Market Developments and Shopper Preferences


Vietnam’s meals and beverage market was one of the vital engaging markets globally (ranked tenth in Asia) in 2019 as per BMI. Whole gross sales of meals and beverage reached US$41.7 million (+ 3.8 p.c YoY) in 2020. On this article, we discover the driving components behind the expansion of Vietnam’s meals and beverage business.


Vietnam is well-known for its different delicacies, which has reached markets world wide, from London to New York, and from Moscow to Johannesburg. Meals from northern Vietnam emphasizes freshwater substances, resembling fish, mollusks, and crab, resulting from geographic restrictions on spice rising and cattle rearing. Central Vietnam boasts of robust flavors enhanced by chili peppers and different spices. Whereas southern Vietnamese delicacies incorporates bounteous fruit and greens, with contemporary herbs, seafood, and often coconut milk.

No matter its delicacies’s international fame, Vietnam’s home meals and beverage business had already been rising at a quick price, earlier than the pandemic. This may be attributed to a cocktail of optimistic developments, together with inhabitants development, rising family incomes, and shifting shopper conduct.

In line with Enterprise Monitor, as cited by the UK Division for Worldwide Commerce, market demand for meals and non-alcoholic drinks was rising at 11.6 p.c till 2020 and predicted to be value US$40 billion by 2021.

At the moment, the home F&B business is recovering from the Covid-19 pandemic, which globally impacted eating places, cafes, and bars in addition to every day consumption resulting from restrictions on public motion and open gatherings.

But, long-standing developments are anticipated to face in good stead for Vietnam as its financial system reopens. The Vietnamese individuals spend a sizeable portion of their incomes on food and drinks. Estimates counsel that someplace between 20 p.c to 48 p.c of family earnings is spent on meals and beverage consumption. Vietnam can be Asia’s high beer shopper.

Tourism is one other sizeable contributor to Vietnam’s meals and beverage business. Vacationers spend a mean of 23.7 p.c of their funds on food and drinks whereas in Vietnam.

Moreover, Vietnam additionally has a fast-growing middle-class inhabitants and sizeable youth demographic. In a 2018 report, PwC projected that Vietnam’s middle-class inhabitants might attain 44 million by 2020 – greater than a 3rd of the entire inhabitants. This center class is additional anticipated to develop, spreading out geographically and turning into extra numerous. And, by 2030, the dimensions of Vietnam’s center class is forecast to hit 95 million.

Moreover, the UN inhabitants fund notes that 25 p.c of Vietnam’s inhabitants (which is round 100 million) are aged between 16 and 30, and over 20 p.c of the inhabitants are below 14.

How are Vietnam’s center class and youth cohort shaping F&B market prospects?

As Vietnam’s center class grows, and disposable incomes rise throughout all sectors of the inhabitants, better spending energy will additional spur demand inside the meals and beverage business, significantly consuming out.

Furthermore, as famous earlier Vietnam is a comparatively younger nation, which can affect future development prospects, such because the emergence of latest tradition and way of life developments that stability native norms with international preferences.

Rising disposable incomes

Vietnam’s rising middle-class inhabitants displays the nation’s compound annual GDP development price of 5 p.c over the previous 20 years, which is 1.7 occasions sooner than the worldwide common.

As of 2020, the common family now has a disposable earnings of US$4,890, whereas the per capita disposable earnings is estimated at US$1,910.

Regardless of the setback of the pandemic, Fitch Options nonetheless expects the nation’s disposable incomes to proceed on this development trajectory within the medium time period (2020 – 2024).

Over the following 5 years, Fitch Options forecast family disposable incomes to develop by a CAGR of 9.0 p.c in native forex phrases (7.9 p.c in US greenback phrases), taking family disposable incomes to a price of US$6,800 by 2024.

As disposable incomes improve, the funds for meals, lodging, and utilities develop, and in consequence, consuming out is turning into frequent in Vietnam, and to some extent a vital a part of fashionable life within the nation.

Social media impression

Given altering existence and socio-cultural norms, the youthful inhabitants is extra inclined to eat out and share their tales and experiences on social media – as in the remainder of the world.

The truth is, there are 76.95 million social media customers in Vietnam as of January 2022. As well as, based on a survey amongst web customers performed in Vietnam within the first quarter of 2022, Fb was the main social media platform amongst all generations. In the meantime, in comparison with Technology X and Y, Technology Z had greater utilization of worldwide platforms resembling Instagram, Tiktok, and Pinterest. 

Picture communities like Fb, Instagram, or Pinterest would imply countless alternatives for meals and beverage manufacturers to extend their presence. For in any case, moreover trend, residing, and journey, there’s hardly some other business than meals that leaves so many visible design choices.

The meals and beverage sector can avail of this to create higher content material, work together with the foodie neighborhood, and switch likes and shares to new clients.

Urbanization

We will additionally observe that urbanization developments and the rising formalization of the nation’s meals and beverage business are positively impacting the sector’s development. It’s predicted that 40 p.c of Vietnamese individuals will stay in cities in 2025, up from round 20 p.c in 1990. Folks residing in cities usually tend to eat out and are typically anticipated to earn extra and due to this fact have a better complete spend on meals and drinks.

Alcohol consumption

Vietnam is Asia’s high beer shopper. The market was value US$5.18 billion in 2015 and is predicted to be value US$10.1 billion in 2025. Nevertheless, the tempo of development is slowing. Annual development between 2020-2025 is forecast to be 5.57 p.c each year versus 8.75 p.c per yr registered in 2015-2019.

