With a population of around 100 million and the PWC forecast that it will be the strongest growing economy in the world until 2050, Vietnam is definitely a rising dragon. With a young population open to new experiences, the food and beverage industry trends in Vietnam 2022 will play an important role in economic growth.

Why is South East Asia and ASEAN important?

The region has some of the most dynamic economic growth on the planet, and with a population of 660 million, represents around 8% of the world’s population. The ASEAN region represents around 7.5% of the total world trade volume, whereas China is 10% and India just 2%. Right now, at a time when China’s borders are closed to visitors, then South East Asia can be a realistic alternative to drive growth for your company, and Vietnam is a strong player in the region which is often underestimated.

Vietnam as initial pandemic champion

In 2020, Vietnam was the global economic star alongside Taiwan, as the country managed to control the initial pandemic outbreak and at the same time maintain one of the highest growth rates in the world. While GDP growth was still around 3%, most countries struggled with negative values.

Although 2021 was a difficult year and many factories were then closed due to the pandemic, GDP growth of 2.6% was still achieved. The higher vaccination rate finally enabled a return to something approaching normality in the last months of 2021.

Vietnamese consumers endured no less than 6 months of prolonged lockdown in 2021. All non-essential brick-and-mortar stores were closed as traditional wet markets and grocery stores severely limited entry numbers. Obviously, that meant a huge boost for online sales at the time.

The outlook for 2022 is positive and a few trends can be mentioned here. Additionally, hardly any other country in Asia has signed so many free trade agreements (14 at the beginning of 2022 with 3 more under negotiation) and is neutral in trade conflicts.

Anthony Bourdain quote about food

Major Food and Beverage Industry Trends in Vietnam 2022

Firstly you should know that food and beverages make up between 40-48% of Vietnamese household expenditure. Vietnam’s F&B market is one of the most attractive markets globally. Due to changing consumer behaviour, more mobility, rising affluence, and urbanisation, Vietnam is expected to be among the top three nations in Asia in terms of food and beverage development.

Young Dynamic Population

According to the UN population fund, 25% of Vietnam’s around 100 million population are aged between 16 and 30, and over 20% of the population are under 14. That makes Vietnam an extremely young nation. The under 30’s have also not experienced the deprivation of the war and post-war years so have grown up with better nutrition than the generations before them, and the expectation of a higher standard of living.

Gen Z is now coming into adulthood and this generation are open to trends and willing to spend their money on eating out. Studies have shown that they spend a large portion of their disposable income (on average 900,000 VND (around $40) on eating outside the home and that they are more receptive to international products.

This generation is also more aware of the impact of their behaviour on the planet so they are critical drivers of food and beverage industry trends in Vietnam 2022 such as ethical sourcing, sustainability and a push for more local products.

Healthy Eating

Vietnamese like to eat green vegetables and herbs

This food and beverage trend can be observed across the whole region as consumers are prepared to pay more for healthier food post pandemic. In turn, this focus on “what IS healthy food” is also stimulating demand for new types of products and diets such as glutenfree and keto.

Brands who are looking to tap into this trend should also think about typical Vietnamese food culture and how this can be incorporated into their healthier offerings. In this way, you could be thinking about things such as the love for green vegetables (Vietnam has many different kinds, not only kale & spinach), the desire for healthier snacks and of course foods that can be enjoyed together, as the Vietnamese don’t like to eat alone.

Healthier ingredients are only one aspect of this healthy eating trend though. Awareness is also increasing of the nutrition that different foods contain, but also the topic of product traceability is higher in people’s awareness. This topic also raises questions for many consumers about the safety of fruits and vegetables bought in wet markets.

Organic and Foods of Natural Origin + Sustainability

We can’t talk about food and beverage industry trends in Vietnam 2022 without considering the rise of organic foods.

Increasing disposable income and a growing middle class combined with a young population who are interested in consuming more diverse foods than their parents or grandparents is pushing demand for green products. Hand in hand with the rise of healthier lifestyles, organic or clean eating is becoming a more mainstream component of green healthy life.

