V Vietnam Ietnam: F Food and Drink R Ood and Drink Report Eport

Q2 2023
www.fitchsolutions.com
Vietnam
Food And Drink R
Report
eport
Includes 5-year forecasts to 2027
Vietnam Food And Drink Report | Q2 2023
Contents
Key View............................................................................................................................................................................................ 5
SWOT .................................................................................................................................................................................................. 8
Food & Drink SWOT...................................................................................................................................................................................................................... 8
Industry Forecast........................................................................................................................................................................... 9
Food ................................................................................................................................................................................................................................................... 9
Drink.................................................................................................................................................................................................................................................15
Industry Trends And Developments .....................................................................................................................................22

Vietnam Dietary Shift Spending ...........................................................................................................................................................................................22
Industry Risk/Reward Index ....................................................................................................................................................27

Asia Food & Non-Alcoholic Drinks Risk/Reward Index: Mainland China Reclaims Leaderboard, Spotlight On Thailand ................27
Asia Alcoholic Drinks Risk/Rewards Index: South Korea Tops Asia, Spotlight On New Zealand.................................................................38
Market Overview..........................................................................................................................................................................48
Food .................................................................................................................................................................................................................................................48
Drink.................................................................................................................................................................................................................................................51
Mass Grocery Retail....................................................................................................................................................................................................................54
Competitive Landscape.............................................................................................................................................................57
Company Profile...........................................................................................................................................................................59
Carlsberg ........................................................................................................................................................................................................................................59
Hanoi Beer Alcohol And Beverage Joint Stock Corporation (Habeco) ..................................................................................................................62
Masan Consumer Corporation..............................................................................................................................................................................................65
Nestlé Vietnam............................................................................................................................................................................................................................69
Saigon Alcohol Beer And Beverages Corporation (Sabeco) ......................................................................................................................................72
Saigon Co-Op ...............................................................................................................................................................................................................................75
San Miguel Pure Foods Vietnam...........................................................................................................................................................................................78
Unilever Vietnam........................................................................................................................................................................................................................80
Vietnam Demographic Outlook ..............................................................................................................................................83
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Food & Drink Glossary ................................................................................................................................................................86
Food & Drink Methodology .......................................................................................................................................................87
Key View
Key View: We forecast healthy growth across the Vietnamese food and drinks sector in 2023 and over the remainder of our
medium-term forecast period to the end of 2027. Underlying growth will be supported by an improving headline economic outlook
and improvements in employment and the labour market. The return of international tourism will also boost food and drinks
spending in Vietnam. In 2023, we still expect Vietnamese consumers to remain price-conscious, which will be good news for food
discount retailers, as consumers switch to private-label brands. On the other hand, diversification of diets and rising incomes will
support spending on premium food and drink over the coming decade.
Positive Food And Drink Spending In The Medium Term

Vietnam - Food & Non-Alcoholic Drink Sales (2020-2027)
e/f = Fitch Solutions estimate/forecast. Source: National statistics, Fitch Solutions
Latest Updates And Industry Developments
• In 2023, food spending in Vietnam is forecast to increase by 11.9% year-on-year (y-o-y), compared to an estimated 10.9% y-o-y
growth in 2022.
• Over the medium term (2023-2027), we expect food spending to record strong growth. Rising incomes are expected to
gradually encourage consumer tastes towards higher-value food and beverage segments, which promises a receptive and
growing audience for branded products in the medium term.
• In 2023, we forecast alcoholic drinks spending growing by 12.0% y-o-y. Between 2023 and 2027, alcoholic drinks spending is set
to rise by an average of 11.1% a year.
• In 2023, we expect non-alcoholic drinks spending growth to come in at 10.5% y-o-y, to take total spending to VND48.6trn.
Medium-term growth in spending on non-alcoholic drinks is projected to average 10.0% a year. This will result in total spending
of VND70.8trn in 2027.
• International tourism, a major driver of hospitality and gastronomy sales in the country, resumed in the country and can be
expected to provide a strong boost to food and drinks spending.
• In November 2022, Nestlé Vietnam announced that it would be signing a cooperation agreement with the Vietnam Women's
Union to continue the 'Nestlé accompanies women' program. The program, which would last between 2022 to 2027, aims
to promote gender equality and women’s empowerment, contributing to supporting women’s comprehensive development,
especially those in rural areas.
• In November 2022, Carlsberg launched a challenge, providing free beer to consumers who are able to pronounce the brand's
name to an AI-infused billboard which comes with an automatic beer dispenser. The challenge is inspired by many Vietnamese
consumers having difficulty in pronouncing the brand's name. The initiative aims to strengthen the brand's presence in the
country, partly in the Southern regions of Vietnam where the brand is less popular.
• In October 2022, Saigon Alcohol Beer and Beverages Corporation (Sabeco) was the main sponsor and partner of the
Vietnam Culture and Tourism Festival in Korea. This marks the latest in a series of partnership between Sabeco and the
Vietnamese authorities aimed at promoting culture and tourism.
• In October 2022, Saigon Co-op announced that it would be partnering with Giftee Mekong, a digital vouchers solutions
company, to offer vouchers for Saigon Co-op businesses on the Giftee platform.
• In September 2022, Masan launched the WINLife concept store. Dubbed as a new 'retail ecosystem'. WINLife stores are a
catch-all store with many existing Masan businesses incorporate such as the Winmart+ convenience store, coffee chain Phuc
Long Coffee & Tea, financial services firm Techcombank, pharmacy Dr.Win and telecommunication services provider Reddi.
The company opened 27 WINLife stores in Hanoi and Ho Chi Minh City by September 2022, aiming to expand to 100 stores by
the end of the year.
Inflation Outlook
Inflationary pressures are peaking in many markets as central banks raise rates to rein in higher prices. However, inflation rates are
still elevated, with high prices eroding purchasing power and shifting consumer spending away from discretionary spending.
Additionally, several inflation drivers are on the supply side, meaning that contractionary monetary policy will have little effect. This is
the economic reality for consumers in 2023.
Inflationary pressure started to rise globally in 2021, as localised shortages were created by base effects, higher commodity prices
and supply-chain challenges. The Ukraine-Russia conflict has also significantly impacted the global supply prices of key
commodities, such as oil and gas; fertiliser; wheat; corn; and barley. The commodity price increases are already feeding through into
higher consumer prices and this will continue into 2023.
Food inflation in Vietnam has largely been shielded from the global rise in food and commodities prices as Vietnam has sufficient
domestic supplies as well as the population's preference for rice as a staple, which has not seen as strong a global fluctuation in
prices as other grains such as wheat. Nevertheless, food price inflation in Vietnam has been creeping upwards, reaching 3.7% y-o-y
in January 2023 (latest data available), an increase from the 2.9% y-o-y from the month prior.
Inflation Is Elevated, But Will Gradually Ease Over 2023

Vietnam – Consumer Price Inflation, % y-o-y (2019-2023)
Source: General Statistics Office, Fitch Solutions
We attribute global inflation to several channels. Firstly, supply-chain challenges and bottlenecks around economies reopening have
created localised shortages, resulting in temporary price pressures for a number of goods. Secondly, factors such as droughts, floods
and other natural disasters have impacted crops from markets including Europe, India, Pakistan and Mainland China. This has put
upwards price pressure on key commodities in the global food production chain. This was exacerbated by the Russian invasion of
Ukraine that was launched in February 2022, with its resultant sanctions threatening the global supply of key food commodities,
such as wheat, corn, barley and fertilisers. Localised labour shortages have been created by employees reconsidering their pre-
Covid jobs, as well as border restrictions limiting migrant labour, putting upward pressure on wage inflation. Finally, rising food
protectionism puts additional pressure on the global food market, pushing up final prices.
Inflation Will Persist Over The Short Term

