FooddrinkQ22015 BMI
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Q2 2015
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VIETNAM
FOOD & DRINK REPORT
INCLUDES 5-YEAR FORECASTS TO 2019
ISSN 1749-3072
Published by:BMI Research
Vietnam Food & Drink Report Q2 2015
INCLUDES 5-YEAR FORECASTS TO 2019
Part of BMI’s Industry Report & Forecasts Series
Published by: BMI Research
Copy deadline: March 2015
BMI Research
Senator House
85 Queen Victoria Street
London
EC4V 4AB
United Kingdom
Tel: +44 (0) 20 7248 0468
Fax: +44 (0) 20 7248 0467
Email:
Web:
© 2015 Business Monitor International Ltd
All rights reserved.
All information contained in this publication is
copyrighted in the name of Business Monitor
International Ltd, and as such no part of this
publication may be reproduced, repackaged,
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in any form or by any means graphic, electronic or
mechanical, including photocopying, recording,
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any other means, without the express written consent
of the publisher.
DISCLAIMER
All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of
publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Business Monitor
International Ltd accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the
publication. All information is provided without warranty, and Business Monitor International Ltd makes no representation of warranty of any kind
as to the accuracy or completeness of any information hereto contained.
Vietnam Food & Drink Report Q2 2015
INCLUDES 5-YEAR FORECASTS TO 2019
Part of BMI’s Industry Report & Forecasts Series
Published by: BMI Research
Copy deadline: March 2015
BMI Research
Senator House
85 Queen Victoria Street
London
EC4V 4AB
United Kingdom
Tel: +44 (0) 20 7248 0468
Fax: +44 (0) 20 7248 0467
Email:
Web:
© 2015 Business Monitor International Ltd
All rights reserved.
All information contained in this publication is
copyrighted in the name of Business Monitor
International Ltd, and as such no part of this
publication may be reproduced, repackaged,
redistributed, resold in whole or in any part, or used
in any form or by any means graphic, electronic or
mechanical, including photocopying, recording,
taping, or by information storage or retrieval, or by
any other means, without the express written consent
of the publisher.
DISCLAIMER
All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of
publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Business Monitor
International Ltd accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the
publication. All information is provided without warranty, and Business Monitor International Ltd makes no representation of warranty of any kind
as to the accuracy or completeness of any information hereto contained.
Vietnam Food & Drink Report Q2 2015
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 (Vietnam 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Canned Food ........................................................................................................................................ 19
Confectionery ........................................................................................................................................ 20
Table: Confectionery Value/Volume Sales, Production & Trade - Historical Data & Forecasts (Vietnam 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Pasta ................................................................................................................................................... 24
Table: Pasta Volume Sales, Production & Trade - Historical Data & Forecasts (Vietnam 2014-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Dairy ................................................................................................................................................... 24
Table: Dairy Volume Sales, Production & Trade - Historical Data & Forecasts (Vietnam 2014-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Drink .................................................................................................................................................... 26
Alcoholic Drinks .................................................................................................................................... 26
Table: Alcoholic Drinks Value/Volume Sales, Production & Trade - Historical Data & Forecasts (Vietnam 2014-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Hot Drinks ............................................................................................................................................ 30
Table: Hot Drink Value/Volume Sales, Production & Trade - Historical Data & Forecasts (Vietnam 2014-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Soft Drinks ............................................................................................................................................ 32
Table: Soft Drinks Sales, Production & Trade (Vietnam 2014-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Mass Grocery Retail ................................................................................................................................ 35
Table: Mass Grocery Retail Sales By Format - Historical Data & Forecasts (Vietnam 2014-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Table: Grocery Retail Sales By Format (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Trade .................................................................................................................................................... 39
Table: Trade Balance - Historical Data & Forecasts (Vietnam 2014-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Macroeconomic Forecast ................................................................................................ 41
Economic Analysis ................................................................................................................................... 41
Table: Economic Activity (Vietnam 2010-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Industry Risk Reward Index ............................................................................................. 46
Asia Pacific - Risk/Reward Index ................................................................................................................ 46
Table: Asia Pacific Food & Drink Risk/Reward Index Q215 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Vietnam Risk/Reward Index ....................................................................................................................... 51
Market Overview ............................................................................................................... 53
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Vietnam Food & Drink Report Q2 2015
Food .....................................................................................................................................................
