VIETNAM FOOD DRINK REPORt
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Q2 2014
www.businessmonitor.com
VIETNAM
FOOD & DRINK REPORT
INCLUDES 5-YEAR FORECASTS TO 2018
ISSN 1749-3072
Published by:Business Monitor International
Vietnam Food & Drink Report Q2
2014
INCLUDES 5-YEAR FORECASTS TO 2018
Part of BMI’s Industry Report & Forecasts Series
Published by: Business Monitor International
Copy deadline: February 2014
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Vietnam Food & Drink Report Q2 2014
CONTENTS
BMI Industry View ............................................................................................................... 7
SWOT .................................................................................................................................... 9
Food ....................................................................................................................................................... 9
Drink .................................................................................................................................................... 11
Mass Grocery Retail ................................................................................................................................ 13
Industry Forecast .............................................................................................................. 15
Consumer Outlook ................................................................................................................................... 15
Food ..................................................................................................................................................... 17
Food Consumption ................................................................................................................................ 17
Table: Food Consumption Indicators - Historical Data & Forecasts, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Canned Food ........................................................................................................................................ 21
Table: Canned Food Volume/Value Sales - Historical Data & Forecasts, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Confectionery ........................................................................................................................................ 22
Table: Confectionery Value/Volume Sales - Historical Data & Forecasts, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Pasta ................................................................................................................................................... 25
Table: Pasta Volume Sales, Production & Trade - Historical Data & Forecasts, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Dairy ................................................................................................................................................... 27
Table: Dairy Volume Sales, Production & Trade - Historical Data & Forecasts, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Drink .................................................................................................................................................... 29
Alcoholic Drinks .................................................................................................................................... 29
Table: Alcoholic Drinks Volume/Value Sales - Historical Data & Forecasts, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Hot Drinks ............................................................................................................................................ 34
Table: Hot Drinks Value Sales - Historical Data & Forecasts, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Soft Drinks ............................................................................................................................................ 37
Table: Soft Drinks Value/Volume Sales - Historical Data & Forecasts, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Mass Grocery Retail ................................................................................................................................ 40
Table: Mass Grocery Retail Sales By Format - Historical Data & Forecasts, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Table: Grocery Retail Sales By Format (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Trade .................................................................................................................................................... 43
Table: Food and Drink Trade Indicators - Historical Data & Forecasts, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Macroeconomic Forecast ................................................................................................ 46
Table: Vietnam - Economic Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Industry Risk Reward Ratings .......................................................................................... 50
Asia Pacific Risk/Reward Ratings ............................................................................................................... 50
Table: Asia Pacific Food & Drink Risk/Reward Ratings Q214 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Table: Asia Pacific Food & Drink Risk/Reward Sub-Factor Ratings Q214 (scores out of 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Vietnam Risk/Reward Ratings .................................................................................................................... 55
Market Overview ............................................................................................................... 57
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Vietnam Food & Drink Report Q2 2014
Food .....................................................................................................................................................
Agriculture ...........................................................................................................................................
Food Processing ....................................................................................................................................
Food Consumption .................................................................................................................................
Drink ....................................................................................................................................................
Hot Drinks ............................................................................................................................................
Soft Drinks ............................................................................................................................................
Alcoholic Drinks ....................................................................................................................................
57
57
57
58
58
58
59
60
Mass Grocery Retail ................................................................................................................................ 61
Table: Structure Of Vietnam's Mass Grocery Retail Market By Estimated Number Of Outlets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Industry Trends And Developments ................................................................................ 64
Food .....................................................................................................................................................
Key Industry Trends And Developments ......................................................................................................
Drink ....................................................................................................................................................
Key Industry Trends And Developments ......................................................................................................
Mass Grocery Retail ................................................................................................................................
Key Industry Trends And Developments ......................................................................................................