Inflation Channels
Source: Fitch Solutions

SWOT
Food & Drink SWOT
Strengths Weaknesses
• A large, youthful and growing population offers high growth • Wide income disparities exist between urban and rural areas.
opportunities for retailers. • Local consumption patterns vary significantly according to
• One of the fastest-growing consumer markets in emerging income.
Asia. • Cultural preference for small, family-run stores and traditional
• Western-style retail is already well established in large cities so format stores.
the necessary infrastructure and logistics are already in place. • Vietnam's retail distribution networks remain
• Vietnamese consumers, particularly the young and affluent, underdeveloped and expansion-oriented firms must invest in
have fairly good brand awareness by regional standards. infrastructure development as well as in new store openings.
• Competitive pressure is increasing rapidly in the drinks sector, • Despite the growing presence of multinationals, local firms
which is likely to drive greater dynamism and growth in the continue to dominate the beer market.
sector. • Historically, the business environment in Vietnam has been a
• A growing multinational presence in the food retail sector has largely unattractive one.
strengthened the acceptance of modern retail best practices in
Vietnam, particularly regarding added value and in-store
services.
Opportunities Threats
• International tourism, a major driver of hospitality and • Covid-19 remains a potential risk to hospitality, tourism and
gastronomy sales in the country, has returned to the country gastronomy sales in 2023.
and can be expected to provide a strong boost to food and • Over the longer term, the retail sector in major cities will
drinks spending. become saturated.
• Free trade agreements are opening up the Vietnamese market • Few alternative communities can currently support modern
to a number of regions including the EU, Chile and Australia. retail development.
• As of May 2022, the signed Regional Comprehensive Economic • If relations with China deteriorate, the Vietnamese economy
Partnership will benefit Vietnamese agricultural produce and will suffer and it could lose a significant political ally and trade
seafood exports. partner.
• As a result of the tensions between Mainland China and the US • Tightening of alcohol laws will weigh on spending in the
over trade since 2018, Vietnam's food-processing sector may alcoholic drinks sector.
stand to benefit if more companies decide to set up shop in
Vietnam due to the higher costs in China.
• Rising income levels and changing lifestyles, particularly in
urban areas, are increasing consumer demand for snacks,
convenience and luxury food, and drink items.
• As the Vietnamese government plans to reduce its stake in
state-owned enterprises, interest from regional and global
players will pick up, translating into opportunities to modernise
the sector.
Industry Forecast
Food
Key View: In 2023, food spending growth is projected to accelerate to double-digits, where it is set to remain throughout our
medium-term forecast period. This growth will be supported by rising incomes and an economic climate that supports healthy
spending in the rapidly developing market. Over the medium term (2023-2027), we forecast food spending to record strong annual
growth rates. Rising incomes are expected to gradually encourage consumer tastes towards higher-value food and beverage
segments, which promises a receptive and growing audience for branded products.
Latest Updates
• In 2023, food spending in Vietnam is forecast to increase by 11.9% y-o-y, above the estimated 10.9% y-o-y growth estimated
for 2022.
• Over the medium term (2023-2027), we forecast food spending to record strong growth. Rising incomes are expected to
gradually encourage consumer tastes towards higher-value food and beverage segments, which promises a receptive and
growing audience for branded products in the medium term.
• The fastest-growing food segment is projected to be fresh and preserved fruits. Spending on these products are set to increase
by an annual average of 11.4% y-o-y during our forecast period.
Structural Trends
2023 Food Outlook
In 2023, we expect food sales in Vietnam to grow by 11.9% y-o-y, an acceleration from the 10.9% y-o-y growth recorded in 2022.
Food inflation in Vietnam has largely been shielded from the global rise in food and commodities prices as Vietnam has sufficient
domestic supplies as well as the population's preference for rice as a staple, which has not seen as strong a global fluctuation in
prices compared to other grains such as wheat. Nevertheless, food inflation has continued to rise slowly in Vietnam, reaching 3.7%
y-o-y in January 2023 (latest data available), an increase from the 2.9% y-o-y from the month prior.
While growth remains elevated, we expect rising food prices to underpin the slowing food spending growth. Over the course of the
year, the outperforming food category is projected to be fresh and preserved fruits with a growth rate of 11.9% y-o-y. In contrast,
sugar and sugar products spending growth will underperform the sector with a forecast growth rate of 7.9% y-o-y.
Food Sales To Accelerate In 2023

Vietnam - Food Sales (2020-2027)
Medium-Term Trends
Vietnam will remain one of the most attractive markets for investment in the region over our forecast period (2023-2027). The
country is already a major regional hub for exports, and domestic consumer expenditure will continue to grow. At the same time, the
food sector represents a large and growing portion of the country's manufacturing output.
We forecast total food sales increasing at an average annual rate of 11.0% over our medium-term forecast. The sector's strong
performance will be supported by growing household incomes and favourable macroeconomic conditions. Meanwhile, the mass
grocery retail (MGR) sector remains underdeveloped. Through to 2027, this will offer multiple opportunities across the food industry,
given rapidly rising incomes and steady population growth.
Currently, income levels in Vietnam are a behind those in developed economies, and consumers continue to spend mainly on food
staples and daily necessities. However, we anticipate double-digit growth across most income bands over the medium term, with
the lower-income groups making the greatest gains over this period. Net household incomes are set to rise by about 50% in US
dollar terms by 2027. As a result, consumer tastes and preferences are expected to shift towards the higher-value food and
beverage segments, which promises a receptive and growing audience for branded products in the medium term.
Within the food segment, staples continue to account for the vast majority of purchases, which is consistent with low consumption
levels. Bread, rice and cereal sales will grow from VND443.0trn in 2023 to over VND667.5trn by 2027, growing at an average annual
pace of 11.0% y-o-y. The fastest-growing food spending category is projected to be fresh and preserved fruit products, which will
expand by an average of 11.4% a year to 2027.
The massive potential provided by the burgeoning middle class in Vietnam is already attracting major consumer-facing players. The
ongoing expansion of the MGR industry will drive up per capita food consumption levels, provided goods sold through such outlets
remain competitively priced. Ultimately, we believe food consumption growth will be driven by the government's ability to harness
rural spending power and by modern retailers' ability to find a model that stirs consumer interest.
Despite being the slowest-growing food spending category, rapid increase in disposable income could translate into a greater
discretionary appetite for sugar products, specifically premium confectionery products. We forecast that sugar and sugar products
will see modest average growth of 7.9% annually. As an increasing number of domestic confectioners expand their product ranges,
especially premium ones, this is likely to strengthen the value of sales growth in the coming years. As almost half of the Vietnamese
population are estimated to be younger than 30, the mass market will have dynamic opportunities to target them as they mature.
Since this demographic group is generally more receptive to Western tastes and innovative products, we believe that demand for
confectionery will grow. With health awareness prompting shifts in consumption habits towards more functional and healthy
confectionery products, capitalising on the growing trend will be important. So far, domestic confectioners such as Tan Tan Food &
Foodstuff and Vina Mit are already expanding their offerings in this category. As such, these products typically carry higher price
tags, and rising demand for them is likely to translate into higher-value sales in the sector.
The Vietnamese pasta market is underdeveloped, although the product has become more popular with increasingly Westernised
tastes, particularly in urban areas. Currently, around half of the retail market is dominated by Barilla, with other prominent importers
including Italpasta and Pasta Zara. The pasta products segment will grow by an average of 11% a year to 2027.
However, the market for instant noodles is well established, with the market supplied by a mixture of local (Masan Consumer and
Acecook Vietnam Joint Stock Company) and imported products. Such goods have been receiving strong marketing and
advertising support, especially as challenging economic times have prioritised non-discretionary spending. Instant noodles are
expected to remain popular on account of their affordability, versatility as a cooking ingredient, availability and convenience.
The Vietnamese dairy sector has experienced particularly strong growth in recent years and will continue to do so with dairy sales
projected to pick up by an average of 11.1% annually. Key drivers of this growth are increasing urbanisation and rising incomes,
supported by a shift in consumer eating habits. Large multinational companies have managed to sway consumer preferences with
their considerable advertising. Dramatic increases in the amount of cattle and in public and private sector investment - part of the
effort to reduce the country's growing dependency on imports - will be the main drivers of growth.
Vietnam Dairy Products is one of the key players in the sector and aims to become one of the 50 largest dairy firms in the world.
The company is also expanding internationally, as Vietnam is in a geographically key place to take advantage of the growing Asian
dairy market. Other prominent dairy producers include Dutch Lady, Hanoimilk and Anco. Vietnam Nutrition Food and
Japanese beverage group Asahi Group Holdings announced the establishment of a joint venture in a bid to bring nutritional
products for children to the Vietnamese market in January 2019.
FOOD SALES (VIETNAM 2021-2027)