Government campaigns are pushing awareness about the need for increased food safety and a clean food chain and this is combining with the desire for a healthier lifestyle to push demand for organic products.

Consumers are becoming more aware of how their surroundings can impact on the quality of the food that they eat, and this increased environmental awareness is pushing food and beverage venues to become more sustainable. Restaurants are being forced to think more about their branding, to be more sustainable in their raw material sourcing and also to think more about the kind of packaging that they are using (this was especially obvious during the lockdowns as consumers began to think about the packaging used for take away/delivery foods).

Manufacturers are also faced with the same issues and also need to recognise how they can promote the health benefits of their products.

One manufacturer who represents the best of modern Vietnamese handicraft in a sustainable way is the chocolate brand Marou. (If you can get your hands on some of this, I’d highly recommend you give it a try!).

marou chocolate

Importance of Origin Stories and Brand Values

The digitalisation of retail (see below) in combination with increased awareness about what constitutes a green healthy lifestyle is clearly pushing the growth of modern advanced distribution channels, rather than the open markets and traditional stores which Vietnam has favoured in the past. Supermarkets which deliver and online retail platforms are clearly benefiting from being more likely to guarantee quality and for stating the origin of their wares.

Consumers are increasingly asking how the products they buy are made and what the benefits are (& why). Digitalisation is also leading to a more personalised consumption approach which can lead to brand trust if manufacturers are perceived to be honest and transparent.

These factors are increasing the impact of origin stories, compared to the situation pre-pandemic and bringing brand values more into focus.

Food and Beverage Industry Trends in Vietnam 2022

Digitalisation of Retail

Faced with stringent social distancing protocols in 2021, Vietnamese consumers had little choice but to turn to online shopping. Ride-hailing services like Grab, GoJek, Bee & Baemin pivoted into food and parcel delivery, while domestic e-commerce giants like Tiki, Shopee, Lazada, and Sendo, along with major supermarket chains like VinMart, BigC, and Lotte Mart, all embraced door-to-door shipping.

The shift to e-commerce has been a complete game-changer for small businesses, drastically reducing the financial burden of maintaining offline stores. SMEs can now focus more on expanding promotion, improving customer service, and streamlining logistics to increase revenue. The data which is available via the online business models means that companies are able to also personalise their offerings in terms of diet, nutrition and fitness (to loop back to the topic of healthy eating above).

Anyone who can set up an online store is now capable of entering Vietnam’s busy consumer market.  Meanwhile, big brands are also enjoying this change of pace. E-commerce channels enabled manufacturers to sell products directly to consumers (D2C) through platforms like ShopeeMall and LazMall. These official stores offer greater credibility than resellers, attracting much more customers as a result. 

Manufacturers and consumer brands are no longer reliant on traditional distribution channels. They can now tap into their customer bases directly through online promotional campaigns, a strategy offering more accurate feedback, expanded sales, and less time spent negotiating with distributors and middlemen. 

Online Food Deliveries

According to the latest report by IMARC Group, The Vietnam online food delivery market size reached a value of US$ 597.1 Million in 2021. The market is expected to reach US$ 1,555.4 Million by 2027, that’s a compound growth rate of 16.4% during 2022-2027. 

Online food delivery ensures no-hassle ordering, express deliveries, fewer misunderstandings and, minimum human interactions. Also, numerous discounts and cashbacks offered by these services have made online ordering quite popular among young people and contributed to their widespread popularity across Vietnam. Some of the most popular players are:

Southeast Asia Ecommerce Companies

Massive change in payment habits

Pre-pandemic, Vietnam was very much a majority cash on delivery country. I remember going to webinars where the ecommerce aspect always included that brands needed to be prepared to accept that as a payment term.

As in many countries, the pandemic has changed all that. QR codes, mobile payments and contactless card technology are now the order of the day. Systems such as Vinmart’s Scan & Go facilitate super-fast contactless payments.