64
64
70
70
79
79
Competitive Landscape .................................................................................................... 86
Table: Key Players In Vietnam's Food Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Table: Key Players In Vietnam's Drink Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Table: Key Players In Vietnam's Mass Grocery Retail Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Company Profile ................................................................................................................ 89
Vietnam Dairy Products Joint Stock Company (Vinamilk) ............................................................................... 89
Unilever Vietnam ..................................................................................................................................... 93
Nestlé Vietnam ........................................................................................................................................ 96
Masan Consumer ..................................................................................................................................... 99
San Miguel Pure Foods Vietnam Co Ltd .................................................................................................... 102
Hanoi Beer Alcohol Beverage Corp (Habeco) ............................................................................................. 104
Saigon Beer Alcohol And Beverage Corporation (Sabeco) ............................................................................. 107
Carlsberg ............................................................................................................................................. 109
Metro Cash & Carry Vietnam .................................................................................................................. 111
Saigon Co-op ........................................................................................................................................ 114
Global Industry Overview ................................................................................................ 117
Table: Food And Drink Core Views . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Demographic Forecast ................................................................................................... 127
Table: Vietnam's Population By Age Group, 1990-2020 ('000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
Table: Vietnam's Population By Age Group, 1990-2020 (% of total) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
Table: Vietnam's Key Population Ratios, 1990-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Table: Vietnam's Rural And Urban Population, 1990-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Glossary ........................................................................................................................... 131
Food & Drink ...................................................................................................................................... 131
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Vietnam Food & Drink Report Q2 2014
Mass Grocery Retail ............................................................................................................................. 131
Methodology .................................................................................................................... 133
Industry Forecast Methodology .............................................................................................................. 133
Sector-Specific Methodology .................................................................................................................. 134
Sources .............................................................................................................................................. 134
Risk/Reward Rating Methodology ........................................................................................................... 135
Table: Food & Drink Risk/Reward Rating Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
Table: Weighting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
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Vietnam Food & Drink Report Q2 2014
BMI Industry View
BMI View: Despite slower than expected economic recovery in 2013, our outlook for Vietnam's economy in
2014 is positive. Recently released macroeconomic data shows a strong rebound in domestic consumption,
which is felt across a wide spectrum of consumer industries. The consumer is expected to benefit from rising
inflow of remittances and suppressed levels of inflation over the coming quarters. While we have
maintained our 2014 GDP growth forecast at 6.0%, we see potential for upside surprises. Food and drink
consumption within the country will grow at a thoroughly impressive based, delivering double-digit annual
growth through to our forecast period.
Headline Industry Data
■
2014 total food consumption (local currency) growth: +19.2%; compound annual growth rate (CAGR)
2014 to 2018: +15.5%.
■
2014 per capita food consumption (local currency) growth: +18.1%; CAGR to 2018: +14.7%.
■
2014 alcoholic drinks value (local currency) sales growth: +12.0%; CAGR to 2018: +8.7%.
■
2014 soft drinks value (local currency) sales growth: +10.5%; CAGR to 2018: +7.5%.
■
2014 MGR sales (local currency) growth: +13.3%; compound annual growth rate (CAGR) 2014 to 2018:
+9.9%.
Key Industry Trends
McDonald's Opens First Ho Chi Minh Restaurant In February: US fast-food restaurant McDonald's, with
its partner Vietnam-based company Good Day Hospitality, has forayed into the Vietnamese food market in
a bid to compete with its rivals, such as KFC and Burger King Worldwide. The company launched its first
outlet in the Vietnamese city of Ho Chi Minh on February 8 2014.
Sabeco Begins Construction On New Brewery: Vietnam-based brewer Saigon Beer Alcohol And Beverage
Corporation (Sabeco) has started construction on a new brewery in Vietnam's Ninh Thuan region. The US
$21mn facility will have an estimated annual capacity of 50mn litres of beer. The brewery will cover an
area of 20 hectares and is expected to address the rising demand for Sabeco products in the south-central
region. The brewery is scheduled to become operational in the next 12 months.
Vinamilk Opens US$110mn Milk Plant And Invests In Cambodia: Vietnam-based dairy group Vietnam
Dairy Products Joint Stock Company (Vinamilk) has opened a new dairy plant in Vietnam's Binh Duong
province, investing US$110mn. The plant will cover an area of 20 hectares and have an annual capacity of
© Business Monitor International
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Vietnam Food & Drink Report Q2 2014
400mn litres of milk in the first stage. The plant will help the company to achieve its goals of raising its
annual revenue to US$3bn by 2017 and becoming one of the 50 largest dairy companies in the world,
according to Vinamilk's CEO, Mai Kieu Lien.
The company has also gained an overseas investment certificate from the Vietnamese government to build a
milk factory in the Cambodian capital of Phnom Penh with an investment of US$23mn. The company will
own a 51% stake in the unit, while Cambodia-based Angkor Dairy Products will hold the remaining 49%
share.
Key Risks To Outlook
While we expect private consumption to grow at a relatively resilient pace of 5.0% in 2014, we note that the
risk of further bankruptcies among SMEs could potentially lead to widespread job losses, especially in
export-driven sectors. Uncertainties over the outlook for employment could, in turn, prompt households to
cut back on spending.
