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Vietnam Food and Drink Report Q2 2009
Business Monitor International, April 2009, Pages: 63
The Vietnam Food and Drink Report provides independent forecasts and competitive intelligence on Vietnam's food and drink industry.
There has been minimal merger and acquisition activity in the past quarter, largely owing to weak consumer confidence and a slowdown in the economy. The author expects Vietnamese GDP growth to fall to 5.0% in 2009; however, the economy is expected to bounce back strongly from the current negative effects of global turmoil, with GDP growth forecast to average 8.3% to 2018. Despite the shaky economic conditions, this past quarter has seen some expansion within the mass grocery retail (MGR) sector, as discussed in the newly published Vietnam Food and Drink Report for Q209.
This quarter sees Vietnam further open its doors to foreign investment in line with its World Trade Organization (WTO) obligations and this has resulted in a flurry of activity amongst retailers in the country. Germany’s Metro Cash & Carry, South Korea’s Lotte Group and Vietnamese retailer Saigon Co-op have all announced expansion plans. Metro has invested US$26.6mn in a ninth outlet, while Lotte plans to invest US$5bn in developing a 30-outlet-strong supermarket network by 2024. Meanwhile, Saigon Co-op announced plans to open a new chain of small-scale convenience food stores. With multinational retail competition set to intensify, and with sales through modern retail outlets expected to increase by an incredible 101.9% to 2013, these investments are not surprising.
Within the drinks industry, both Vinamilk and local brewer Hanoi Beer Alcohol and Beverage Corpation (Habeco) announced positive revenue targets for 2009 with planned year-on-year (y-o-y) increases of 7.6% and 26.4%, respectively. Habeco will be hoping to take advantage of forecast growth of 50.7% in beer volume sales through to 2013. An area not feeling so positive this quarter is that of the coffee industry, with demand for Vietnamese coffee having dropped severely as a result of the global financial crisis. However, this has not deterred Singapore’s Jayangti Pte, which has announced plans to build an instant coffee factory in Vietnam.
Elsewhere, Vietnam’s rice exports for January and February 2009 are expected to have almost doubled the amount exported during the corresponding period last year. This is good news for Vietnam’s all important export sector, particularly in light of the drop in demand for Vietnamese coffee.
The actions of Metro, Lotte and Saigon Co-op – in addition to the positive revenue targets set by Vinamilk and Habeco – indicate that, despite the current economic conditions, Vietnam still presents opportunities for investors.
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