Probably the most noticeable developments is the shift towards the consumption of low and no-alcohol beers such because the Heineken 0.0 zero alcohol or Sabeco’s Sagota – the primary Vietnamese brewery to introduce non-alcoholic beer, in addition to craft beers with frequent model names resembling Belgo or BiaCraft Artisan Ales.

Sustainability and wholesome consuming

With Vietnam’s center class rising, its inhabitants is turning into more and more engaged with international developments, resembling sustainability and wholesome consuming. The truth is, manufacturers are even trying to faucet into this development by discovering synergies between Vietnamese native meals tradition and more healthy market choices. Vietnamese meals, typically characterised by its use of contemporary greens and spices, is maybe extra naturally in-sync with wholesome consuming developments. For instance, the nation’s high meals exports embody wholesome substances like pepper, fruit and greens, cashews, and occasional.

Hand in hand with the rise of wholesome consuming is the need to make sure that meals is coming from sustainable sources. The truth is, authorities campaigns are elevating consciousness in regards to the want for meals security and cleaner provide chains. That is enhancing the demand for natural merchandise together with the need for more healthy diets. Vietnamese clients have gotten more and more prepared to pay greater costs for natural meals, environmentally aware choices, and overseas merchandise.

Main gamers in Vietnam’s meals and beverage business

The highest manufacturers within the nation’s meals business embody Vietnam Dairy Merchandise JSC (Vinamilk), together with acquainted manufacturers to Vietnamese customers such because the foreign-invested Nestle, Masan Shopper Company, and others whereas Heineken, Saigon Beer Alcohol Beverage Companies (Sabeco) and Pepsico Vietnam Beverage Co., Ltd are among the many key gamers within the beverage business in Vietnam.

Vietnam’s meals and beverage business is characterised by the prevalence of smaller firms. 84 p.c of meals firms have lower than 50 staff. Over time, one would count on bigger firms to develop from the meals and beverage ecosystem. These corporations could also be extra more likely to standardize manufacturing and assure high quality whereas benefiting from economies of scale in areas like e-commerce adoption.

How has the post-COVID-19 restoration affected Vietnam’s F&B business?

Labor provide

Vietnam’s meals and beverage business is dealing with labor shortages and rising prices however is nearing a full restoration after the pandemic.

Income in key segments

In line with the nation’s Basic Statistics Workplace, income generated within the catering and lodging providers sector reached VND124.4 trillion within the first quarter of 2022. The determine represents a year-on-year improve although it is1.79 p.c decrease than within the first quarter of 2019.

Gross sales rebound

In line with e-wallet participant Payoo, gross sales in Vietnam’s F&B business had been up 50 p.c year-on-year within the first quarter of 2022. The group mentioned that the variety of transactions had risen by 24 p.c, indicating sector restoration. A Payoo spokesperson informed VN Categorical that revenues had been more likely to improve additional in Q2 because the pandemic eases and other people develop into extra snug consuming out.

Securities brokerage VNDirect has strengthened this sentiment. The group prompt that the F&B business might develop between 10-12 p.c development in 2022. The resumption of dine-in providers and the restoration of home demand had been cited as key drivers. F&B spending can be more likely to improve as vacationers return to Vietnam.

Retail digitalization and recognition of supply apps

The pandemic and accompanying restrictions pushed grocery buying on-line in Vietnam. COVID-19 noticed ride-hailing providers like Seize, GoJek, and Bee & Baemin pivot into meals and parcel supply. In the meantime, e-commerce giants like Tiki and Shopee, together with grocery store chains like VinMart and BigC, began or enhanced their house supply choices. In line with, site visitors on on-line grocery web sites continued rising all through the pandemic and grew by 13 p.c in Q1, 2021.

On-line meals supply from meals cooperatives or eating places additionally grew through the pandemic. In line with a report by the IMARC Group, Vietnam’s on-line meals supply market measurement reached a price of US$597.1 million in 2021. IMARC contends that the present development price can be sustained and that the market can be value an enormous US$1.55 billion by 2027. This represents a compound development price of 16.4 p.c within the 5 years between 2022-2027. A younger, tech-savvy inhabitants will assist speed up this development.

A few of the hottest gamers within the meals supply sector embody:

  • Eat.vn
  • Foody.vn
  • Now.vn
  • Seize Meals

The IMARC Group additionally famous that many individuals have created accounts and have been added to the mailing lists of firms providing house supply through the pandemic. Whereas individuals could have fewer considerations about going to eating places or supermarkets within the present atmosphere, they’re extra uncovered to the advertising and marketing of meals supply firms. That is additionally more likely to be a driver within the years to return.

Supply apps additionally enable clients to peruse a number of menus and discover new cuisines with out essentially going to or visiting the eating places in query. That is deemed one other doable driver of on-line meals supply within the years to return.

With contributions from Thu Nguyen


About Us

Vietnam Briefing is produced by Dezan Shira & Associates. The agency assists overseas traders all through Asia from workplaces the world over, together with in Hanoi, Ho Chi Minh Metropolis, and Da Nang. Readers could write to vietnam@dezshira.com for extra assist on doing enterprise in Vietnam.

We additionally keep workplaces or have alliance companions helping overseas traders in Indonesia, India, Singapore, The Philippines, Malaysia, Thailand, Italy, Germany, and the United States, along with practices in Bangladesh and Russia.

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