International retail chains, changing preferences for retail channels and higher out-of-home consumption open opportunities for food imports in Vietnam

Vietnam is a large producer of agricultural products including pork, poultry, and fruits and vegetables while also developing a burgeoning food processing and agro-industrial base. Leading multinationals have established food processing operations in Vietnam, and are able to offer a range of western-style products at reasonable prices in the domestic market. Moreover, Vietnam has become more globally integrated through a range of free trade agreements (FTAs) with foreign trading partners. The high openness of Vietnam’s market has created significantly dynamic and competitive environment for all food traders owning ambitions to penetrate the market. The Western exporters from EU and the US has found that the inflow of capital from other Asian countries such as Thailand, Japan, and South Korea has been pouring into Vietnam’s food retail sector, resulted in the proliferation of Asian-branded products on the shelves of food retail outlets across Vietnam. Many Japanese brands are present in the Vietnamese retail market, such as AEON, Takashimaya, 7-Eleven, and Sumitomo with FujiMart from Feb 2019. More modern retail chains are managed by foreigners, increasing the opportunities for imported products when consumer awareness of global retail brands is increasing with more international brands entering Vietnam.

Most consumers in Vietnam still prefer buying foodstuffs in a traditional market or temporary market. However, because of convenience and raising awareness in food safety, more and more people are going to supermarkets, minimarts and convenient stores to purchase their foodstuffs. According to our consumer survey, in 2013, only 8.3% of household bought food and  foodstuffs from supermarkets/minimarts and these food/foodstuff only accounted for less than 13.2% of their food consumption. In 2018, this number has increased to 14.9% and 18.6% respectively. Many households have now come to supermarkets once a week to buy food and foodstuff supply for their whole week, and most of these meats/vegetables are chilled/frozen.

Some value chain analysis and expert consultancy information show that most of the chilled/frozen foodstuffs are consumed by restaurants and public kitchens/canteens rather than by individual households. There are many different types of chilled/frozen products that go into different types of restaurants. High quality imported chilled/frozen meat/vegetables (e.g. beef from Australia, US, Japan,...; salmon from Norway,…) goes into formal restaurant, fine dining, fast-food restaurants and casual restaurants. While cheap imported frozen meat (especially chicken from US, Brazil and Korea and buffalo from India) goes into Com Binh Dan restaurants, Noodle/Pho Restaurants, school kitchens and office/factory canteens. It is estimated that the proportion of out-of-home food consumption in total income has nearly doubled in the last 10 years, from 7.1% in 2006 to 12.1% in 2016.