Agriculture ...........................................................................................................................................
Food Processing ....................................................................................................................................
Food Consumption .................................................................................................................................
Drink ....................................................................................................................................................
Hot Drinks ..........................................................................................................................................
Soft Drinks ............................................................................................................................................
Alcoholic Drinks ....................................................................................................................................
53
53
54
54
56
56
56
57
Mass Grocery Retail ................................................................................................................................ 60
Table: Mass Grocery Retail Sales By Format (Vietnam 2006-2015) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Industry Trends And Developments ................................................................................ 63
Food .....................................................................................................................................................
Key Industry Trends And Developments ......................................................................................................
Drink ....................................................................................................................................................
Key Industry Trends And Developments ......................................................................................................
Mass Grocery Retail ................................................................................................................................
Key Industry Trends And Developments ......................................................................................................
63
63
68
68
77
77
Competitive Landscape .................................................................................................... 81
Table: Key Players In Vietnam's Food Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Table: Key Players In Vietnam's Drink Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Table: Key Players In Vietnam's Mass Grocery Retail Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Company Profile ................................................................................................................ 84
Vinamilk ................................................................................................................................................ 84
Table: Vinamilk - Financial Highlights, 2008-2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Unilever Vietnam ..................................................................................................................................... 96
Nestlé Vietnam ........................................................................................................................................ 99
Masan Consumer ................................................................................................................................... 101
San Miguel Pure Foods Vietnam Co Ltd .................................................................................................... 104
Hanoi Beer Alcohol Beverage Corp (Habeco) ............................................................................................. 106
Saigon Beer Alcohol And Beverage Corporation (Sabeco) ............................................................................. 109
Carlsberg ............................................................................................................................................. 111
Saigon Co-op ........................................................................................................................................ 114
Global Industry Overview ................................................................................................ 117
Table: TESCO - Selected Historical Financial Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Table: Food and Drink Team's Core Views . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Demographic Forecast ................................................................................................... 127
Table: Population Headline Indicators (Vietnam 1990-2025) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
Table: Key Population Ratios (Vietnam 1990-2025) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
Table: Urban/Rural Population & Life Expectancy (Vietnam 1990-2025) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
Table: Population By Age Group (Vietnam 1990-2025) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
Table: Population By Age Group % (Vietnam 1990-2025) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
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Vietnam Food & Drink Report Q2 2015
Glossary ........................................................................................................................... 132
Food & Drink ...................................................................................................................................... 132
Mass Grocery Retail ............................................................................................................................. 132
Methodology .................................................................................................................... 134
Industry Forecast Methodology ..............................................................................................................
Sector-Specific Methodology ..................................................................................................................
Sources ..............................................................................................................................................
Risk/Reward Index Methodology .............................................................................................................
134
135
135
136
Table: Food & Drink Risk/Reward Index Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Table: Weighting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
© Business Monitor International Ltd
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Vietnam Food & Drink Report Q2 2015
BMI Industry View
BMI View: We hold a positive outlook for the Vietnamese consumer, as the government targets economic
growth through public spending and promoting investment and exports. We forecast real GDP growth at
6.4% in 2015 and 6.6% in 2016, on the back of supportive government policies, as well as a strong outlook
for foreign investment and exports. However, political risks remain in the form of Chinese tensions, which
we believe will continue for some time.
Headline Industry Data (local currency)
■
2015 total food consumption growth: +18.0%; compound annual growth rate (CAGR) 2014 to 2019:
+18.6%.
■
2015 per capita food consumption growth: +17.0%; CAGR to 2019: +17.6%.
■
2015 alcoholic drinks value sales growth: +8.0%; CAGR to 2019: +10.0%.
■
2015 soft drinks value sales growth: +9.3%; CAGR to 2019: +11.0%.