Indicator 2021e 2022e 2023f 2024f 2025f 2026f 2027f
Food,
sales, 955,971,704.1 1,059,958,678.7 1,185,988,352.5 1,320,528,903.9 1,459,024,508.5 1,611,973,260.5 1,789,260,791.9
VNDmn
Food,
sales,
VNDmn, % 4.6 10.9 11.9 11.3 10.5 10.5 11.0
growth y-
o-y
Bread, rice
and
cereals, 357,344,789.3 396,045,411.9 442,950,236.5 493,026,948.5 544,581,112.1 601,518,915.6 667,519,777.3
sales,
VNDmn
Bread, rice
and
4.6 10.8 11.8 11.3 10.5 10.5 11.0
cereals,
sales,
VNDmn, %
growth y-
o-y
Pasta
products,
1,171,686.5 1,298,106.8 1,451,325.0 1,614,902.5 1,783,304.6 1,969,291.2 2,184,880.8
sales,
VNDmn
Pasta
products,
sales,
4.6 10.8 11.8 11.3 10.4 10.4 10.9
VNDmn, %
growth y-
o-y
Meat and
Poultry,
289,583,102.7 320,942,932.0 358,950,767.8 399,528,833.3 441,304,097.7 487,441,816.2 540,923,486.6
sales,
VNDmn
Meat and
Poultry,
sales,
4.6 10.8 11.8 11.3 10.5 10.5 11.0
VNDmn, %
growth y-
o-y
Fish and
fish
products, 84,409,636.0 93,871,230.2 105,340,071.0 117,585,753.3 130,193,730.4 144,119,206.0 160,262,138.7
sales,
VNDmn
Fish and
fish
products,
sales, 4.8 11.2 12.2 11.6 10.7 10.7 11.2
VNDmn, %
growth y-
o-y
Dairy,
sales, 18,586,648.7 20,629,585.9 23,105,746.1 25,749,473.3 28,471,294.2 31,477,429.6 34,962,147.5
VNDmn
Dairy,
sales,
VNDmn, % 4.7 11.0 12.0 11.4 10.6 10.6 11.1
growth y-
o-y
Oils and
Fats, sales, 29,701,798.5 32,960,590.2 36,910,411.2 41,127,501.9 45,469,144.3 50,264,287.4 55,822,810.9
VNDmn
Oils and
Fats, sales,
VNDmn, % 4.7 11.0 12.0 11.4 10.6 10.5 11.1
growth y-
o-y
Fresh and
preserved
56,683,803.7 63,112,373.6 70,905,075.5 79,225,903.5 87,793,133.5 97,255,815.5 108,225,507.9
fruit, sales,
VNDmn
Fresh and
preserved
fruit, sales,
4.8 11.3 12.3 11.7 10.8 10.8 11.3
VNDmn, %
growth y-
o-y
Fresh
vegetables,
48,623,608.6 53,938,426.2 60,374,370.4 67,239,320.9 74,300,942.3 82,094,212.0 91,121,559.3
sales,
VNDmn
Fresh
vegetables,
sales,
4.7 10.9 11.9 11.4 10.5 10.5 11.0
VNDmn, %
growth y-
o-y
Sugar and
sugar
products, 12,432,022.0 13,327,637.5 14,413,099.0 15,563,029.9 16,735,679.3 18,024,670.0 19,516,117.1
sales,
VNDmn
Sugar and
sugar
products,
sales, 2.8 7.2 8.1 8.0 7.5 7.7 8.3
VNDmn, %
growth y-
o-y
Other food
products,
57,434,608.0 63,832,384.3 71,587,250.0 79,867,236.9 88,392,070.1 97,807,617.1 108,722,365.9
sales,
VNDmn
Other food
products,
sales, 4.7 11.1 12.1 11.6 10.7 10.7 11.2
VNDmn, %
growth y-
o-y
Drink
Key View: In 2023, we expect robust growth in spending on both alcoholic and non-alcoholic drinks. Similarly, sustained strong
growth in spending on both sub-sectors is expected throughout our medium-term forecast in 2027. Over this period, we forecast
that spirits will have the strongest average annual increase in consumption terms. In terms of average annual medium-term
spending growth, carbonated drinks are set to outperform the other non-alcoholic drinks segments.
Latest Updates
• In 2023, we forecast alcoholic drinks spending growing by 12.0% y-o-y. Between 2023 and 2027, alcoholic drinks spending is set
to rise by an average of 11.1% per year.
• Alcohol consumption is projected to grow by 4.6% in 2023 to 4.2bn litres. Over our medium-term forecast period, the
consumption of alcoholic drinks is forecast to increase by an annual average of 4.0% y-o-y to reach 4.9bn litres in 2027.
• Spirits consumption will see the fastest growth through to 2027, averaging 11.3% a year from a low base, with sales being driven
by higher-income consumers and their shift in tastes.
• In 2023, we expect non-alcoholic drinks spending growth to come in at 10.5% y-o-y to take total spending to VND48.7trn.
Medium-term growth in spending on non-alcoholic drinks is projected to average 10.0% a year. This will result in total spending
of VND70.9trn in 2027.
• The outperforming non-alcoholic drinks segment is expected to be carbonated drinks, with spending on these products forecast
to rise by an annual average of 11.5% during our forecast period. Spending will be driven by demand among Vietnam's young
consumer base and growing investment in the sector.
Structural Trends
Alcoholic Drinks
2023 Alcoholic Drinks Outlook
In 2023, we expect alcoholic drinks spending in Vietnam to grow to 12.0% y-o-y, compared to 10.8% y-o-y in 2022, as consumers'
emphasis on essentials during the pandemic shifts and have greater propensity to spend on other non-essential beverages,
including alcoholic drinks. The outperforming segment during 2023 is projected to be spirits with consumption growth rates of
11.3% y-o-y. In contrast, wine will grow by 10.3% y-o-y, while beer consumption will grow by just 3.9% y-o-y. There are fewer
opportunities for consumption growth in this category, as beer is already well-established in Vietnam. Overall alcohol volume
consumption is forecast to be steady in 2023, with a growth rate of 4.6% for the year.
Consumption Growth Remains Steady Over Medium Term

Vietnam - Total Alcohol Consumption, litres mn (2020-2027)
e/f = Fitch Solutions estimate/forecast. Source: National sources, Fitch Solutions
Medium-Term Trends
A favourable demographic landscape, rising affluence and strong economic growth imply a large scope for alcoholic drinks
consumption. The emergence of a thriving tourist industry in Vietnam is likely to bolster alcoholic drinks consumption. Although we
caution that the tax rate levied on alcoholic drinks was increased in January 2017, this has not significantly affected our positive
outlook for the industry.
Increasingly affluent consumers in Vietnam will translate into growth in alcohol spending. Over the medium term (2023-2027),
alcohol spending will expand by an average 11.1% annually, outpacing volume consumption growth, which is set to expand by 4.0%
over the same period. In line with positive economic prospects and a developing mass grocery retail network in Vietnam, we
maintain a very positive outlook for the country's drinks industry. In particular, we believe that the beer industry will post good
growth; we expect foreign investment to flow into the sector as global beer companies strengthen their presence in the country. We
forecast per capita beer consumption to grow from 68.0 litres in 2023 to 77.6 litres in 2027, and total beer consumption to grow at
an average annual rate of 3.9%. A young and growing population as well as rising tourist numbers will ensure the prevalence of beer
in the alcoholic drinks market.
Beer, in particular, is set to benefit and will continue to dominate the alcoholic drinks sector, accounting for the vast majority of
volume sales. It will also remain the main contributor to value sales. This is reflected in the strong interest the beer sector has been
attracting from both local and international brewers. We expect foreign brewers to take on a more prominent role in driving beer
sales growth in Vietnam as they seek to enter emerging markets. Global brewers have expressed a strong interest in purchasing
stakes in previously state-owned companies Hanoi Alcohol Beer and Beverage Company (Habeco) and Saigon Beer Alcohol
Beverage Corporation (Sabeco), as the Vietnamese government is seeking to reduce its participation in the two companies.
ThaiBev acquired a 53.6% stake in Sabeco in December 2017. ThaiBev, through its subsidiary BeerCo, reached an agreement to
acquire another 50% in Vietnam F&B Alliance, the entity that currently owns a nearly 54% stake in Sabeco. BeerCo will purchase
more than 34mn shares in Vietnam F&B for USD14.7mn and increase its holding to 99%. Carlsberg has reportedly been interested
in acquiring a stake in Habeco. We caution that recent reluctance by the government to sell stakes to foreign players highlights
government intervention and operational obstacles.
Volume sales growth in the wine and spirits industries is expected to outpace that of beer, but this is because they will be developing
from much lower bases. Vietnam has a relatively underdeveloped wine market, but this is rapidly changing. The Vietnamese
consumer has historically opted for cheaper beer products over wine. The average Vietnamese adult consumes just 0.3 litres of
wine per year (2023 estimate). Regionally, consumers in Singapore, Thailand and Malaysia all consume more wine per capita.
However, with a population of approximately 97.0mn, Vietnam's total wine consumption is relatively high, with the market offering
the third-largest in wine in the Association of Southeast Asian Nations region, at 16.4mn litres in 2023. Only Thailand (103.3mn
litres) and Malaysia (26.7mn litres) offer a larger market. However, wealth accrual among Vietnamese consumers is shifting
consumption habits towards higher-value alcoholic drink products, and this trend is particularly evident in urban centres such as Ho
Chi Minh City, Hanoi and Da Nang.
Red wine dominates the wine market in Vietnam, accounting for approximately 76.7% of total wine consumed in 2023.
Proportionally, we foresee this remaining relatively constant over our medium-term forecast period. White wine accounts for a
further 18.1% of total wine consumption, followed by sparkling wines (2.3%) and fortified wines (2.9%). Historically, red wine has
always dominated wine consumption patterns in the country, mostly varietals coming from the Bordeaux region of France. However,
the entry of New World wines from Chile and Australia has seen the introduction of new red varietals and blends, re-enforcing the
dominance of red wine consumption in the country.
Traditionally, wine was mostly consumed via the hotels, restaurants and bars of the tourism sector and a small immigrant
community in Vietnam. Wine offerings were, therefore, of a higher price point than sparkling wines. Such high price points excluded
the domestic consumer, leaving beer as the more dominant alcohol consumed. However, rising incomes and the entry of cheaper,
New World wines (through free trade agreements) into the mass grocery retail channel in Vietnam have increased the visibility of
wines for the Vietnamese consumer. It is not uncommon to see wines from Chile, France, Italy and Australia for sale in local
supermarkets. While there are no specific statistics on wine consumption during meals, the beverage has become a staple of many
social interactions, such as business dinners.
Investment in the Vietnamese spirits and wine sub-sectors are expected to intensify as an increasing number of investors recognise
the higher margin growth opportunities in these sub-sectors; this is likely to instill further dynamism and drive volume sales.
TOTAL ALCOHOLIC DRINKS SPENDING AND CONSUMPTION (VIETNAM 2020-2027)

