According to the German online statistics website Statista, Vietnam’s food market will reach US$96.47 billion in 2023, a year-on-year increase of 9%. The market is expected to maintain an average annual growth rate of 8.22% from 2023 to 2027. Within Southeast Asia, Vietnam ranks third in terms of food market turnover, after Indonesia and the Philippines. Vietnam’s beverage market turnover will reach US$27.121 billion in 2023, of which non-alcoholic beverages occupy the highest market share at 37.7% and are also the fastest growing segment. Non-alcoholic beverage sales will reach US$10.22 billion in 2023, an increase of 10.4% over 2022. It is expected that the non-alcoholic beverage market will maintain an average annual growth rate of 6.28% from 2023 to 2028.
1. Driving factors
1. Economic growth and demographic dividend: Vietnam has great economic growth potential. Its gross domestic product (GDP) will increase by 8.02% in 2022, ranking first among ASEAN countries. Vietnam has a huge demographic dividend. Its population will reach 100 million in 2023, making it the 15th country in the world to enter the “100 million population club”. Moreover, Vietnam has a young population structure and strong consumption power. According to statistics, as many as 65% of the Vietnamese population is under 35 years old.
2. The rise of the middle class: Vietnam’s middle class continues to expand, its spending power is gradually increasing, and its demand for high-quality food and beverage products is increasing.
3. Changes in consumer preferences: Vietnamese consumers’ preferences for food and beverages are changing. Increased health awareness has driven the demand for natural, organic, low-sugar, and low-fat products. At the same time, convenience has also become an important factor for consumers to choose products, with ready-to-eat foods and convenient drinks becoming popular.
4. Policy support and introduction of foreign investment: The Vietnamese government is committed to maintaining domestic political stability, actively promoting economic reform and opening up, and implementing various preferential investment policies to attract foreign investors. International brands such as Coca-Cola, Nestlé, and Unilever have production bases in Vietnam, taking advantage of Vietnam’s production cost advantages and market potential to serve the local and export markets.
2. Develop market advantages
Rapid economic growth: Vietnam’s economy continues to grow, providing a solid foundation for the development of the food and beverage industry. For example, Vietnam’s gross domestic product (GDP) increased by 8.02% in 2022, ranking first among ASEAN countries, and its growth rate in 2023 also reached 5.05%. This rapid economic growth has promoted the increase in consumer purchasing power, thereby promoting the prosperity of the food and beverage market.
Significant demographic dividend: Vietnam has a large population base and a young population structure, providing huge consumption potential for the food and beverage market. Vietnam’s population will reach 100 million in 2023, becoming the 15th country in the world to enter the “100 million population club”. Among them, as many as 65% of the population are under the age of 35. This young group is the main force in the consumer market. Their consumption habits and preferences have a profound impact on the food and beverage market.
Cultural similarity: Vietnam is culturally similar to China and other Asian countries, which facilitates the promotion of food and beverage companies from China and other countries in the Vietnamese market. The two countries have many similarities in food culture, living habits, etc., which makes it easier for food and beverage companies from China and other countries to gain recognition and acceptance from consumers in the Vietnamese market.
Diversified needs: Vietnamese consumers have increasingly diversified demands for food and beverages, and are no longer satisfied with traditional food types and flavors. They are more pursuing novel, unique, healthy and convenient products, which promotes innovation and upgrading of the food and beverage industry. For example, market demand for convenience foods, high-end beverages, and functional foods continues to grow, providing more development opportunities for food and beverage companies. At the same time, with the rise of the middle class and the trend of consumption upgrading, Vietnamese consumers’ demand for high-quality, high-value-added products is also increasing, which provides a broad market space for high-end food and beverage products.
Policy support: The Vietnamese government has always been committed to maintaining domestic political stability and actively promoting economic reform and opening up. The government has implemented various preferential investment policies to attract foreign investors, such as tax exemptions and land use rights concessions, providing a good policy environment for the development of the food and beverage industry.
Introduction of foreign investment: Vietnam’s food and beverage industry has attracted a large amount of foreign investment. These foreign-funded enterprises have brought advanced technology and management experience, improving the overall competitiveness of Vietnam’s food and beverage industry. At the same time, the entry of foreign-funded enterprises has also promoted the export of Vietnamese food and beverage products and promoted the international development of the industry.
To sum up, Vietnam’s food and beverage foreign trade development market has many advantages such as economic growth and demographic dividend, geographical and cultural advantages, production cost advantages, market demand advantages, policy support and the introduction of foreign investment. These advantages provide broad space and opportunities for food and beverage companies to expand in the Vietnamese market.