■
2015 mass grocery retail sales growth: +10.8%; CAGR to 2019: +11.5%.
Key Industry Trends
Vietnam Beer Sector To Attract Interest: We expect strong interest from Thai brewers and global majors in
Vietnam's beer sector. Thailand is home to strong food and drink companies such as ThaiBev, which are
looking to diversify geographically as they face a slowdown in their home market. Similarly, global beer
majors such as SABMiller, AB InBev and Heineken are seeking to expand to high-growth markets in Asia.
In addition, foreign investment in Vietnam's beer sector will be fuelled by the state's plans to privatise stateowned companies. In March, the government confirmed its intention to reduce its stake in Sabeco, the
leading domestic brewer, from 89% to 36%. Ten potential buyers, including ThaiBev, Heineken and
SABMiller, have already expressed their interest.
Metro Retail Exit Does Not Diminish Positive Vietnam View: In early August 2014, the German cash-andcarry retailer Metro announced it is planning to sell its Vietnam business, potentially pulling in
EUR1.75bn. The decision to leave Vietnam is driven by the need to re-focus on its core Europe business
and strengthen its balance sheet, rather than being based on any major structural issues or re-rating in the
growth profile of the organised food retail sector. Like some of the other major European retailers, namely
Carrefour and Tesco, Metro has had to rein in spending internationally over the past two-to-three years as
retail sales across Western Europe have remained weak while Russia, one of Metro's key markets, slowed
down in 2014. We still see Vietnam as one of South-East Asia's best retail opportunities.
© Business Monitor International Ltd
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Vietnam Food & Drink Report Q2 2015
Vietnam Likely To Benefit From Russia Import Ban: Vietnam will benefit from Russia's ban on agricultural
imports from select countries, including the US and the EU. Russia implemented the ban in August 2014
and it will likely last for one year from the announcement. The Russian Economic Development Minister
has urged ASEAN countries to increase food exports to the country, particularly highlighting the need for
seafood, nuts, beef, pork, chicken, fruit and vegetables. We believe that Vietnam's seafood and livestock
sectors will particularly benefit.
© Business Monitor International Ltd
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Vietnam Food & Drink Report Q2 2015
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.
© Business Monitor International Ltd
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Vietnam Food & Drink Report Q2 2015
SWOT Analysis - Continued
Opportunities
■
The government's focus on investment within the manufacturing and exports industry
will help create a regional food and drink trade hub. Vietnam's recent ASEAN
Economic Community membership 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.
■
If relations with China deteriorate, the Vietnamese economy will suffer and could lose
a significant political ally and trade partner.
© Business Monitor International Ltd
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Vietnam Food & Drink Report Q2 2015
Drink
SWOT Analysis
Strengths
■
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.
■
Alcoholic drinks are widely consumed and have gained popularity in recent years.
■
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
■
The government's focus on investment within the manufacturing and exports industry
will help create a regional food and drink trade hub.
■
Vietnam's recent ASEAN Economic Community membership should provide greater
access to both foreign markets and capital, while making Vietnamese enterprises
stronger through increased competition.
© Business Monitor International Ltd
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Vietnam Food & Drink Report Q2 2015
SWOT Analysis - Continued
■
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.
■
As the Vietnamese state plans to reduce its stake in state-owned brewers, interest
from regional and global brewers will pick up, translating into opportunities to
modernise the sector.
Threats
■
Vietnam's WTO membership may result in smaller companies who are unable to cope
with the increased competition being forced out of business.
■
If relations with China deteriorate, the Vietnamese economy will suffer and could lose
a significant political ally and trade partner.
© Business Monitor International Ltd
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Vietnam Food & Drink Report Q2 2015
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 6.5% annually between 2000 and 2014,
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 so
far resulted in slow rates of expansion.
■
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.
Opportunities
■
The hypermarket concept is still in its infancy and, as familiarity with modern retailing
grows, this format will represent an immense growth opportunity.
© Business Monitor International Ltd
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Vietnam Food & Drink Report Q2 2015
SWOT Analysis - Continued
■
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.
