Vietnam Food and Drink Report Q2 2011 – new market report published

Vietnam Food and Drink Report Q2 2011 – A very dynamic consumer story is taking shape in Vietnam. In the near term, rising wages and improving tourist arrivals will continue to instil dynamism to the consumer-facing scene in the country and buoy food and drink (F&D) consumption growth.

Longer term, Vietnam continues to strengthen its appeal as one of the most attractive propositions among the Asian Pacific economies, as the increasingly affluent Vietnamese consumer gradually trades up to higher value F&D products.

Headline Industry Data

2011 per capita food consumption = +18.3%; forecast to 2015 = +38.6%

2011 alcoholic drinks sales = +9.6%; forecast to 2015 = +34.6%

2011 soft drinks sales = +15.5%; forecast to 2015 = +33.1%

2011 mass grocery retail sales = +18.2%; forecast to 2015 = +54.1%

Key Company Trends

Regional Retail Players Revving Up Their Presence Singapore mass grocery retail operator NTUC Fairprice and Vietnam´s Saigon Union of Trading Co-operatives has inked a joint venture agreement to establish a chain of hypermarkets in Vietnam. Given Saigon´s local expertise and NTUC´s experience in operating hypermarket stores, this is clearly a formidable-looking partnership, and their expansionary activities are likely to place considerable upward pressure on our hypermarket growth forecast for Vietnam. Meanwhile, Japanese convenience retailer FamilyMart is planning on focusing its Asian operations outside of Japan, with a focus on Vietnam and China, in order to reduce its reliance on its stagnant domestic market.

Vietnam Remains A High-Growth Asset In A Balanced Geographic Portfolio With an enviable geographical spread across developed economies, high-growth EMs and the largely untapped frontier markets, Asia Pacific Breweries (APB) has once again demonstrated its capacity to deliver stellar sales and earnings growth. The high growth potential in Vietnam automatically warrants the country an important asset in APB´s balanced geographic portfolio and this strong growth will continue to buoy APB´s revenue growth. APB recorded a 13% growth in its revenues from the Indochina region (Vietnam, Cambodia and Laos) for the year ending September 2010.

Key Risks to Outlook Further Rate Hikes Could Be in the Pipeline Vietnam´s consumer price inflation has continued to accelerate in January, supporting our view that the State Bank of Vietnam (SBV) will be under increasing pressure to hike its interest rates in order to keep a lid on these inflationary pressures. Although food price inflation (the main driver of Vietnam´s CPI) has trended lower in recent months, we note that there is a strong possibility of the SBV tightening its monetary policy aggressively in 2011, should food prices start to accelerate strongly. While we are factoring in only a single rate hike for 2011, risks of additional rate hikes are rapidly building, and a tighter credit environment could bear a dampening effect on consumer confidence and domestic demand.

Click for report details: www.companiesandmarkets.com/Market-Report/vietnam-food-and-drink .

Tags: Vietnam Food and Drink Report 2011