The growth of modern retail formats such as supermarkets presents opportunities for Vietnamese consumers to be more exposed to imported products, which are not generally stocked by traditional stores.
The average Vietnamese diet is also changing to include more meat and dairy products.
Additional factors influencing consumer trends include:
- Population and demographics: Vietnam has a young population that is growing rapidly. Around one third of Vietnam’s population is under 15. The younger population are more receptive of convenience and processed foods, leading to increased demand for those products.
- Trade: Since joining the World Trade Organisation (WTO) in 2007, Vietnam has been importing more products from overseas. As a result, Vietnamese consumers are trending towards a more varied diet with a wider range of products.
- Health consciousness: Events such as the avian flu crisis and better health education are leading the Vietnamese to become more health conscious. Healthy products, packaged products and modern retail channels (which are seen as hygienic) are expected to grow as a result.
Areas of opportunity
The overall food market is expected to grow between 3.7 – 4.3 percent per annum for the period 2011 – 2013.
There are several sectors and products that are expected to grow faster than the overall market:
- Meat: Meat consumption is rising as consumers trend towards a more westernised diet. Sales of meat products totalled US$589.6 million for 2010. This is expected to grow at a compound annual growth rate of 7 percent for the period 2011 – 2015. Poultry products are particularly popular with Vietnamese consumers. Sales of poultry products are expected to grow around 10 percent per annum for the period 2011 – 2015.
- Convenience and processed foods: Urbanisation, busier lifestyles and a young population are leading towards increased consumption of convenience and processed foods. Canned food products are expected to increase at a compound annual growth rate of 10 percent for the period 2011 – 2015. Ready-to-eat meals are forecast to grow at a compounded annual growth rate of 9 percent for the same period.
- Dairy: Rising consumption of dairy products and rising demand for dairy ingredients in food processing can be observed in the Vietnamese market. The dairy sector in Vietnam was valued at US$476.6 million in 2010 and is expected to grow approximately 7 percent per annum for the period 2011 – 2015. Within the dairy sector, demand for fresh milk and dairy spreads are expected to perform particularly well. Fresh milk is forecast to grow around 11 percent per annum for the period 2011 – 2015. Dairy spreads are forecast to grow 11 percent per annum in the same period.
- Healthy foods: The increased health consciousness of consumers has led to an increased demand for healthier products. Fresh food products were valued at US$1.2 billion in 2010 and this is expected to increase at rates between 6 – 7.2 percent per annum until 2015.
The beverage market overall is growing rapidly and is becoming more diverse.
Sales of beverage products are expected to increase between 6.3 – 7.2 percent per annum for the period 2011 – 2013.
- Non-alcoholic beverages: Due to a combination of westernisation and rising health consciousness, both soft drinks and healthy alternatives, such as fruit and vegetable juices, are expected to grow. As the population becomes wealthier, demand for hot beverages such as coffee and tea is also expected to rise.
- Alcoholic beverages: Higher income levels and westernisation are influencing alcohol consumption, which is increasing rapidly in Vietnam. Alcohol consumption is forecast to increase by around 6.5 – 7.5 percent each year for the period 2011 – 2013.vi Currently, 98 percent of alcohol consumption is beer. However, as other alcoholic beverages such as spirits and wine become more affordable for consumers, demand is expected to rise.v Wine is expected to grow at around 4 percent per annum for the period 2011 – 2015. White wine is forecast to grow at around 6 percent per annum for the same period and red wine at 3 percent.
Market entry strategies
Vietnamese consumers are price sensitive and have little brand loyalty. However, with rising incomes and westernisation, this is starting to change.
Products are increasingly competing on brand and quality. Careful thought around marketing and promotion strategies will help a product succeed in the Vietnam market in the long term.
Vietnam is split into three distinct regions. Each of these regions has a central urban hub.
- North: Hanoi city
- Central: Da Nang city
- South: Ho Chi Minh city
Consumers in each region have different purchasing habits and considerations. It is recommended that companies focus on one region only when entering the market.
Ho Chi Minh is the most developed city and the recommended starting location for consumer products. If companies are aiming to target more than one region, it is recommended that they tailor entry strategies to each region.
