Why is Vietnam attractive for Food and Beverage Investments?

Consumption Trends in Vietnam’s Food and Beverage Sector
September 29, 2017

One of the rising economic tigers in Asia, Vietnam is becoming more and more interesting for foreign investments and the expansion of global brands. Among important competitive advantages of the country are its young and well-educated population and continued economic growth. In addition, considering the rise of wages in China, Vietnam has become an alternative for global brands to relocate their factories.

What about the food and beverage sector?

The F&B is one of the main industrial sectors, considering that at the moment households spend around half of their income on food. Moreover, according to estimates, food consumption increased by 61.6% in 2012-2017 period. These numbers illustrate well the market potential of the sector. DCA Holding is ready to contribute to the growth and development with several projects.

Franchising Fast Track

Considering that foreign brands encounter barriers such as capital investment, access to suppliers, and regulation, the best way for them to succeed in the Vietnamese market is through franchising with strong local partners. Vietnam’s Ministry of Industry and Trade reported in 2016 that 148 foreign brands registered their franchise businesses locally, of which a significant number operates in the F&B industry. To illustrate, global fast food and cafe chains such as Jollibee, KFC, and Starbucks are present in Vietnam.
There is no unique path to prosperity, as conditions in all countries are different. In Vietnam, the combination of factors such as an economy open to the global marketplace, many returnees from overseas, and the surge in Viet Kieu has led to a rise of franchises and homegrown brands and startups.
Also, franchising is an excellent way for local Vietnamese brands to gain regional and international recognition. That’s how Café Cong, AQ Silk, Kinh Do Bakery, Wrap and Roll, and Trung Nguyen Coffee have become famous outside of the borders of Vietnam.

Problems and Opportunities

The growing economy is also facing some challenges. The increase in urban population means increased demand for food supply. Moreover, it is difficult to meet this need by relying on the traditional methods of the food supply. Furthermore, some participants in value chain do not adhere to hygiene standards, which has resulted in health concerns among the public. However, this also means that businesses have a unique opportunity to import the necessary infrastructure, methodology, and cutting-edge technology to sustain the 94 million Vietnamese people.
In the F&B sector, one of the main challenges is a lack of certain skill sets. Hence, operators need to implement more intensive training protocols and to develop skilled and reliable local teams before large-scale expansion. However, this also implies that first-movers who overcome this challenge will have significant advantages over latecomers.
At DCA Holding International, we are well aware of the local context. Thus, our services can offer a strategic advantage to the region. In our work, we always build strong relationships with local partners so to be able to develop sustainable and profitable business platforms. In this way, the entry of our overseas clients to the market is smooth and strong local F&B brands are established.