To meet the growing needs of consumers, businesses need to digitise and put the needs of their customers first. This is extremely urgent for businesses to minimise the impact of the pandemic and stay ahead of competitors.

Winnie wong, MAstercard Country Manager for Vietnam, Cambodia & Laos

Of course this is a process and not something that can be abruptly achieved overnight, but the tide is certainly turning. According to the Mastercard “New Payments Index 2021” 84% of APAC consumers saw increased access to emerging forms of payment and 88% had used at least 1 during the past 12 months. Two thirds of those surveyed (75% of whom were millennials) said they had tried new payment methods during the pandemic that they wouldn’t have otherwise. 60% even stated that they were “ready to say goodbye” to shops and restaurants who only accept cash.

Resulting Challenges for the Food and Beverage Industry in Vietnam

Of course, where there are trends, there are also challenges and Vietnam is no exception to that. Especially the domestic food and beverage industry needs to raise their standards in order to be able to compete in the medium to long term. Those challenges include:

  • a lack of highly qualified technical staff
  • product quality standards (how to ensure standards when you have an unstable supply of raw materials and increasing quality demands for export products as a result of the various Free Trade Agreements?)
  • guaranteeing traceability and clean sources for raw materials used
  • small scale production facilities in many cases
  • weak branding combined with poor packaging (brands like prestige in consumer perceptions)
  • Fierce domestic competition & foreign buy outs eg Cau Tre (brands need to become stronger to survive not only the domestic competition, but also to stand up to the international players)

Concrete product groups that have particularly large potential in Vietnam

  1. Dairy incl. raw materials
    70% of raw materials for dairy products are imported, and taxes are reducing with the EVFTA (European Vietnam Free Trade Agreement)
    Growth rate is around 4.5%
  2. Meat – local production can’t meet the demand, especially for pork and chicken. (Barriers to market entry are relatively high though)
  3. Alcohol.
    Vietnam is the largest market in Southeast Asia for beer (& number 3 in Asia after China & Japan). This includes a boom in local craft breweries, although imported products are still at a low level due to high taxes
    Wine consumption is growing at 10%.
    With the implementation of the EVFTA import taxes will be slowly reduced to 0 over the coming 7-10 years
  4. Processed food – this includes 50% meat products and 28% fish products
    This segment is growing at 12.9%
    Local brands are usually 10-15% cheaper for consumers.
  5. Supplements
    40% of all supplements in Vietnam are imported, and this segment has grown even fast in the post-pandemic situation.

You shouldn’t underestimate the registration process, but the potential is high with the right market entry strategy.

What should brands be additionally considering in order to compete in the food and beverage industry in Vietnam?

Realistically speaking, brands need to be reviewing their online presence and digital marketing in order to ride the trends in 2022. That means in concrete terms:

  • Upgrading your e-commerce website (make sure you offer a range of suitable payment options)
  • Setting up official stores on e-commerce platforms if you haven’t already
  • Considering using customer support chatbots to ensure you can give answers 24/7
  • Thinking about automated workflows to process large number of orders and enhance customers’ shopping experiences
  • Reviewing your brand stories and green credentials and localising them for use in Vietnam. Many companies didn’t focus so much on this in the past as organic certification or sustainable packaging were not so important to consumers – that’s now changing, so now’s the time to move over.
  • Thinking about whether your marketing activities are really up to date. According to 7Sat’s State of Influencer Marketing in Vietnam report, while only 30% of Vietnamese consumers trust advertisements, 90% trust influencers’ recommendations. (That includes micro-influencers or KOCs (=key opinion consumers)

This could be a great time to run some qualitative market research to find out what it is that your target consumers really are looking for in your brand. (And are your target consumers who you think they are in Vietnam?).

If you have healthier ranges of products which you didn’t yet sell into Vietnam for perhaps pricing reasons, now could be the time to launch them. Consumers are still price sensitive but if you have a clear value proposition then more premium healthy products can also achieve some great results. Vietnamese consumers enjoy consuming high quality imported goods, as long as they feel they got a fair price, and the group of people who can afford such goods is growing steadily.