© Business Monitor International
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Vietnam Food & Drink Report Q2 2014
SWOT
Food
SWOT Analysis
Strengths
■
The food processing sector accounts for a sizeable proportion of industrial output and
GDP, with the sector attracting significant foreign investment in recent years from
global industry majors such as Unilever, Nestlé and San Miguel.
■
Vietnamese consumers, particularly the young and affluent, are fairly brand aware by
regional standards. Accordingly, renowned Western products, backed by investment
in marketing and promotions, tend to have highly successful launches.
■
The wealthy urban centres of Hanoi and Ho Chi Minh City now provide highly
receptive consumer audiences.
■
Large and diverse domestic agricultural output aids the stability of ingredient supplies
and prices for local producers - a vital strength during this period of global volatility.
■
Strong economic and private consumption growth will help fuel food consumption
growth.
Weaknesses
■
There are wide income disparities between urban and rural areas, and local
consumption patterns vary significantly according to income.
■
The food processing industry remains largely fragmented, except for a few key
sectors such as dairy and confectionery.
■
The country's agricultural sector has been criticised for being too slow to adapt to
new technologies to be globally competitive in the long term, although the
government is working hard to address this.
■
Vietnam's infrastructure is still weak. Roads, railways and ports are inadequate to
cope with the country's economic growth and links with the outside world.
■
The lack of white goods among large sections of the consumer base slows down the
development of the high-potential dairy sector.
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Vietnam Food & Drink Report Q2 2014
SWOT Analysis - Continued
Opportunities
■
Accession to the WTO, in January 2007, will continue to benefit Vietnamese
exporters, with the gradual removal of market barriers and trade restrictions set to
increase competition.
■
Vietnam's upcoming ASEAN AEC membership in 2015 should provide greater access
to both foreign markets and capital, while making Vietnamese enterprises stronger
through increased competition.
■
Rising income levels and changing lifestyles, particularly in urban areas, are
increasing consumer demand for snacks, convenience and luxury food items.
■
Vietnam's large domestic market, growing export opportunities and low labour costs,
as well as the prospect of acquiring newly privatised food companies, offer further
investment opportunities.
■
The country's agricultural sector is in need of significant investment, and willing
investors can expect assisted entry.
Threats
■
A growing tourism sector fuels interest in convenience categories.
■
Vietnam's WTO membership may result in smaller companies who are unable to cope
with the increased competition being forced out of business.
■
Elevated agricultural commodity costs will remain a risk for the profitability of
processed-food manufacturers; farmers themselves also view this as a threat.
■
Rising unemployment levels are taking their toll on consumer confidence.
■
If there is a prolonged slowdown in emerging markets, this will hurt Vietnam's
economy both directly and indirectly.
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Vietnam Food & Drink Report Q2 2014
Drink
SWOT Analysis
Strengths
■
Vietnamese consumers, particularly the young and affluent, are fiarly brand aware by
regional standards. Accordingly, renowned Western products, backed by investment
in marketing and promotions, tend to have highly successful launches.
■
The wealthy urban centres of Hanoi and Ho Chi Minh City now provide highly
receptive consumer audiences.
■
Alcoholic drinks are widely consumed and have gained popularity in recent years.
■
Vietnam has been one of the fastest growing economies in Asia in recent years, with
GDP growth averaging 7.1% annually between 2000 and 2011.
■
Competitive pressure is quickly intensifying in the drinks sectors, which is likely to
drive greater sector dynamism and fuel growth.
Weaknesses
■
There are wide income disparities between urban and rural areas, and local
consumption patterns vary significantly according to income.
■
The drinks industry remains largely fragmented, except for a few key sectors, such as
alcohol and soft drinks.
■
Despite the growing presence of multinationals, local firms continue to dominate the
beer market.
■
Vietnam's infrastructure is still weak. Roads, railways and ports are inadequate to
cope with the country's economic growth and links with the outside world.
■
Establishing separate breweries in different regions is costly but remains one of the
best strategies to overcome the lack of infrastructure.
Opportunities
■
Accession to the WTO, in January 2007, will benefit Vietnamese exporters, with the
gradual removal of market barriers and trade restrictions set to increase competition.
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SWOT Analysis - Continued
■
Vietnam's upcoming ASEAN AEC membership in 2015 should provide greater access
to both foreign markets and capital, while making Vietnamese enterprises stronger
through increased competition.