Indicator 2020e 2021e 2022e 2023f 2024f 2025f 2026f 2027f
Alcoholic drinks
spending, 60,068.57 62,789.47 69,581.57 77,941.83 86,866.67 96,053.88 106,199.86 117,960.39
VNDbn
Alcoholic drinks
spending, VND 2.57 4.53 10.82 12.02 11.45 10.58 10.56 11.07
% y-o-y
Alcoholic drinks
spending, VND 1,959,772.55 2,008,775.63 2,188,513.17 2,403,261.24 2,635,064.20 2,857,725.04 3,099,314.23 3,377,276.96
per household
Alcoholic drinks
spending, VND 621,514.58 644,205.76 708,664.79 788,414.48 873,052.23 959,541.10 1,054,826.95 1,165,293.29
per capita
Total alcohol
consumption, 3,693.8 3,811.3 3,997.5 4,181.8 4,362.5 4,538.2 4,707.9 4,870.5
litres mn
Total alcohol
consumption,
-1.0 3.2 4.9 4.6 4.3 4.0 3.7 3.5
litres mn, % y-o-
y
Total alcohol 62.0 63.6 66.3 69.1 71.8 74.4 76.9 79.2
consumption,
litres per capita
Beer, litres mn 3,644.1 3,757.1 3,937.4 4,114.6 4,287.4 4,454.6 4,615.0 4,767.3
Beer, litres mn,

-1.0 3.1 4.8 4.5 4.2 3.9 3.6 3.3
% y-o-y
Beer, litres per

61.2 62.7 65.3 68.0 70.6 73.0 75.4 77.6
capita
Wine, litres mn 12.5 13.6 14.9 16.4 18.1 19.9 22.0 24.2
Wine, litres mn,

-2.5 8.1 9.5 10.3 10.4 10.3 10.2 10.2
% y-o-y
Wine, litres per

0.2 0.2 0.2 0.3 0.3 0.3 0.4 0.4
capita
Spirits, litres mn 37.1 40.6 45.2 50.8 56.9 63.6 70.9 79.0
Spirits, litres
-2.8 9.4 11.4 12.2 12.2 11.8 11.5 11.3
mn, % y-o-y
Spirits, litres per

0.6 0.7 0.8 0.8 0.9 1.0 1.2 1.3
capita
Non-Alcoholic Drinks
2023 Non-Alcoholic Drinks Outlook
In 2023, we expect non-alcoholic drinks spending in Vietnam to grow by 10.5% y-o-y, an improvement from 7.9% y-o-y in 2022. We
expect improved economic conditions and growing inflation to push up spending growth in non-alcoholic drinks.
Carbonated soft drinks will be the outperforming non-alcoholic drinks category in 2023, delivering spending growth of 12.0% y-o-y.
Companies have paid attention to the growing wave of health-conscious consumers and reacted swiftly by introducing healthier
offerings such as zero-calorie or fortified carbonated drinks. This has been the key driver behind the high growth in spending on
carbonated soft drinks.
The underperforming non-alcoholic drinks category will be the fruit and vegetable juices category, which will see growth of 6.9%%
y-o-y in 2023. As consumers continue to be price-sensitive about their purchases, the value proposition of fruit and vegetable juices
lacks behind other drinks categories as they typically cost more, and some may even cost more than a meal. This prices out
segments of the consumer market, who would prefer a cheaper option such as carbonated drinks, despite knowing the greater
health benefits of fruit and vegetable juices.
Faster Non-Alcoholic Drinks Sales In 2023

Vietnam - Non-Alcoholic Drinks (2020-2027)
e/f = Fitch Solutions estimate/forecast. Source: National Statistics, Fitch Solutions
Medium-Term Trends
Over the medium term (2023-2027), we see total spending on non-alcoholic drink sales grow from VND48.7trn in 2023 to
VND70.9trn in 2027, growing at a compound annual growth rate (CAGR) of 10.0%. Coffee, teas and hot drinks will form the majority
of these sales at about 67.2% in 2023, while soft drink sales will constitute about 32.8% of the sales.
Our revised forecast envisages carbonated drink sales outperforming over the medium term, with CAGR growth of 11.5%. Teas,
coffees and hot drinks, the largest category, will also post a steady CAGR of 10.0%. Fruit and vegetable juice sales will underperform
with a CAGR of 6.0%, as despite rising health-consciousness efforts encouraging healthier options, the higher prices of healthy
juices over other drinks outprice many price-sensitive consumers.
We are witnessing a rapid emergence of competition in the Vietnamese soft drinks market. Opportunities provided by an emerging
middle class in Vietnam are firmly within the sights of domestic drinks producers such as PepsiCo Vietnam, Tan Hiep Phat
Beverage Group and Coca-Cola Beverages Vietnam. These companies' aggressive initiatives in terms of product innovation,
portfolio expansion and advertising will instill even greater dynamism in the sector.
A favourable demographic profile and rising consumer affluence create strong growth opportunities across the sector. The youth
demographic (aged 0-14 years) is an underlying driver of soft drinks consumption, particularly the carbonated drinks category. As a
result, carbonated soft drinks will experience the strongest growth in this segment. An influx of investment will provide another
major impetus for the industry's growth.
Domestic soft drinks manufacturers will continue to engage in product innovation by offering different bottle formats and sizes in
an attempt to cater to varying consumer tastes and preferences. For instance, Coca-Cola Beverages Vietnam and PepsiCo Vietnam
produce their soft drinks in varying sizes, and this has facilitated their reach to the end-consumer market. As more companies
expand their product innovation, this will further fuel sales growth.
Local soft drink manufacturers are now gradually calibrating their portfolios towards healthier and more functional beverages, such
as fruit juices and ready-to-drink teas, as they look to tap into a health-conscious trend in the country. For instance, Big C
introduced its private-label fruit juice range, Casino Bio. Carbonated drinks will remain the outperforming category - at odds with
most markets globally - as is common in markets where soft drinks consumption is relatively low, and consumer preferences are not
highly dynamic.
Vietnam's strong economic growth forecast over the next few years will also continue to fuel the demand for higher-value food and
beverage products, such as coffee. Vietnam's young population, for whom visiting cafés and drinking coffee is a lifestyle choice, is
another positive factor. As this group of consumers enter the workforce, the corresponding rise in incomes will serve to further buoy
the demand for higher-value coffee products. Over the longer term, we expect Vietnamese coffee production to increase strongly.
The tea sector is also set to experience strong growth over our five-year forecast period, buoyed by the same rising incomes and
increasing domestic demand.
NON-ALCOHOLIC DRINKS SALES (VIETNAM 2020-2027)