■
The government's focus on investment within the manufacturing and exports industry
will result in lower production costs for such items, which have the potential to boost
the profits of MGR firms.
■
100% foreign ownership in retail has been allowed since January 2015, following
Vietnam's accession to the WTO and other trade agreements, which will boost foreign
presence.
Threats
■
Rising operating costs, especially hikes in the legal minimum wage, will threaten
retailer profit margins; price increases have to date been passed on to shoppers, but
this cannot continue indefinitely in the price-conscious market.
■
If relations with China deteriorate, the Vietnamese economy will suffer and could lose
a significant political ally and trade partner.
© Business Monitor International Ltd
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Vietnam Food & Drink Report Q2 2015
Industry Forecast
Consumer Outlook
We hold a positive outlook for the Vietnamese consumer, as the government targets economic growth
through public spending and promoting investment and exports. However, political risks remain in the form
of Chinese tensions, which we believe will continue for some time.
In line with our positive outlook for the Vietnamese economy, we forecast real GDP growth at 6.4% in
2015 and 6.6% in 2016, on the back of supportive government policies, as well as a strong outlook for
foreign investment and exports. The continued strong economic performance in the first two months of
2015 has reinforced our positive outlook for the Vietnamese economy for the rest of the year. From a
production perspective, the manufacturing sector, which accounts for about 19.0% of GDP, should continue
to register robust performance in 2015. The Purchasing Managers Index (PMI) came in at 51.7 in February,
rising marginally from 51.5 the previous month and the 18th consecutive month of expansion in industrial
output. On the services side, although growth in retail sales has weakened over recent quarters (see chart
below), the expansion in domestic auto sales bodes well for private consumption growth over the coming
quarters.
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Vietnam Food & Drink Report Q2 2015
Retail Sales Expected To Pick Up
Vietnam - Retail Sales, % chg y-o-y
Source: Bloomberg, BMI
We believe that the food and drink industry in Vietnam will benefit from the government's drive to increase
the manufacturing sector for regional and international trade. Vietnam is quickly becoming a regional trade
powerhouse, especially in the food and drink sector, as low wages and tax incentives continue to entice
foreign manufacturing firms to set up production plants in the country. Vietnam's export sector continues to
be a driver of growth for the country, and we forecast this trend to remain in play over the coming months.
Exports rose by 8.6% year-on-year (y-o-y) in February, and while this marked a slight slowdown from the
9.7% in the previous month, it was still a healthy growth rate. With the US receiving up to 19% of total
Vietnamese exports, we believe improving US economic conditions should provide a tailwind for
Vietnamese outbound shipments going forward. In addition, the Vietnamese government has been making a
concerted push to build diplomatic and trade ties with many countries and is negotiating several free trade
agreements. One of the most important ones is the Trans-Pacific Partnership (TPP), which is increasingly
likely to be signed in 2015.
On the consumer side, we note that a proposed increase in the tax base on food and drink products could be
implemented in July 2015. This will decrease sales of certain food and drink items, predominantly products
© Business Monitor International Ltd
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Vietnam Food & Drink Report Q2 2015
such as carbonated drinks and confectionery. If and when this tax increase is confirmed, we will be
adjusting our forecasts accordingly.
In the long term, rapid economic growth in Vietnam over the coming years is likely to translate into higher
income, in turn benefiting consumerism. We forecast strong private consumption growth over the next few
years, at 6.5% in 2015 and 6.4% in 2016. Most exciting is the country's favourable demographic profile:
49.6% 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 92.5mn and GDP growth forecast at 6.4% in 2015, 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. 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'.
Risks To Outlook
Major risks are political and stem from the ongoing maritime dispute with China over claims to parts of the
South China Sea and from the impact of any reshuffle of party leadership at the Communist Party Congress.
We nevertheless believe this will not pose a major risk to the current macroeconomic environment.
However, we note that businesses might face potential operational risks stemming from possible delays in
obtaining approvals and permits from government officials for starting their new businesses and major
development projects.
Food
Food Consumption
■
2015 total food consumption (local currency) growth: +18.0%; compound annual growth rate (CAGR)
2014 to 2019: +18.6%.
