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Vietnam Food and Drink Report Q4 2008
Business Monitor International, Nov 2008, Pages: 69
This Vietnam Food Drink Report provides independent forecasts and competitive intelligence on Vietnam's food and drink industry.
Vietnam is one of the most attractive emerging markets in the food, drink and grocery retail sectors, with strong economic growth and personal disposable income on an upward trajectory. The country’s large population also means that there is the potential for a sizeable middle-class to emerge, which could see spending increase on premium goods and luxury items. However, multinationals have yet to really invest in strength in the country and, as such, this report believes that Vietnam is not fulfilling its true potential.
For example, as examined in this Vietnam Food & Drink Report for Q408, the mass grocery retail sector, is still dominated by small independent retailers. However, under its WTO commitments, Vietnam will have to open its market to foreign retail and distribution firms at the start of 2009. With the threat of giant multinationals entering the market, the larger firms already operating in the market are scrambling to increase scale and the market shares of both Metro Cash & Carry and Big C are reportedly on the rise. Soon these firms could have to compete with Wal-Mart, Carrefour and Costco.
Meanwhile, Vietnam is looking to invest in its soluble coffee industry. Over the next two years, over US$80mn will be invested in the construction of three coffee processing plants, more than doubling Vietnam's output of soluble coffee to around 15,000 metric tonnes by 2010. Traders expect revenue from instant coffee to double by 2010, which is good news for Vietnamese producers and manufacturers. Vietnamese producers are often criticised abroad for selling low quality beans, which is attributed to picking green and ripe beans together. Each year around 30,000 tonnes of the country's coffee is rejected by traders at ports. This poor quality coffee – which is not good enough for international roasters to use raw – can be used entirely to make instant coffee, thus adding value to the industry, without losing volume; instant coffee prices can be as much as three times higher per tonne, on a free-on-board-basis.
Meanwhile, Vietnam is also looking to expand its tea industry, with the Vietnamese tea association, VITAS, setting set an ambitious 12-year growth target. VITAS – in line with what it perceives to be the country’s full potential – is targeting a turnover of US$1bn from the tea industry by 2020. Presently, the industry is reliant on the export industry for almost all of its earnings and with exports having totaled around US$100mn in 2007, VITAS has an enormous production and marketing job to fulfill in order to meet its stated aims.
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