Non-alcoholic
drinks, sales, 39,362,103.1 40,858,565.9 44,064,052.7 48,695,288.2 53,639,274.4 58,728,597.7 64,349,033.5 70,863,850.8
VNDmn
Non-alcoholic
drinks, sales,
5.1 3.8 7.8 10.5 10.2 9.5 9.6 10.1
VNDmn, %
growth y-o-y
Coffee, teas and

other hot
26,420,599.0 27,429,551.3 29,593,106.1 32,718,353.7 36,057,016.0 39,496,206.7 43,296,921.4 47,705,629.5
drinks, sales,
VNDmn
Coffee, teas and

other hot
drinks, sales, 5.1 3.8 7.9 10.6 10.2 9.5 9.6 10.2
VNDmn, %
growth y-o-y
Soft drinks,
12,941,504.1 13,429,014.6 14,470,946.6 15,976,934.5 17,582,258.4 19,232,391.1 21,052,112.1 23,158,221.4
sales, VNDmn
Soft drinks,
sales, VNDmn, 5.1 3.8 7.8 10.4 10.0 9.4 9.5 10.0
% growth y-o-y
Fruit and
vegetable
4,183,360.7 4,294,585.6 4,507,996.3 4,822,935.5 5,134,005.5 5,428,888.9 5,726,730.1 6,038,110.2
juices, sales,
VNDmn
Fruit and
vegetable
juices, sales, 4.5 2.7 5.0 7.0 6.4 5.7 5.5 5.4
VNDmn, %
growth y-o-y
Mineral or
spring waters, 345,549.0 357,947.5 384,122.0 422,040.6 462,131.5 503,009.8 547,724.5 599,031.7
sales, VNDmn
Mineral or
spring waters, 5.0 3.6 7.3 9.9 9.5 8.8 8.9 9.4
sales, VNDmn,
% growth y-o-y
Carbonated
drinks, sales, 8,412,594.4 8,776,481.5 9,578,828.3 10,731,958.4 11,986,121.4 13,300,492.4 14,777,657.5 16,521,079.5
VNDmn
Carbonated
drinks, sales,
5.3 4.3 9.1 12.0 11.7 11.0 11.1 11.8
VNDmn, %
growth y-o-y
e/f = Fitch Solutions estimate/forecast. Source: National Statistics, Fitch Solutions
Industry Trends And Developments

Vietnam Dietary Shift Spending
Key View
• The average Vietnamese household will spend 20.8% of their total household budget on food in 2025, marginally
increasing from 20.1% in 2005.
• Vietnamese households have seen significant growth in their disposable incomes. This has fed through to their food spending
patterns, allowing them to diversify their palate and purchase food that is not commonly found in their country.
• Poultry and pork products will see significant consumption and spending growth as opposed to beef,
due to the significantly higher price and inflation of beef products.
• Fruits will see strong spending growth, with imported fruits increasingly being the main choice for the Vietnamese consumer.
Despite having an abundance of fruits domestically, Vietnamese consumers perceive foreign fruits to be of a higher quality and
safety standard than domestically produced ones.
• Dairy consumption will continue to outperform, as Vietnamese consumers are paying more attention to their food choices as
part of the ongoing healthification trend. Milk consumption will increase from 3.2kg per capita in 2005 to 10.7kg per capita in
2025, while convenient dairy products, such as yoghurt, will grow by an annual average of 14.9% over this period.
Dietary Shift Spending Overview
The average Vietnamese household will spend 20.8% of the total household budget on food in 2025, marginally increasing from
20.1% in 2005. Despite food spending as a percentage of total household budget not changing significantly, growing wages and
disposable income over the past 20 years has led to real growth in food spending and consumption, enabling the average
Vietnamese household the ability to afford more than just basic food staples. Between 2005 and 2025, the number of households
with an annual disposable income of USD5,000 plus will increase from 0.3mn (1.4% of households) in 2005, to 17.6mn (52.4% of
households) 2025. This will be supported by the impressive minimum wage growth over the years, compounding at an annual rate
of 12.1% between 2008 and 2021 (latest data available), which takes minimum wages from VND12mn per annum in 2008 to
VND53.0mn per annum in 2021.
Over this period (2005-2025), we note that food spending will grow by an annual average of 13.6%, compared to the annual
average inflation rate of 6.5% over the same period, indicating real growth in food spending. As a result, there are certain instances
of shifts in dietary spending stemming from income growth, with consumers spending a lesser proportion of their food spending on
fish, diversifying their palate and opting for food that is not commonly found in their country.
Food Spending Growth Consistently Outpaces Inflation

Vietnam - Inflation Vs Food Sales, % y-o-y (2005-2025)
When breaking down the average Vietnamese household spend on food, three food categories (bread, rice and cereals, meat and
poultry, fish and fish products) will account for more than 70% of total food spending in 2025: Staples (Bread, rice and cereals) will
account for the largest share, at 36.9% of total food spending; meat and poultry at 29.9%; and fish and fish products at 10.5%. These
three food categories will see their share of total food spending decreasing marginally, from 79.3% of total food spending in 2005 to
77.2% in 2025.
Within the three dominant food categories, we highlight that Vietnamese consumers spending on rice will be the largest share of
the staples spending category, at 88.1% in 2005 and 87.7% in 2025. Like many developing Asia countries, rice in Vietnam will
remain as a staple food and main source of calories for families across all income brackets, but will account for a bigger proportion
of consumption in lower-income bracket households due to its affordability. Spending on meat and poultry will increase from 29.2%
of total food spending in 2005 to 29.9% in 2025, while spending on fish and fish products will decrease from 13.8% to 10.5%, over
the same period.
We note that the decline in spending on fish and fish products is due to the lower annual inflation of fish prices, compared to other
food products such as meat and poultry, and not a result of decreasing fish consumption. Vietnam has one of the largest domestic
fish markets in the world and is one of the top fish exporters in the world. Pangasius freshwater fish (catfish), or known locally
as Basa, is the top consumed fish locally due to its affordability. Basa is inexpensive as it grows fast, is easily harvested and processed
in factories near the farm, which helps to keep prices low. In 2019, Vietnam's exports of pangasius fish accounted for 94.8% of global
pangasius export.
Three Food Categories Dominate Spending Patterns

Vietnam - Food Spending Breakdown, % of total food sales
f = Fitch Solutions forecast. Source: National sources, Fitch Solutions
Households Consuming More Meat Due To Rising Income And Affordability
Between 2005 and 2025, Vietnamese households will allocate a larger portion of their total food spending towards meat and
poultry products, increasing from 29.2% of total food spending in 2005 to 29.9% in 2025. Collectively, total meat consumption
(beef, pork and poultry) per capita will grow by a compound annual growth rate (CAGR) of 3.6%, increasing from 24.8kg in 2005 to
50.0kg in 2025. Pork will remain the most consumed meat throughout this entire period, accounting for 61.1% of
total meat and poultry consumed in 2025. On the other hand, poultry will see the largest consumption growth, growing from a per
capita consumption of 3.8kg in 2005 to 15.7kg in 2025.
Poultry And Pork Will Continue To Dominate Vietnamese Households Meat Consumption
Vietnam - Meat Protein Consumption, by category (2005-2025)

All three categories of meat will see growth surpass average headline food spending growth of 6.5% per year. Spending on pork and
poultry will grow by an annual average of 13.9% and 14.6% respectively, while spending on beef will grow by an annual average of
14.4%. Despite the high annual growth of beef spending, we highlight that beef consumption will only increase marginally from
1.3kg in 2005 to 3.7kg in 2025. The low consumption growth of beef is due to the much higher prices and higher annual inflation of
beef. This is due to the fact that Vietnam's domestic production of beef is much lower than that of poultry and pork, and imports are
subjected to higher price volatility commanded by its trade partners.
Fruit Spending Outperforms, Imported Fruits Are Extremely Popular
Fresh and preserved fruits will be the top performing food category between 2005 and 2025, with annual average spending growth
of 17.1% during this period. This growth will see the fresh and preserved fruits proportion of total food sales increase from 3.4% in
2005 to 5.8% in 2025, making fresh and preserved fruits the category of food with the biggest increase in share of food spending.
Healthier Food Categories Have Attracted Significant Growth