■
2015 per capita food consumption (local currency) growth: +17.0%; CAGR to 2019: +17.6%.
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Vietnam Food & Drink Report Q2 2015
Vietnam will remain one of the most attractive
investment opportunities in the region over our
Food Consumption
forecast period to 2019 and beyond. Domestic
(2010-2019)
consumer expenditure will continue to grow, and the
country is a major regional hub for exports. The food
1,500,000
20
sector represents a large and growing portion of the
country's manufacturing output.
17.5
1,000,000
15
12.5
We expect per capita food consumption to grow at a
500,000
10
fast pace, by 17.0% in 2015 and by a compound
and rapid expansion of country's mass grocery retail
2019f
2018f
2017f
2016f
2015f
2014
2013
2012
7.5
2011
attractive demographic profile, rapid urbanisation
0
2010
annual rate of 17.6% from 2014 through to 2019. An
Food consumption VNDbn (LHS)
Food consumption, VND, % y-o-y (RHS)
sector will fuel this growth over the longer term.
Currently, income levels in Vietnam are a long way
f = BMI forecast. Source: National sources, BMI
behind those enjoyed in developed economies, and
consumer purchases remain largely centred on food staples and daily necessities. However, as incomes
continue 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. The ongoing expansion of the mass grocery retail industry
will 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.
As a regional manufacturing and trade hub, we also highlight Vietnam's strong food processing sector as an
ongoing investment driver. Food products account for 21% of all of Vietnam's manufacturing output, which
in itself makes up 19% of GDP. The manufacturing sector will expand robustly in the country on the back
of an improved macroeconomic and investment climate, a growing domestic market, and an abundant
working age population with competitive wages relative to regional peers.
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Vietnam Food & Drink Report Q2 2015
Table: Food Consumption Indicators - Historical Data & Forecasts (Vietnam 2012-2019)
Food
consumption
VNDbn
2012
2013
2014
2015f
2016f
2017f
2018f
2019f
441,791.9
497,188.4
584,568.6
689,881.7
819,323.4
976,204.8
1,160,243.0
1,372,052.5
11.4
12.5
17.6
18.0
18.8
19.1
18.9
18.3
Food
consumption,
VND, % y-o-y
Food
consumption, 4,865,776.6 5,423,100.3 6,316,385.1 7,387,371.7 8,698,529.2 10,279,985.9 12,124,184.5 14,233,630.0
VND per
capita
Food
consumption,
USDbn
21.2
23.6
27.6
32.1
38.2
45.9
55.1
65.8
Food
consumption,
USD per
capita
233.1
257.9
298.0
344.1
405.5
483.8
576.0
682.7
f = BMI forecast. Source: National sources, BMI
Canned Food
■
2015 canned food value sales (local currency) growth: +9.1%; CAGR to 2019: +8.4%.
Canned food sales are forecast to experience robust growth in Vietnam, in line with increasing urbanisation
and growing affluence among consumers. Between 2014 and 2019 we forecast volume growth of 32.0%,
and value growth of 49.8%. 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.
© Business Monitor International Ltd
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Vietnam Food & Drink Report Q2 2015
Confectionery
■
2015 confectionery value (local currency) sales
growth: +7.5%; CAGR to 2019: +9.1%.
■
2015 chocolate value (local currency) sales
growth: +9.5%; CAGR to 2019: +11.6%.
■
2015 sugar confectionery (local currency) sales
growth: +5.9%; CAGR to 2019: +7.5%.
Confectionery
(2010-2019)
300,000
6
200,000
4
100,000
2
0
0
The longer-term outlook for the Vietnamese
confectionery market is positive. Factors such as
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.
2019f
2018f
2017f
2016f
2015f
2014
2013
2012
in the sector will support confectionery demand,
2011
growing health awareness and continued investments
2010
rising purchasing power, favourable demographics,
Confectionery sales, tonnes (LHS)
Confectionery sales, tonnes, % y-o-y (RHS)
f = BMI forecast. Source: National sources, BMI
■
A Massive Youthful Population: Almost half 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 tastes and
innovative products, 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
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. In November 2014, Mondelez International, a global
leader in snacks and confectionery, acquired a 80% stake in domestic confectioner Kinh Do.