■
Vietnam's large domestic market, growing export opportunities and low labour costs,
as well as the prospect of acquiring newly privatised drink companies, offer further
investment opportunities.
■
A growing tourism sector is fuelling interest in convenience categories, in addition to
sub-sectors such as soft and alcoholic drinks.
■
In line with consumers' rising disposable incomes, there are opportunities for
premium-branded products in the soft and alcoholic drinks sub-sectors.
■
The global trend towards health consciousness provides an opportunity for drinks
manufacturers to diversify into perceived healthier options.
Threats
■
Vietnam's WTO membership may result in smaller companies who are unable to cope
with the increased competition being forced out of business.
■
Rising unemployment levels are taking their toll on consumer confidence.
■
If there is a prolonged slowdown in emerging markets, this will hurt Vietnam's
economy both directly and indirectly
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Mass Grocery Retail
SWOT Analysis
Strengths
■
The potential size of the mass grocery retail market makes it an attractive target for
foreign retailers once improved market terms are granted. Further growth is expected,
especially in the supermarket format.
■
Hypermarkets, supermarkets and convenience stores have all proved popular in
Vietnam, catering for different types of consumers and different shopping occasions.
■
A growing multinational presence in the retail sector has aided the acceptance of
modern retail best practices in Vietnam, particularly things such as added-value instore services.
■
Vietnamese economic growth averaged 7.1% annually between 2000 and 2012,
fuelling a steady middle-class emergence and growing consumerism. The economic
boom has lifted many Vietnamese out of poverty, generating a greater demand for the
higher-value modern retail concepts.
■
The formation of buying groups has proved an effective means of facilitating quicker
expansion among smaller industry players.
Weaknesses
■
Vietnam's retail distribution networks remain underdeveloped, and expansionoriented firms must invest in infrastructural development as well as new store
openings.
■
Regulations governing international participation in modern retail in Vietnam have
resulted in slow rates of expansion, and aspects of government policy continue to
make life challenging for foreign firms in spite of WTO accession.
■
Poverty levels among the country's vast rural population hugely inhibit the potential
audience size for modern retail in Vietnam.
■
Vietnam's infrastructure is still weak. Roads, railways and ports are inadequate to
cope with the country's economic growth and links with the outside world.
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SWOT Analysis - Continued
Opportunities
■
The hypermarket concept is still in its infancy and, as familiarity with modern retailing
grows, this format will represent an immense growth opportunity.
■
Modern retail is currently focused on the major urban centres of the north and south,
which still boast space for new entrants. Central Vietnam and the provinces provide
further opportunities still.
■
Modern retail concepts, such as discounting and private labelling, are likely to prove
popular with price-conscious Vietnamese consumers as familiarity with modern
retailing builds.
■
Rapid urbanisation and the development of new housing complexes provide ideal
locations for modern retail outlets.
Threats
■
Were industry majors Tesco, Carrefour and Walmart all to enter Vietnam, the window
of opportunity for other entrants would rapidly close.
■
Rising operating costs will threaten retailer profit margins; price increases have to
date been passed on to shoppers, but this cannot continue indefinitely in the priceconscious market.
■
Rising unemployment levels are taking their toll on consumer confidence.
■
If there is a prolonged slowdown in emerging markets, this will hurt Vietnam's
economy both directly and indirectly
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Vietnam Food & Drink Report Q2 2014
Industry Forecast
Consumer Outlook
Although we expect the Vietnamese economy to have recorded yet another quarter of sub-par growth in
Q413, we are beginning to see potential for upside surprises to domestic demand over the coming quarters.
Recent data on foreign direct investment inflows, remittances, passenger car sales, and property market
launches, suggests that domestic demand is on a nascent recovery, setting the stage for stronger 2014
growth. We expect private consumption to grow at a relatively resilient pace of 5.0% in 2014. However, we
note that the risk of further bankruptcies among SMEs could potentially lead to widespread job losses and
uncertainties in the employment outlook could prompt households to cut back on spending.
We continue to see evidence that foreign direct investment (FDI) inflows into the country have remained
resilient despite the lack of progress on banking reforms and the weak economic data. According to figures
published by the Ministry of Planning and Investment (MPI), FDI inflows into Vietnam grew by 19.5%
year-on-year (y-o-y) over the first eight months of 2013. The results are in line with our view that Vietnam's
long-term prospects remain bright.