Vietnam - Spending Growth Per Food Category, % chg y-o-y (2005-2025f)
f = Fitch Solutions forecast. Source: National statistics, Fitch Solutions
Vietnam is home to a wide variety of rare tropical and exotic fruits, such as langsat, mangosteen, rambutan, longan and many other
fruits which are not commonly found in other parts of the world. However, in recent years, Vietnamese consumers are consuming
more imported fruits, which are generally more expensive, despite having an abundance of fruits domestically. The Vietnamese
consumers perceive foreign fruits to be of a higher quality and safety standard than domestically produced ones. In one instance,
bananas imported from the Philippines saw strong demand at many supermarkets in Vietnam, while Vietnamese bananas were
rejected by locals.
In February 2019, Vietnam opened its borders to fresh US blueberries. Due to the strong expected demand from local
consumers, VinMart, a Vietnamese grocery chain with 2,000 stores, increased its sales forecast of fresh US blueberries three times,
going from slightly less than 1mn pounds, to a final forecast of 1.5mn pounds. Similarly, there was a strong demand for Australian
cherries, when Vietnam banned imports of Australian fruits for eight months in 2015. This created a black market for Australian
cherries, where travellers smuggled over 100kg of the fruit on passenger flights each day, despite the ban. This highlights the strong
demand for high quality foreign fruits, and we believe fruit spending will continue to outperform.
Youthful Population, Growing Convenience And Healthification Trend Supports Dairy Consumption
Demand for high protein and high energy food, such as dairy products, has increased over the years, as Vietnamese consumers are
increasingly paying more attention to their food choices, as part of a healthification trend. This growing health awareness is
increasing in Vietnam, as the government rolled out initiatives to improve the general population’s knowledge of health, such as
educational television programmes explaining the function of calcium intake to increase bone strength and supporting a dairy rich
diet for children’s development. Additionally, the large size of Vietnam’s youthful population (29.8mn in 2025), who have recently
entered the workforce, will support demand for convenience products. As a result, demand for high protein and high energy food
such as dairy products have increased significantly. Spending on dairy products will grow by an annual average of 14.9% between
2005 and 2025, with total milk consumption (liquid milk and whole milk powder) increasing from 3.2kg per capita in 2005 to 10.7kg
per capita in 2025.
We highlight that yoghurt is undergoing a similar growth trajectory, due to its relative affordability, ease of consumption and health
benefits it provides. Spending yoghurt products will grow by an annual average of 14.9% during this period. Within the last 10 years,
dairy companies have been successful in launching branded yogurt products that promise to ensure better food safety standards
than the traditional home-made yogurt.
Dairy Consumption Has Increased Significantly Over The Years

Vietnam - Total Milk Consumption, kg per capita (2005-2025)
e/f = Fitch Solutions estimate/forecast. Source: OECD-FAO, Fitch Solutions
Between 2010 and 2020, dairy company Vinamilk invested USD110mn to set up a new factory and expand current capacity amid
growing domestic demand. In 2013, the company completed phase 1 of its biggest liquid milk factory in the Binh Duong province,
achieving a capacity of 400mn litres/year. The annual capacity was subsequently doubled to 800mn litres/year in 2018. Another
key player, TH Milk has invested in its operations and can currently produce up to 500mn litres/year. We highlight that the youthful
population and consumers looking for healthy and convenient foods will continue to drive the demand for healthy dairy products
such as milk and yoghurt.
Industry Risk/Reward Index

Asia Food & Non-Alcoholic Drinks Risk/Reward Index: Mainland China
Reclaims Leaderboard, Spotlight On Thailand
Key View: In our Q223 update of the Food & Non- Alcoholic Drinks Risk/Rewards Index, the Asia region retains its second place
position among six regions globally. Asia offers attractive markets for food and drinks companies, with strong demographics, rapid
urbanisation and expanding income levels, all contributing to an average score for the region of 60.6 out of 100 Industry Rewards.
Mainland China leads the region with an overall RRI score of 74.6 out of 100, offering investors an increasingly wealthier urban
population with high food spending levels. Malaysia comes in as the second most attractive market in Asia, due to its rapidly
urbanising population with strong income growth, making it an attractive long-term market. Overall, the region boasts strong
Rewards scores and a navigable risk outlook.
Asia Region Offers A Strong Rewards Profile

Asia - Food & Non-Alcoholic Drinks Risk/Reward Index
Note: May include territories, special administrative regions, provinces and autonomous regions. Scores out of 100; higher score = more attractive market. Source: Fitch
Solutions
Important Note: Our Food & Drink Risk/Reward Index includes two Food & Drink Risk/Reward indices: our Food & Non-Alcoholic
Drinks Risk/Reward Index and our Alcoholic Drinks Risk/Reward Index. The first quantifies the risks and rewards associated with food
and non-alcoholic drink sales in each market, while the other quantifies the risks and rewards associated with the alcoholic drinks
sector.
Main Regional Features And Latest Updates
• In our Q223 Food & Non-Alcoholic Drinks Risk/Reward Index (RRI), Asia retains its second-place position out of our six regions
globally. Asia's regional average score of 59.0 out of 100 places it behind North America & Western Europe (NAWE)'s 63.7 out of
100, but considerably ahead of Central & Eastern Europe in third place, with its score of 47.6.
• Asia has the most attractive Rewards profile globally, with an average score of 60.7 out of 100, above the second-placed NAWE
with 56.9 out of 100. Most markets across the region offer positive growth outlooks for consumer spending, which feeds
through into high growth rates for food and non-alcoholic drinks spending. Similarly, the region boasts attractive demographics
profiles, with large and youthful consumer bases.
• Mainland China leads in the Asia region, with an overall RRI score of 74.6 out of 100. However, with the 2024-2027 consumer
outlook in Malaysia increasingly becoming more positive, the gap between second place is closing. Malaysia currently scores
74.2 out of 100.
• We spotlight Thailand as a growing food and drinks target market as international tourism returns with the country's economic
indicators looking positive over the medium term.
Asia Presents Strong Mix Between Risks And Rewards

Asia - Food & Non-Alcoholic Drinks Risk/Reward Index
Solutions
Thailand Climbs Regional And Global Rankings, Supported By Recovery Of International Tourism
In our Q223 update, we spotlight Thailand as a food and drinks target market that offers a population of international and wealthy
consumers, who have the disposable incomes to purchase premium products and buy into new and emerging food and non-
alcoholic drinks trends. Thailand has moved up the regional leaderboard from 14th to 10th place, while climbing the global rankings
by 10 spots, going from 37th place in Q123, to 27th place in Q223.
The improvement in Thailand's ranking is mainly attributable to an improvement in its Industry Rewards score, increasing by six
points from 61.3 out of 100 in Q123 to 67.3 out of 100 in Q223. This increment stems from our revised forecast for Thailand's real
household spending growth over the medium term, which we project to reach 4.3% y-o-y in 2023. This comes on the back of the
recovery of global tourism, a key component of Thailand's economy before the Covid-19 pandemic. Tourism numbers will recover
strongly in 2023, although we note that they have yet to exceed pre-pandemic levels in 2019. The spillover effect that tourism will
have on the rest of Thailand's economy supports the overall economic growth forecast, with real GDP expected to rise by 3.6% y-o-y
in 2023.
As a result, Thailand's Rewards pillar has increased by 3.2 points, pushing the overall RRI score up from 59.25 in Q123 to 62.4 in
Q223. We highlight that Thailand is also increasingly an attractive demographic for upmarket, high-end food and drinks retailers, as
the middle class in the country continues to expand. Households with disposable income of more than USD10,000 will account for
61.9% of all households in 2027, up from 30.1% in 2023. This increases the propensity for aspirational spending and is a key target
for food and drink retailers to tap into this growing demographic.
Thailand's Consumers Will See Disposable Incomes Grow Over The Medium Term
Thailand - Disposable Incomes, US Dollar (2023-2027)
f = Fitch Solutions forecast. Source: Local sources, Fitch Solutions
While Thailand offers attractive Rewards, we highlight that the market's overall RRI score is weighed down by its low Risks scores.
Although Bangkok is a bustling metropolis, outside of major urban population centres, such as Bangkok, Chiang Mai and Hat Yai, the
food and drink industry in Thailand remains relatively fragmented, with informal retail forming the bulk of the industry. This
significantly weighs down the country's F&D Formalisation score where Thailand scored only 22.9 out of 100, below the regional
average of 40.8 out of 100. Additionally, Thailand also scored lower than the regional average for the Long-Term Political Risk Index
indicator (27.6 out of 100 versus the regional average of 50.1 out of 100). This is because of the uncertain nature of the country's
political future, which heightens risks for companies as questions on the longevity of business policies and political stability remain
unclear. However, its stable economic and regulatory environment as well as logistical infrastructure has bolstered the market’s RRI
risk scores significantly. Thailand boasts the third highest Logistics Risk score among its South East Asian neighbours (Singapore,
Malaysia, Vietnam, Indonesia, Laos, Cambodia, Myanmar and the Philippines), at 69.5 out of 100 and only behind Singapore and
Malaysia. The urbanised market, with well-developed logistics allows for efficient distribution through a network of retailers. As a
result, international food and drink manufacturers view Thailand as a reliable first market when they seek to expand into the Asia-
Pacific or South East Asia region, viewing Thailand as a good proxy for consumers in Asian markets.
Mainland China Reclaims Leaderboard As Easing Of Pandemic Restrictions Aids Spending Recovery
China moved up by one regional position and two global positions in our Q223 RRI update, with an overall RRI score of 74.6 out of
100. China is now the most attractive market in the Asia region and the second most attractive market globally, below first-placed
US, which scores 77.2 out of 100. Consumer spending in China continues to recover strongly in Q223 as authorities ease pandemic
restrictions, leaving the two years of Covid-related economic pressure on consumer spending levels behind. Globally, China offers
the most attractive Rewards profile, scoring 77.9 out of 100. China boasts the second-largest consumer market in the world (in
terms of total household spending) after the US, and the food and drinks industry is one of the market's fastest-growing industries.
Similarly, high disposable incomes in Chinese cities are creating an aspirational consumer base, with access to modern retailing, and
increasing interest in premium food and drinks products.
Mainland China Outperforms On Most RRI Pillars