However, while we highlight the positive consumption picture, we caution that growth- especially in the
burgeoning chocolate sector- could be restricted by supply issues.
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Vietnam Food & Drink Report Q2 2015
Interest in Asia's cocoa and chocolate sectors is rising, with many local and international players entering
the cocoa grindings and chocolate making business in the region. While there is no traditional culture of
eating chocolate in the region, the Vietnamese are one of the largest chocolate eaters per capita amongst
Emerging Asian countries, with consumption per capita at 0.6kg a year, while Indian and Thai consumers
eat 0.1kg a year.
Attracted by these enticing consumption trends, cocoa grinders are investing heavily across Asia, especially
in Malaysia and Indonesia.
Other Asian countries where chocolate demand is growing have also recorded investments in their grinding
capacity. Countries like Vietnam and Thailand mainly import cocoa powder due to their lack of processing
plants. This corresponds well to the taste of consumers in emerging countries, who usually prefer milder
chocolate products based on cocoa powder (cakes, biscuits and drinks) rather than cocoa butter-based
products which tend to be stronger (melt-in-your-mouth products such as chocolate bars and ice cream).
In spite of strong demand fundamentals for the cocoa and chocolate sectors in Asia, headwinds are growing
in the processing industry. First, the ongoing wave of investment in cocoa processing plants has led to
overcapacity in Malaysia and Indonesia. We believe the fast development of capacity will have a lingering
impact on cocoa grinders' profitability in the coming years, with margins in the industry remaining in the
doldrums. The second challenge facing the sector is the dwindling supply of cocoa beans coming Indonesia,
which has traditionally been Asia's main supplier. Cocoa production in Indonesia has been declining since
2012/13, as the government's ambitious plan to double output has been a failure so far. Seeds supplied by
the Indonesian Coffee and Cocoa Research Institute are producing defective cocoa trees that yield poorquality pods and small, discoloured beans. The scarcity of locally grown bean is being exacerbated by the
fast development of the grinding sector. Indonesia's cocoa production surplus is steadily narrowing and is
expected to come in at a low 119,600 tonnes in 2013/14, compared with the five-year average of 274,000
tonnes.
Not only have beans exports fallen recently, hampering the processing sector in Asia, but Indonesia is now
forced to import higher-quality beans from Africa. In addition, grinders in Indonesia are lobbying to lower
the import tax on cocoa beans in order to increase domestic supply. This would put further pressure on
Indonesian cocoa bean farmers, as they would have to face stiffer competition from African beans, which
are cheaper and of better quality. Many Indonesian cocoa farmers could be pushed out of business, limiting
production further in the future.
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Vietnam Food & Drink Report Q2 2015
We believe the growing scarcity of Indonesian beans, on which many Asian grinders were counting to
supply their plants, will put the development of the chocolate making sector in Asia in jeopardy. The
stagnation in beans output will leave the world dependent on a single source of cocoa, West Africa, known
for its unstable production. This is likely to lead to volatile and slim margins in times of elevated cocoa
prices. Decreasing supply from Indonesia should limit the global production surpluses in the coming years,
leaving cocoa prices at high levels compared with historical averages.