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Vietnam Food & Drink Report Q2 2014
Robust Remittances Could Also Boost Domestic Demand
Vietnam - Unrequited Transfers, US$mn
Source: BMI, Asian Development Bank
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Vietnam Food & Drink Report Q2 2014
Vietnam's growth story over the past decade has been marked by tumultuous periods of high inflation,
multiple currency devaluations and widespread economic wastage as a result of inefficient state-owned
enterprises that continue to have a dominating presence in key economic sectors. From our perspective,
however, we believe that 2013 marked a major turning point for the economy. While structural factors
underpinning Vietnam's potential for long-term growth (including favourable demographics, proximity to
China, and the low cost of labour relative to the region) remain largely unchanged, we highlight recent
developments that reinforce our bullish outlook on the economy over the next decade.
Certainly, the long-term potential of the consumer-facing sectors in Vietnam is undeniable. Rapid economic
growth in Vietnam over the coming years is likely to translate into higher income, in turn benefiting
consumerism. Most exciting is the country's favourable demographic profile: 51.9% of the population is
estimated to be younger than 30. This implies potentially dynamic opportunities for consumer goods players
targeting the mass-market segment in particular. Rapid urbanisation provides additional opportunities for
modern retail outlets.
What Vietnam offers investors is arguably one of the most attractive consumer bases in South East Asia
after India. With a youthful population of 90mn, and GDP growth forecast at 6.0% in 2014, the country
provides attractive demographic potential for retailers keen to capture the vast consumer base. A flurry of
international investment interest in the country over recent years has given continued focus on the merits of
the unravelling consumer story in Vietnam, particularly in its mass grocery retail sector. The latest
multinational reported to be entering the market is French retailer Auchan which, according to local
sources, is set to inject US$500mn in the next decade. This highlights the attractive long-term potential of a
country that has been largely devoid of international investment in the grocery sector. Overall, we believe
that Vietnam remains one the most exciting mass grocery retail Asian growth stories. With the potential to
outperform regionally in the coming years, the country continues to gradually prove its growing reputation
as Asia's 'little India'.
Food
Food Consumption
■
2014 total food consumption (local currency) growth: +19.2%; compound annual growth rate (CAGR)
2014 to 2018: +15.5%.
■
2014 per capita food consumption (local currency) growth: +18.1%; CAGR to 2018: +14.7%.
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Food Consumption
2011-2018
1,500,000
15M
1,000,000
10M
2018f
2017f
2016f
2015f
2014f
0M
2013e
0
2012
5M
2011
500,000
Food consumption VNDbn (LHS)
Food consumption, VND per capita (RHS)
e/f = BMI estimate/forecast. Source: General Statistics Office, BMI
Improvements in Vietnam's macroeconomic fundamentals suggest that its food sector will remain one of the
most attractive investment opportunities in the region over the forecast period. Between 2014 and 2018 food
consumption is projected to expand at a thoroughly impressive compound annual growth rate of 15.5%,
posting an impressive 105.1% overall increase in local currency terms. An attractive demographic profile,
rapid urbanisation and rapid expansion of country's mass grocery retail sector will fuel this growth over the
longer term.
Currently, income levels in Vietnam are a long way behind those enjoyed in developed economies, and
consumer purchases remain largely centred on food staples and daily necessities. However, as incomes start
to accelerate off a low base on the back of sturdy economic growth, consumer tastes and preferences are
expected to calibrate towards the higher-value food and beverage segments, which will be very likely to
guarantee a receptive and growing audience for branded food and beverage products in the medium term.
The massive potential provided by the burgeoning middle class in Vietnam is already attracting the sights of
major consumer-facing players in the country. Private equity firm Kohlberg Kravis Roberts &
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Vietnam Food & Drink Report Q2 2014
Co (KKR), in early 2011, acquired a 10% stake in Masan Consumer, the largest producer of condiments
including fish, soy and chilli sauce and the second biggest producer of instant noodles in Vietnam. This
underlines its confidence in the opportunities available in the mass-market segment. In early 2013, KKR
doubled its investment in Masan.
In particular, we expect functional food products to garner stronger appeal among Vietnamese consumers
over the coming years. Given the nutritional health benefits of functional foods, these products have
witnessed strong demand in Vietnam over the past few years in line with a growing shift towards health
awareness. In 2000, the functional food market comprised only a dozen imported functional food products.
By 2005-2006, domestically produced functional foods accounted for 33% of the entire food market, and in
2008 this figure had doubled, underlining the burgeoning demand for functional food products.
