Market Overview

Euromonitor reports that Cambodia has been one of the fastest-growing developing countries in Asia. Another year of buoyant Gross Domestic Product (GDP) growth took place in 2016 at 7%. The economy is driven by construction, real estate, and exports of garments. Domestic demand should also gain strength in the medium term. The large current account deficit is a source of concern. Steep wage increases undermine the degree of competitiveness. Economic growth is expected to be around 7.3% per annum in the medium term.

The real value of private final consumption rose by 4.2% in 2015 and gains of 4.6% are forecast for 2016. Unemployment is officially put at just 0.6% of the economically active population in 2015. Impressive rates of economic growth have led to sharp wage increases which undermine the degree of competitiveness. Economic growth is expected to be around 7% per year in the medium term, thanks to improvements in infrastructure and competitiveness.

Structural constraints on growth still need to be resolved. A narrow export base means Cambodia is vulnerable to a slump in key markets. For example, exports to the U.S. and the EU account for roughly two-thirds of total exports. Growth has also benefited urban centers more than rural areas. Agricultural success is crucial for the rural population but remains vulnerable to weather conditions despite the improvements in irrigation.

U.S. exports of agricultural products increased 25% to over US$49.5 million in 2016. Consumer-oriented exports increased by 23% to US$14 million and represented 28% of the agricultural total. U.S. exports of processed food increased by 46% to US16.8 million in 2016 or 34% of the agricultural total. Top U.S. processed food exports to Cambodia in 2016 included food preparations, processed vegetables and pulses, non-alcoholic beverages, distilled spirits and other alcoholic beverages, snack foods, baby food, and beer and wine. Additional analysis and in-market intelligence indicate the value if much higher, as much like with Burma, U.S. exports are being supplied through third countries, such as Singapore.   

USDA’s Office of Agricultural Affairs (OAA), in Vietnam, hereinafter referred to as “Post” reports that Cambodia’s healthy tourism industry and the growing bakery, quick service restaurant, and retail sectors offer the best opportunities for U.S. exporters of high-value foods and beverages. Consumers of U.S. products are likely to be young and higher-income Cambodians, expatriates, and tourists. There is a surprisingly wide range of U.S. food products available in Cambodian supermarkets and growing foodservice offerings.

Although the vast majority of food is sold in traditional markets, the situation is changing as more supermarkets, convenience stores, quick-service restaurants, and other modern outlets are opening. There is limited food manufacturing in Cambodia, contributing to the impressive variety of imported processed foods from the U.S. and other sources.

Among the best prospects for U.S. products in the retail and foodservice sectors are beef, pork, processed meat products, dairy products, frozen potatoes, snacks, fresh fruit, and dried fruits and nuts. With the recent growth in the market and increasing demand for high-quality products, there are a number of supermarkets that are looking to form relationships with grocery wholesalers and consolidators on the U.S. West Coast to import consolidated shipments of U.S. food products.

Retail Sector

According to Euromonitor, retail sales in the packaged food market in Cambodia had been estimated to reach US$441.1 million in 2016. That represents a growth rate of over 55.5% or US$157.3 million since 2012. The forecast for growth in this market is also promising. By the year 2021, the retail sales in the packaged food market in Cambodia is expected to reach US$632 million, a growth rate of 33.5% or US$158.8 million. High growth categories in the forecast ready meals, breakfast cereals, ice cream and frozen desserts, sweet biscuits snack bars and fruit snacks, savory snacks, and baked goods.

Euromonitor has Cambodia also identified as one of the “20 Markets of the Future” that will offer the most opportunities for consumer goods companies. Young and growing population, growing middle and investments to infrastructure as well as improved business climate are anticipated to foster sales of consumer goods. Packaged Food and Alcoholic Drinks are expected to remain the largest category over the forecast period, while Consumer Electronics is forecast to be the fastest-growing category.

Post reports that Lucky Markets is the leading retail chain in Cambodia, with 10 supermarket outlets, along with fast food operations (Lucky Burger) and in-store bakeries. Lucky imports some products directly from the U.S., such as frozen potatoes, and others in consolidated shipments from Singapore. Dairy Farm International (DFI), of Hong Kong, recently acquired Lucky Markets and operates in Cambodia under the name DFI Lucky Private Limited.

Japanese retailer AEON opened a large mall and hypermarket in 2014 and was able to attract 15 million visitors in the first year. The company plans to open a second hypermarket in 2018. AEON imports many of their food products from Japan, Thailand, and Singapore, but the hypermarket also carries some U.S. brands.

Other food retailers that offer a variety of imported products include Bayon Markets, Thai Huot Supermarkets, Veggy's and Super Duper. Most modern retail outlets are located in Phnom Penh, but there is an increasing presence in Siem Reap, including Angkor Market, Lucky Market, Thai Huot Market, and Asia Market. Modern retailers in Phnom Penh often import from foreign suppliers, while smaller supermarkets in Siem Reap position themselves as distributors and source their products from the importers based in Phnom Penh. Retailers, such as DFI Lucky and Thai Huot, also serve the foodservice trade through their retail stores or wholesale operations.

IMR Report

Food Export’s In-Market Representative (IMR) from Vietnam has commercial ties with the Cambodian food market and visited it for a firsthand view. His Primary research feedback from the market indicates though shoppers in modern markets mostly are mid and high-income earners who are aware that the import products are high quality (depending on the origin of manufacture), they are willing to purchase higher-priced products based on the most preferred origins such as from the U.S., EU, and Australia. This is also a price-sensitive market, however, because there are many competing origins in the same category. Traders and importers want to work with U.S suppliers directly in order to make the prices more competitive instead of obtaining them through 3rd party countries.

The details indicated imported processed food, red meats, seafood, and beverage products are mostly imported through other ASEAN countries and some direct shipments arrive from the U.S. in consolidated containers. Some of the local trading companies are run by expatriates who have Cambodian citizenship and with multi-national companies. Supermarkets such as Lucky import full mixed containers from the U.S. of products including french fries, meats, and seafood. 

The IMR also reported that U.S. food and agricultural products with high potential in Cambodia at this point include concentrated milk and other dairy products, breakfast cereals, potato chips, sauces, beer and wine, and non-alcoholic beverages. This sounds like most of the other Southeast Asian markets as well, including Vietnam, which at one point was also a small market many thought, had no potential and their growth has been phenomenal.