Table: Confectionery Value/Volume Sales, Production & Trade - Historical Data & Forecasts (Vietnam 2012-2019)
Confectionery
sales, tonnes
Confectionery
sales, VNDmn
2012
2013
2014
2015f
2016f
2017f
2018f
2019f
167,979.8
172,517.0
180,658.4
190,430.4
198,987.6
210,275.7
219,618.7
230,965.9
22,411,421 24,585,828 26,778,261 28,782,683 31,111,184 34,399,891 37,570,130
41,342,067
Confectionery
sales, VND per
capita
246,833.3
268,170.8
289,344.7
308,209.9
330,298.8
362,250.2
392,596.4
428,881.3
Confectionery
sales, USDmn
1,073.7
1,169.1
1,263.2
1,340.7
1,450.4
1,618.8
1,784.8
1,982.8
Chocolate
sales, tonnes
47,448.7
48,046.6
50,905.2
54,602.3
58,170.1
62,978.2
67,336.1
72,162.6
Chocolate
sales, kg per
capita
0.5
0.5
0.6
0.6
0.6
0.7
0.7
0.7
Chocolate
sales, VNDmn 3,703,892.4 3,998,109.3 4,409,229.4 4,828,783.5 5,334,638.0 6,058,585.8 6,795,229.7 7,631,841.8
Chocolate
sales, USDmn
177.45
190.12
207.99
224.92
248.70
285.11
322.81
366.04
Sugar
confectionery
sales, tonnes
114,300.6
118,201.2
122,465.2
127,062.2
131,159.2
135,885.8
139,644.6
144,026.0
Sugar
confectionery
sales, kg per
capita
1.3
1.3
1.3
1.4
1.4
1.4
1.5
1.5
Sugar
confectionery
exports,
tonnes
29,615.0
30,789.8
32,018.6
33,293.7
35,688.7
36,647.7
39,270.9
40,788.6
Sugar
confectionery
imports,
tonnes
15,089.2
16,156.1
17,249.1
18,424.0
19,997.0
21,065.9
22,709.8
23,997.0
Sugar
confectionery
balance,
tonnes
14,525.8
14,633.7
14,769.5
14,869.6
15,691.7
15,581.8
16,561.2
16,791.6
6,230.6
6,269.2
7,288.0
8,765.8
9,658.3
11,411.7
12,638.0
14,777.3
Gum sales,
tonnes
© Business Monitor International Ltd
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Vietnam Food & Drink Report Q2 2015
Confectionery Value/Volume Sales, Production & Trade - Historical Data & Forecasts (Vietnam 2012-2019) - Continued
2012
2013
2014
2015f
2016f
2017f
2018f
2019f
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.2
Gum sales,
VNDmn
1,177,461
1,262,945
1,528,238
1,876,719
2,144,309
2,657,737
3,087,572
3,783,516
Gum sales,
VND per
capita
12,968.2
13,775.6
16,512.9
20,096.2
22,765.5
27,987.5
32,264.2
39,250.1
Gum sales,
USDmn
56.41
60.06
72.09
87.42
99.97
125.07
146.68
181.46
Gum sales, kg
per capita
f = BMI forecast. Source: National sources, BMI
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Vietnam Food & Drink Report Q2 2015
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 (Vietnam 2014-2019)
2014
2015f
2016f
2017f
2018f
2019f
Uncooked pasta production, tonnes
34,749.9
38,758.4
38,758.4
42,813.8
42,813.8
46,937.2
Uncooked pasta sales, tonnes
30,175.0
34,981.3
35,790.7
40,670.8
41,507.4
46,487.6
0.3
0.4
0.4
0.4
0.4
0.5
Uncooked pasta exports, tonnes
6,695.1
6,148.8
5,602.4
5,056.0
4,509.7
3,963.3
Uncooked pasta imports, tonnes
2,120.2
2,371.6
2,634.7
2,913.1
3,203.2
3,513.7
Uncooked pasta balance, tonnes
4,574.9
3,777.2
2,967.7
2,143.0
1,306.4
449.6
739,426.7
800,114.6
866,940.6
935,330.4
1,008,519.1
1,085,105.5
2,979.5
3,171.6
3,372.5
3,585.2
3,806.9
4,044.1
Uncooked pasta sales, kg per capita
Prepared pasta production, tonnes
Prepared pasta imports, tonnes
f = BMI forecast. Source: National sources, BMI
Dairy
The Vietnamese dairy sector has experienced very strong growth in recent years. Key drivers of this growth
have been increasing urbanisation and rising incomes, supported by a shift in consumer eating habits. Huge
multinational companies have, in particular, managed to sway consumer preferences with their considerable
advertising and promotional power. Dramatic increases in cattle numbers and increased public and private
sector investment - part of the effort to reduce the country's growing import dependency - will be the main
boost to growth..
© Business Monitor International Ltd
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