The ongoing expansion of the mass grocery retail industry will also drive up per capita food consumption
levels, provided goods sold through such outlets remain competitively priced. Ultimately, food consumption
growth will be driven by the government's ability to harness rural spending power and by modern retailers'
ability to find a model that stirs consumer interest, without forgetting that price will remain the major
purchasing determinant.
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Vietnam Food & Drink Report Q2 2014
Table: Food Consumption Indicators - Historical Data & Forecasts, 2011-2018
2011
2012
2013e
2014f
2015f
396,467.8
441,791.9
504,206.3
601,208.9
725,087.1
11.19
11.43
14.13
19.24
20.60
4,409,413
4,865,776
5,499,648
6,496,188
7,764,357
Food
consumption
per capita,
VND, % chg yo-y
10.12
10.35
13.03
18.12
19.52
19.00
18.26
17.91
Food
consumption
(US$bn)
19.19
21.17
24.12
29.23
35.67
43.05
51.88
62.27
Food
consumption,
US$, %
change y-o-y
2.92
10.28
13.98
21.18
22.00
20.70
20.50
20.02
Food
consumption
per capita (US
$)
213.46
233.11
263.14
315.89
381.92
457.05
546.29
650.65
Food
consumption
(VNDbn)
Food
consumption,
VND, % chg yo-y
Food
consumption
per capita
(VND)
2016f
2017f
2018f
870,250.0 1,037,539.7 1,232,851.5
20.02
19.22
18.82
9,239,203 10,925,877 12,882,920
e/f = BMI estimate/forecast. Source: General Statistics Office of Vietnam, BMI
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Vietnam Food & Drink Report Q2 2014
Canned Food
■
2014 canned food value sales (local currency) growth: +10.7%; CAGR to 2018: +7.4%.
Canned food sales are forecast to experience strong growth in Vietnam, in line with increasing urbanisation
and growing affluence among consumers. Between 2014 and 2018 we forecast volume growth of 23.4%,
and value growth of 42.8%. Indeed, demand for higher-value products such as canned foods is expected to
pick up on the back of rising disposable incomes.
Vietnamese consumers are experiencing a growing awareness of hygiene concerns and food origin as their
living standards improve and as numerous health scares lead to increased caution. This will further
encourage consumers to purchase processed foods over fresh produce, and strong investment in this sector
from both domestic and international operators will be very likely to help to fuel sales growth. Meanwhile,
city workers are increasingly cutting back on restaurant meals and opting for canned and processed foods in
order to save money, with major retailers such as Saigon Co-op reporting a recent spike in sales.
Table: Canned Food Volume/Value Sales - Historical Data & Forecasts, 2011-2018
2011
2012
2013e
2014f
2015f
2016f
2017f
2018f
9,621.76
10,062.31
10,441.09
11,081.23
11,762.98
12,132.74
13,126.33
13,668.20
Canned food sales,
units, % change y-oy
3.83
4.58
3.76
6.13
6.15
3.14
8.19
4.13
Canned food sales,
kg per capita
0.11
0.11
0.11
0.12
0.13
0.13
0.14
0.14
Canned food sales,
tonnes
Canned food sales,
VNDmn
Canned food sales,
VND, % change y-oy
415,096.74 452,677.81 488,939.89 540,989.81 601,715.86 646,811.32 725,333.81 772,535.30
12.49
9.05
8.01
10.65
11.22
7.49
12.14
6.51
Canned food sales,
VND per capita
4,616.60
4,985.67
5,333.13
5,845.51
6,443.28
6,867.02
7,638.17
8,072.76
Canned food sales,
US$mn
20.10
21.69
23.39
26.31
29.60
32.00
36.27
39.02
Canned food sales,
US$, % change y-oy
4.13
7.92
7.87
12.45
12.51
8.11
13.35
7.58
Canned food sales,
US$ per capita
0.22
0.24
0.26
0.28
0.32
0.34
0.38
0.41
e/f = BMI estimate/forecast. Source: General Statistics Office, company information, trade press, BMI
© Business Monitor International
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Vietnam Food & Drink Report Q2 2014
Confectionery
■
2014 confectionary value (local currency) sales growth: +10.7%; CAGR to 2018: +7.9%.
■
2014 chocolate value (local currency) sales growth: +11.9%; CAGR to 2018: +9.9%.
■
2014 sugar confectionary (local currency) sales growth: +9.6%; CAGR to 2018: +6.8%.