So just to summarise the points above, you should be focusing on:

  • health/ wellness incl. organic products (according to Deloitte 86% of Vietnamese are willing to pay more for food security)
  • premiumisation
  • omnichannel approach with increasing digitalisation
  • convenience

How can you adapt your market approach to meet those customer expectations?

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Kathryn

24 Comments

  1. […] portion of their incomes on food and drink. Estimates suggest that somewhere between 20 percent to 48 percent of household income is spent on food and beverage consumption. Vietnam is also Asia’s top beer […]

  2. […] portion of their incomes on food and drink. Estimates suggest that somewhere between 20 percent to 48 percent of household income is spent on food and beverage consumption. Vietnam is also Asia’s top beer […]

  3. […] 6 Food and Beverage Industry Trends in Vietnam 2022 to watch out for […]

  4. […] portion of their incomes on food and drink. Estimates suggest that somewhere between 20 percent to 48 percent of household income is spent on food and beverage consumption. Vietnam is also Asia’s top beer […]

  5. […] portion of their incomes on food and drink. Estimates suggest that somewhere between 20 percent to 48 percent of household income is spent on food and beverage consumption. Vietnam is also Asia’s top beer […]

  6. […] 6 Food and Beverage Industry Trends in Vietnam 2022 to watch out for […]

  7. […] portion of their incomes on food and drink. Estimates suggest that somewhere between 20 percent to 48 percent of household income is spent on food and beverage consumption. Vietnam is also Asia’s top beer […]

  8. […] portion of their incomes on food and drink. Estimates suggest that somewhere between 20 percent to 48 percent of household income is spent on food and beverage consumption. Vietnam is also Asia’s top beer […]

  9. […] portion of their incomes on food and drink. Estimates suggest that somewhere between 20 percent to 48 percent of household income is spent on food and beverage consumption. Vietnam is also Asia’s top beer […]

  10. […] 6 Food and Beverage Industry Trends in Vietnam 2022 to watch out for […]

  11. […] portion of their incomes on food and drink. Estimates suggest that somewhere between 20 percent to 48 percent of household income is spent on food and beverage consumption. Vietnam is also Asia’s top beer […]

  12. […] portion in their earning on meals and drink. Estimates recommend that someplace between 20 p.c to 48 percent of family source of revenue is spent on meals and beverage intake. Vietnam may be Asia’s most […]

  13. […] ăn thức uống. Các ước tính cho thấy rằng ở đâu đó giữa 20 phần trăm đến 48 phần trăm thu nhập của hộ gia đình được chi cho tiêu dùng thực phẩm và đồ uống. […]

    1. Yeah, it’s hard to say what really the % is – the report I read mentioned 40-50%

  14. […] 6 Food and Beverage Industry Trends in Vietnam 2022 to watch out for […]

  15. […] portion of their incomes on food and drink. Estimates suggest that somewhere between 20 percent to 48 percent of household income is spent on food and beverage consumption. Vietnam is also Asia’s top beer […]

  16. […] portion of their incomes on food and drink. Estimates suggest that somewhere between 20 percent to 48 percent of household income is spent on food and beverage consumption. Vietnam is also Asia’s top beer […]

  17. […] portion of their incomes on food and drinks. Estimates counsel that someplace between 20 % to 48 percent of family revenue is spent on meals and beverage consumption. Vietnam can also be Asia’s high […]

  18. […] 6 Food and Beverage Industry Trends in Vietnam 2022 to watch out for […]

  19. […] 6 Food and Beverage Industry Trends in Vietnam 2022 to watch out for […]

  20. […] 6 Food and Beverage Industry Trends in Vietnam 2022 to watch out for […]

  21. […] 6 Food and Beverage Industry Trends in Vietnam 2022 to watch out for […]

  22. […] 6 Food and Beverage Industry Trends in Vietnam 2022 to watch out for […]

  23. […] 6 Food and Beverage Industry Trends in Vietnam 2022 to watch out for […]

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