Mainland China & Regional Average - Risk/Reward Scores (2023)
Note: Scores out of 100; higher score = more attractive market. Source: Fitch Solutions
China scores 100 out of 100 for two Rewards indicators (the highest and most attractive score in our Index), including Total Food &
Drink Expenditure and Urban Population, and it also performed well for other indicators such as the Population indicator at 99.0 out
of 100. Additionally, the market has begun to relax its zero-Covid policy and has eased restrictions considerably, giving a strong
boost to household spending. We expect household spending to outperform over the next five years. The market scores 97.1 out of
100 for our five-year Real Household Spending Average Growth indicator, which highlights the spending growth opportunities and
so the overall attractiveness of the Chinese market for consumer-facing companies. Over the medium term (2023-2027), we
forecast real household spending to grow by an average annual rate of 6.9%.
While China's Risk profile is still more attractive than the regional average (67.0 out of 100, compared to the regional average of 54.9
out of 100), it does weigh down its overall RRI score. The Regulatory Environment in China (61.0 out of 100) is still relatively
complicated and time consuming, compared to other developed markets, and companies risk sudden regulatory changes. There
have been a number of food hygiene incidents across the food and grocery retail industries, highlighting the vulnerabilities of the
marketplace. Similarly, outside of the Tier I and Tier II cities, the food and drink industry is still relatively fragmented and informal
(China scores 39.0 out of 100 for our Food & Drink Formalisation indicator).
Mainland China Has Some Of The Highest Scores In The Region

Mainland China - Select Reward Indicators (2023)
In light of the China 14th Five-Year Plan announcement, we highlight that China is seeking to reduce its import dependency,
emphasising a shift towards the expansion of the domestic market via domestic production over the medium term as part of its
'dual circulation strategy'. In 2021 (latest data available), food and drink products imported by China collectively accounted for more
than USD123.9bn (approximately 37.5% of total imported consumer goods) and the shift towards domestic production will reduce
imports of foreign food products progressively over the medium-to-long term. Furthermore, brands from outside of China may find
it difficult to navigate through consumer behaviour while operating there, due to rising nationalistic sentiments of Chinese
consumers, as seen with the recent consumer boycotts of H&M and Nike.
Malaysia Remains Attractive Despite Falling To Second Place
In our Q223 update, Malaysia ranks as the second most attractive market in the Asia region, but it has fallen by one position in our
regional and global rankings, with an overall RRI score of 74.2 out of 100. In line with wider economic weakness in the market,
Consumer spending in Malaysia has declined slightly in Q223. The country has an Industry Rewards score of 74.9 out of 100, a fall
from 77.5 out of 100 in Q123. Nevertheless, Malaysia remains an attractive market. This is apparent from Malaysia's overall Rewards
score of 73.9 out of 100, the fourth highest in the region and well above the Asia average of 60.7, highlighting the growth
opportunities for companies in the market over the medium term.
Malaysia's Consumer Profile Slows In Q223

Malaysia - Reward Scores (2017-2023)
Malaysia also offers the third-highest Industry Risks score in the Asia region, at 78.4 out of 100, below only that of Singapore (98.4
out of 100) and Hong Kong, China (95.2 out of 100). The market offers a well-diversified and high-quality transport network,
offering supply chains with strong levels of internal and international connectivity. Malaysia's transport network offers strategic
advantages to businesses with regional supply chains given the strong linkages with that of key regional peers such as Singapore
and Thailand. Similarly, with a score of 87.6 out of 100, Malaysia's Regulatory Environment is also attractive. Combined, these two
scores highlight the attractiveness of doing business in Malaysia, as companies face relatively smoother regulatory processes than
regional peers, while also being able successfully transport their goods around Malaysia in a timely manner.
ASIA FOOD & NON-ALCOHOLIC DRINKS RISK/REWARD INDEX

Industry Rewards Country Rewards Industry Country Risks RRI Regional Global
Rewards Risks Risks Rank Rank
Mainland 80.3 74.3 77.9 60.0 74.0 67.0 74.6 1 2

China
Malaysia 74.9 72.4 73.9 78.4 71.5 75.0 74.2 2 3
Australia 73.0 67.1 70.7 69.5 86.2 77.9 72.8 3 5
South 63.8 68.3 65.6 71.7 87.1 79.4 69.8 4 10

Korea
Japan 64.8 66.7 65.5 74.6 83.1 78.8 69.5 5 12
Taiwan, 65.1 57.9 62.2 76.5 87.9 82.2 68.2 6 13

China
Indonesia 74.0 75.5 74.6 43.8 59.4 51.6 67.7 7 14
India 72.7 78.1 74.9 39.0 53.3 46.2 66.2 8 16
Philippines 73.0 72.9 73.0 27.9 48.6 38.3 62.5 9 26
Thailand 67.3 61.9 65.1 56.8 55.0 55.9 62.4 10 27
Vietnam 65.1 62.4 64.0 51.4 64.2 57.8 62.1 11 29
Singapore 47.0 49.0 47.8 98.4 92.5 95.5 62.1 12 30
New 56.5 42.9 51.0 65.4 86.7 76.0 58.5 13 35

Zealand
Bangladesh 69.8 74.3 71.6 17.5 37.7 27.6 58.4 14 37
Hong Kong, 39.7 37.6 38.9 95.2 83.3 89.3 54.0 15 44

China
Pakistan 49.2 69.5 57.3 21.0 16.8 18.9 45.8 16 67
Cambodia 54.3 48.1 51.8 28.4 26.8 27.6 44.6 17 70
Myanmar 39.0 63.1 48.7 10.8 6.1 8.5 36.6 18 84
Sri Lanka 45.1 34.5 40.9 22.2 27.0 24.6 36.0 19 86
Laos 36.8 43.3 39.4 16.5 22.1 19.3 33.4 20 91
Global 50.0 50.0 50.0 50.0 50.0 50.0 50.0 ~ ~

average
Regional 60.6 61.0 60.7 51.3 58.5 54.9 59.0 ~ ~

average
Note: May include territories, special administrative regions, provinces and autonomous regions. Scores out of 100; higher score = more attractive market. Source: Fitch Solutions
ASIA FOOD & NON-ALCOHOLIC DRINKS INDUSTRY REWARDS