Confectionery Sales
2011-2018
225,000
50M
200,000
25M
2018f
2017f
2016f
2015f
150,000
2014f
2012
2011
0M
2013e
175,000
Confectionery sales, VNDmn (LHS)
Confectionery sales, tonnes (RHS)
e/f = BMI estimate/forecast. Source: General Statistics Office, company information, trade press, BMI
The longer-term outlook for the Vietnamese confectionery market is positive. Factors such as rising
purchasing power, favourable demographics, growing health awareness and continued investments in the
sector will support confectionery demand, especially with regard to chocolate.
■
Rising Disposable Incomes: Rapid wealth accrual is likely to translate into a greater discretionary
appetite for premium confectionery products. As an increasing number of domestic confectioners expand
their upmarket product ranges, this is likely to bolster value sales growth over the coming years.
■
A Massive Youthful Population: 51.9% of the Vietnamese population is estimated to be younger than
30, and the maturation of this demographic group means that there are dynamic opportunities in the mass
market. Moreover, this demographic group is generally more receptive to Western cultures, which will
give an impetus to confectionery demand.
■
Growing Health Awareness: Health awareness is prompting shifts of consumption habits towards
functional and healthy confectionery products. Capitalising on the growing trend, domestic confectioners
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Vietnam Food & Drink Report Q2 2014
such as Tan Tan Food & Foodstuff and Vina Mit are expanding their functional product offerings.
These products typically carry higher price tags, and their rising demand is likely to translate into higher
value sales in the sector.
■
Continued Sector Investments: Sustained competition levels in the Vietnamese confectionery sector
ensure that dynamism in the market is unlikely to cool off any time soon. Nabati Indonesia, a leading
Indonesian biscuit producer, recently announced plans to start distributing its biscuit products in Vietnam
- a testament to the attractiveness of the sector. Meanwhile, domestic confectioners such as Kinh Do are
expected to continue to invest in broadening their product ranges and expanding their distribution
channels.
Table: Confectionery Value/Volume Sales - Historical Data & Forecasts, 2011-2018
2011
Confectionery sales,
tonnes
2012
2013e
2014f
2015f
2016f
2017f
2018f
164,815.74 167,979.82 173,192.25 181,310.47 190,617.32 199,339.80 210,528.96 220,143.75
Confectionery sales,
tonnes, % change y-oy
2.83
1.92
3.10
4.69
5.13
4.58
5.61
4.57
Confectionery sales,
kg per capita
1.83
1.85
1.89
1.96
2.04
2.12
2.22
2.30
Confectionery sales
VNDmn
Confectionery sales,
VND, % change y-o-y
Confectionery sales,
VND per capita
20,109,914 22,411,420 24,641,932 27,266,415 30,150,945 33,014,226 36,491,849 39,884,680
22.20
11.44
9.95
10.65
10.58
9.50
10.53
9.30
223,657.33 246,833.31 268,782.78 294,619.31 322,861.48 350,502.89 384,279.72 416,782.70
Confectionery sales,
US$mn
973.53
1,073.70
1,179.04
1,325.87
1,483.08
1,633.15
1,824.59
2,014.38
Confectionery sales,
US$, % change y-o-y
13.11
10.29
9.81
12.45
11.86
10.12
11.72
10.40
Confectionary sales,
US$ per capita
10.83
11.83
12.86
14.33
15.88
17.34
19.21
21.05
46,763.90
47,448.65
48,722.86
51,541.38
54,879.33
58,612.36
63,326.46
67,948.24
Chocolate sales,
tonnes, % change y-oy
1.92
1.46
2.69
5.78
6.48
6.80
8.04
7.30
Chocolate sales, kg
per capita
0.52
0.52
0.53
0.56
0.59
0.62
0.67
0.71
3,340,752
3,703,892
4,054,379
4,536,173
5,083,520
5,700,780
6,461,089
7,272,341
Chocolate sales VND,
% change y-o-y
20.96
10.87
9.46
11.88
12.07
12.14
13.34
12.56
Chocolate sales VND
per capita
37,155.00
40,793.67
44,223.30
49,014.30
54,435.21
60,523.61
68,038.91
75,993.74
Chocolate sales,
tonnes
Chocolate sales,
VNDmn
