhi Market Overview in Vietnam
According to the statistic (Nguoi Lao Dong, 2017), Vietnam market consumption in 2017 will be 625 tons of dried (raw Ling Zhi is dried under sunlight or drying machine) Ling Zhi. The domestic production in 2017 was estimated to produce 40% of the market’s need, which is around 250 tons. The rest, 60% or 375 tons is imported from China, Korea and Japan. Importing from China accounts for largest portion and its quality is still in concern.
The price of dried Ling Zhi ranges from 600 thousand to 2 million VND per kg, the mean of the price is about 1 million VND (44 USD) per kg. Taking the above production, we can see the potential of current market size is about 625 billion VND (~28 million USD).
Dr. Truong Thi Dep had collected 42 samples of Ling Zhi in the market to analyze, the result had shown that there are 2 samples from China having no medicinal attributes (Ling Zhi had been extracted to make processed Ling Zhi such as Ling Zhi tea, capsules, condensed sauce or powders…) (Nguoi Lao Dong, 2017).
Since the temperate climate is suitable to cultivate Ling Zhi, the south of Vietnam is the preferable option to grow Ling Zhi. The most suitable place is Tay Nguyen (high land area that near border of Vietnam, Cambodia and Laos) with temperature range from 20 to 30-degree Celsius, especially and the raw material can be found easily there. Cu Chi, one of the village next to the West of Ho Chi Minh city, is now increasingly the places for Ling Zhi producers as its advantage of the location.
The benefit of Ling Zhi is widely known among Vietnamese, especially middle-age and senior
DOI:10.6814/THE.NCCU.IMBA.024.2018.F08
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citizens. There are several reasons that they are reluctant to use:
1. They don’t know what brand they should trust: as no producer can dominate the market, so the point of sales and marketing are not enough to make them well-known in the whole market. People who are drinking Ling Zhi are buying from neighbor or very closed relationship producer.
2. The product is not available at convenient purchase point: some of them have been trying to sell online on e-commerce website or on their own website, but the volume is very small as the trust and brand not yet known. The consumers tend to buy known brand in internet rather than unknown brand. Some of producers have cooperated with pharma chain stores to put at their shelf, but consumers have no habit to purchase Ling Zhi from pharma stores (they tend to buy Western medicine there).
3. The price is perceived as too high: as no strong local brand exists, people perceive Ling Zhi from Korea as the premium and good quality product with almost double to triple times more expensive than local cultivated product. So expensiveness and the fear of cheaper local product with lower quality have been rooted into common consumers.
4. Ling Zhi is still perceived as the product for rich people: The same causes from previous section, that as price is high, it is only for rich people to use rather.
3.2. Competitor analysis
According to latest statistic (Ha Nam, 2017), there are about 10 companies and 40 farms growing Ling Zhi in scale nearby Ho Chi Minh city. Beside these companies, there are thousands of household and individuals growing mushroom in their garden with or without any brand in Tay Nguyen and other areas.
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There are several famous producers including following
- Linh Chi Vina, the biggest local producer, accounting for 10% of the local production, which is around 25 tons per year (this 10% is the portion of this company in total domestic production. If comparing with total current market size, this company accounts for 4%) (Nguoi Lao Dong, 2017). Although at this scale, this company has been focusing on export rather than domestic market, as it has no official distributors or retailers, consumers can only buy through calling to call center and ask for product, or go directly to the its head office to buy.
- Linh Chi Nong Lam, this brand is based on the Nong Lam University (doing both research and cultivation on not only Ling Zhi, but also plenty other mushroom related products), the most famous university about agricultural product cultivation and
development. It currently has 9 showrooms in Ho Chi Minh and some other cities, also its products are sold on Medicare stores (pharma chain store) with 74 locations in Vietnam (Linh Chi Nong Lam, 2018). Its products are sold at premium price, usually 30% higher than the closest competitor.
- Vinamilk, the largest dairy producers in Vietnam, had introduced the first Ling Zhi tea in 2012, with brand name Lincha. However, the product had not launched and
distributed successfully as Vinamilk had discontinued to produce this product.
- Besides that, there are other brands such as: Linh Chi Viet, Greenherbs, Vietmushroom…in the market.
Currently there is no player seizing more than 5% of the market. The fragmentation and low profile producers has been the obstacles to bring confidence of quality and health awareness to broad consumers. Marketing is the weakest point of these players, there are lack of professional design for their websites, their packaging, branding and marketing activities…