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Vietnam Food and Drink Report Q1 2009
Business Monitor International, Feb 2009, Pages: 64
Vietnam Food Drink Report provides independent forecasts and competitive intelligence on Vietnam's food and drink industry.
Vietnam’s food, drink and grocery retail sectors pose an attractive opportunity for investors with GDP growth estimated at 6.0% in 2008, and forecast at 5.0% in 2009 and 9.3% in 2010, respectively. However, despite these positive forecasts, this quarter has seen minimal mergers and acquisitions (M&A) activity and only moderate expansion activity. This limited activity is likely a result of a shaky global economy and a lowering of consumer confidence; while the Vietnamese economy remains high growth, relative to current global forecasts, price sensitivity remains a very important issue in the low-income state and is only exacerbated at times like these.
In terms of expansion, most activity has occurred in the retail sector, with Vietnamese retailer Saigon Coop investing VND150bn (US$9.37mn) in the opening of a further four supermarkets by the end of 2008. This is not surprising given that the Vietnamese retail industry is predicted to grow by a phenomenal 101.9% over the 2008-2013 forecast period. On top of this, retailers have been under pressure to expand ahead of 2009 when Vietnam opens its market to foreign retail firms, as discussed in our newly published Vietnam Food & Drink Report for Q109.
Meanwhile, this quarter has seen Vietnam receive confirmation of a combined loan of US$110mn from the World Bank and the Asian Development Bank (ADB) in order to enhance agricultural performance, improve existing infrastructure and reduce levels of poverty in the country. The country already has a strong agricultural sector and is self-sufficient in staples such as rice, coffee and pork. However, this loan will serve to improve the sector, enabling it to produce and export more processed agricultural goods at a time when both domestic and foreign private-sector investment is likely to be low owing to the global credit crunch.
In addition, the country is planning to grow its aquaculture industry by increasing the catfish acreage in the Mekong Delta to enable further sales and a firm foothold in the world market. Elsewhere, Vietnam’s leading dairy products manufacturer Vietnam Dairy Products Joint Stock Company (Vinamilk) reported strong financial results for the first 10 months of 2008, announcing a net profit of VND1.13trn (US$68.5mn) as a result of strong sales performance. Vinamilk’s performance further underlines the potential of the local market, even as food and drink manufacturers and retailers choose to exercise caution with regard to major investments.
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