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Vietnam Food & Drink Report Q2 2014
Confectionery Value/Volume Sales - Historical Data & Forecasts, 2011-2018 - Continued
2011
2012
2013e
2014f
2015f
2016f
2017f
2018f
161.73
177.45
193.99
220.58
250.05
282.01
323.05
367.29
Chocolate sales, US$,
% change y-o-y
11.97
9.72
9.32
13.71
13.36
12.78
14.56
13.69
Chocolate sales, US$
per capita
1.80
1.95
2.12
2.38
2.68
2.99
3.40
3.84
Chocolate sales US
$mn
Sugar confectionery
sales, VNDmn
Sugar confectionary
sales, VND, % change
y-o-y
Sugar confectionary
sales, VND per capita
Sugar confectionery
sales US$mn
15,709,150 17,530,067 19,324,607 21,185,318 23,136,033 25,077,466 27,255,472 29,381,901
22.56
11.59
10.24
9.63
9.21
8.39
8.69
7.80
174,713.15 193,071.41 210,783.87 228,911.78 247,744.60 266,240.51 287,015.47 307,031.87
760.49
839.84
924.62
1,030.16
1,138.02
1,240.54
1,362.77
1,483.93
Sugar confectionary
sales, US$, % change
y-o-y
13.45
10.43
10.10
11.41
10.47
9.01
9.85
8.89
Sugar confectionary
sales, US$ per capita
8.46
9.25
10.09
11.13
12.19
13.17
14.35
15.51
6,129.08
6,230.61
6,269.18
7,250.90
8,612.57
9,496.01
11,235.85
12,467.62
Gum sales, tonnes, %
change y-o-y
1.75
1.66
0.62
15.66
18.78
10.26
18.32
10.96
Gum sales, kg per
capita
0.07
0.07
0.07
0.08
0.09
0.10
0.12
0.13
1,060,011
1,177,461
1,262,944
1,544,923
1,931,391
2,235,979
2,775,288
3,230,437
20.75
11.08
7.26
22.33
25.02
15.77
24.12
16.40
11,789.18
12,968.24
13,775.62
16,693.22
20,681.67
23,738.77
29,225.35
33,757.08
Gum sales US$mn
51.32
56.41
60.43
75.12
95.00
110.61
138.76
163.15
Gum sales US$, %
change y-o-y
11.77
9.93
7.12
24.32
26.46
16.43
25.45
17.58
Gum sales US$ per
capita
0.57
0.62
0.66
0.81
1.02
1.17
1.46
1.70
Gum sales, tonnes
Gum sales VNDmn
Gum sales, VNDmn, %
change y-o-y
Gum sales, VND per
capita
e/f = BMI estimate/forecast. Source: General Statistics Office, company information, trade press, BMI
© Business Monitor International
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Vietnam Food & Drink Report Q2 2014
Pasta
The Vietnamese pasta market is underdeveloped, although the product has become more recognisable in
view of Westernisation of lifestyles, particularly in urban areas. Around half of the retail market is
dominated by Barilla, with other prominent importers including Italpasta and Pasta Zara.
However, the market for instant noodles is well established, with the market supplied by a mixture of
locally made (by companies such as Masan Consumer and Acecook Vietnam JSC) and imported products.
Goods are receiving strong marketing and advertising support, especially as the more challenging economic
times have prioritised non-discretionary spending. Instant noodles are expected to remain very popular, on
account of their affordability, versatility as a cooking ingredient, wide-ranging availability and convenience.
Table: Pasta Volume Sales, Production & Trade - Historical Data & Forecasts, 2011-2018
2011
2012
2013e
2014f
2015f
2016f
2017f
2018f
Uncooked
pasta
production,
tonnes
25,401.54
28,189.69
31,220.68
34,739.13
38,752.37
38,752.37
42,808.98
42,808.98
Uncooked
pasta
production,
tonnes, %
change y-oy
14.01
10.98
10.75
11.27
11.55
0.00
10.47
0.00
Uncooked
pasta sales,
tonnes
18,484.38
22,059.82
25,865.49
30,164.19
34,975.21
35,784.64
40,666.02
41,502.54
Uncooked
pasta sales,
tonnes, %
change y-oy
25.63
19.34
17.25
16.62
15.95
2.31
13.64
2.06
Uncooked
pasta sales,
kg per
capita
0.21
0.24
0.28
0.33
0.37
0.38
0.43
0.43
8,334.24
7,787.87
7,241.50
6,695.13
6,148.76
5,602.39
5,056.03
4,509.66
-6.15
-6.56
-7.02
-7.54
-8.16
-8.89
-9.75
-10.81
1,417.07
1,658.00
1,886.31
2,120.19
2,371.60
2,634.67
2,913.07
3,203.22
Uncooked
pasta
exports,
tonnes
Uncooked
pasta
exports,
tonnes, %
change y-oy
Uncooked
pasta
© Business Monitor International
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