F&D Real HH Total F&D Industry Rewards Rewards
Spending Per Capita Spend 5-Year Growth Expenditure
Mainland China 43.8 97.1 100.0 80.3 77.9
Malaysia 59.0 86.7 79.0 74.9 73.9
Australia 97.1 39.0 82.9 73.0 70.7
South Korea 64.8 42.9 83.8 63.8 65.6
Japan 89.5 7.6 97.1 64.8 65.5
Taiwan, China 67.6 52.4 75.2 65.1 62.2
Indonesia 35.2 91.4 95.2 74.0 74.6
India 20.0 100.0 98.1 72.7 74.9
Philippines 41.9 89.5 87.6 73.0 73.0
Thailand 38.1 83.8 80.0 67.3 65.1
Vietnam 21.0 98.1 76.2 65.1 64.0
Singapore 60.0 45.7 35.2 47.0 47.8
New Zealand 95.2 26.7 47.6 56.5 51.0
Bangladesh 25.7 99.0 84.8 69.8 71.6
Hong Kong, China 45.7 41.9 31.4 39.7 38.9
Pakistan 9.5 71.4 66.7 49.2 57.3
Cambodia 33.3 88.6 41.0 54.3 51.8
Myanmar 2.9 68.6 45.7 39.0 48.7
Sri Lanka 23.8 74.3 37.1 45.1 40.9
Laos 12.4 85.7 12.4 36.8 39.4
Global Average 50.0 50.0 50.0 50.0 50.0
Regional Average 44.3 69.5 67.9 60.6 60.7
ASIA FOOD & NON-ALCOHOLIC DRINKS COUNTRY REWARDS

Population Mass Affluent Class Urban Spending Population Country Rewards
Population Rewards
Mainland China 99.0 57.1 100.0 41.0 74.3 77.9
Malaysia 61.0 66.7 71.4 90.5 72.4 73.9
Australia 57.1 97.1 64.8 49.5 67.1 70.7
South Korea 74.3 93.3 79.0 26.7 68.3 65.6
Japan 89.5 81.9 94.3 1.0 66.7 65.5
Taiwan, China 55.2 80.0 62.9 33.3 57.9 62.2
Indonesia 97.1 41.9 96.2 66.7 75.5 74.6
India 100.0 24.8 99.0 88.6 78.1 74.9
Philippines 88.6 34.3 86.7 81.9 72.9 73.0
Thailand 82.9 47.6 77.1 40.0 61.9 65.1
Vietnam 86.7 21.0 78.1 63.8 62.4 64.0
Singapore 25.7 91.4 34.3 44.8 49.0 47.8
New Zealand 21.0 79.0 24.8 46.7 42.9 51.0
Bangladesh 93.3 21.9 90.5 91.4 74.3 71.6
Hong Kong, 30.5 71.4 39.0 9.5 37.6 38.9

China
Pakistan 96.2 10.5 91.4 80.0 69.5 57.3
Cambodia 46.7 43.8 23.8 78.1 48.1 51.8
Myanmar 76.2 37.1 60.0 79.0 63.1 48.7
Sri Lanka 54.3 18.1 20.0 45.7 34.5 40.9
Laos 31.4 38.1 14.3 89.5 43.3 39.4
Global average 50.0 50.0 50.0 50.0 50.0 50.0
Regional 68.3 52.9 65.4 57.4 61.0 60.7

average
ASIA FOOD & NON-ALCOHOLIC DRINKS INDUSTRY RISKS

Regulatory Environment F&D Formalisation Logistics Risks Industry Risks Risks
Mainland China 61.0 39.0 80.0 60.0 67.0
Malaysia 87.6 61.9 85.7 78.4 75.0
Australia 52.4 80.0 76.2 69.5 77.9
South Korea 54.3 65.7 95.2 71.7 79.4
Japan 33.3 90.5 100.0 74.6 78.8
Taiwan, China 70.5 62.9 96.2 76.5 82.2
Indonesia 41.9 31.4 58.1 43.8 51.6
India 42.9 8.6 65.7 39.0 46.2
Philippines 34.3 17.1 32.4 27.9 38.3
Thailand 78.1 22.9 69.5 56.8 55.9
Vietnam 79.0 13.3 61.9 51.4 57.8
Singapore 99.0 99.0 97.1 98.4 95.5
New Zealand 38.1 81.0 77.1 65.4 76.0
Bangladesh 4.8 14.3 33.3 17.5 27.6
Hong Kong, China 96.2 99.0 90.5 95.2 89.3
Pakistan 19.0 9.5 34.3 21.0 18.9
Cambodia 63.8 1.9 19.5 28.4 27.6
Myanmar 23.8 5.7 2.9 10.8 8.5
Sri Lanka 15.2 0.0 51.4 22.2 24.6
Laos 28.6 11.4 9.5 16.5 19.3
Global average 50.0 50.0 50.0 50.0 50.0
Regional average 51.2 40.8 61.8 51.3 54.9
ASIA FOOD & NON-ALCOHOLIC DRINKS COUNTRY RISKS

Long- Short- Long-Term Short-Term
Operational Country
Term Economic Risk Term Economic Risk Political Risk Political Risk Risks
Risk Index Risks
Index Index Index Index
Mainland
86.7 91.9 56.2 81.9 63.8 74.0 67.0
China
Malaysia 72.4 78.6 47.6 72.4 79.0 71.5 75.0
Australia 89.5 91.9 83.8 84.3 83.8 86.2 77.9
South
94.3 100.0 85.7 81.0 81.0 87.1 79.4
Korea
Japan 73.3 68.1 90.5 93.3 86.7 83.1 78.8
Taiwan,
100.0 98.1 70.5 70.5 94.3 87.9 82.2
China
Indonesia 69.5 73.8 46.7 52.4 57.1 59.4 51.6
India 42.9 73.8 49.5 58.1 47.6 53.3 46.2
Philippines 54.3 76.7 43.8 53.8 31.4 48.6 38.3
Thailand 70.5 71.4 27.6 34.8 62.9 55.0 55.9
Vietnam 65.7 70.5 44.8 91.9 56.2 64.2 57.8
Singapore 82.9 89.5 82.9 100.0 100.0 92.5 95.5
New
88.6 75.2 87.6 89.5 89.5 86.7 76.0
Zealand
Bangladesh 55.2 60.0 38.1 34.8 19.0 37.7 27.6
Hong Kong,
90.5 96.2 32.4 82.9 99.0 83.3 89.3
China
Pakistan 18.1 10.5 21.0 9.5 21.0 16.8 18.9
Cambodia 14.3 22.4 29.5 49.0 22.9 26.8 27.6
Myanmar 3.8 13.8 1.9 1.9 7.6 6.1 8.5
Sri Lanka 6.7 15.2 42.9 23.8 36.7 27.0 24.6
Laos 10.5 11.4 20.0 65.7 12.4 22.1 19.3
Global
50.0 50.0 50.0 50.0 50.0 50.0 50.0
average
Regional
59.5 64.5 50.1 61.6 57.6 58.5 54.9
average
Please Note: Our Risk/Reward Indices are updated frequently and, as a result, the scores in this section may not match the scores
in the rest of the report.
Asia Alcoholic Drinks Risk/Rewards Index: South Korea Tops Asia,

Spotlight On New Zealand
Key View: The Asia region scores 56.1 out of 100 in our Alcoholic Drinks Risk/Reward Index in the Q223 update. Asia ranks second
out of five regions and boasts one of the best demographic’s profiles globally, while income growth drives both consumption and
spending growth. In more developed alcoholic drinks markets like South Korea and Australia, a premiumisation trend is prominent,
especially in wine and spirits, as growth in spending levels greatly outperform consumption levels. The wider recovery in the
international tourism sector bodes well for several markets' alcoholic drinks markets over the medium term (2023-2027). This
quarter, we highlight New Zealand, a market that scores highly on several of our risk indicators, making it a safe market for investors
in the region, particularly as global economic uncertainty and a rising cost of living has hampered alcoholic drinks spending
propensity of many consumers in other markets.
Asia Region Offers A Number Of Attractive Rewards Profiles

Asia - Alcoholic Drinks Risk/Reward Index
Solutions
Important Note: Our Food & Drink Risk/Reward Index includes two Food & Drink Risk/Reward indices: our Food & Non-Alcoholic
Drinks Risk/Reward Index and our Alcoholic Drinks Risk/Reward Index. The first quantifies the risks and rewards associated with food
and non-alcoholic drink sales in each market, while the other quantifies the risks and rewards associated with the alcoholic drinks
sector.
Main Regional Features And Latest Updates
• In our Q223 update to the Alcoholic Drinks Risk/Rewards Index (RRI), Asia ranks second out of our five regions, with an overall
average RRI score of 56.1 out of 100. This is considerably below the first-placed North American and Western Europe region, with
an average score of 64.1 out of 100, but well above the third placed Central and Eastern Europe region, with an average score of
48.7 out of 100.
• South Korea tops the Asia region, with an overall score of 69.6 out of 100. Australia (68.9 out of 100) and Mainland China (68.8
out of 100) are a close second and third respectively. South Korea and Australia offer a more developed alcoholic drinks market,
where consumption levels are slowing but spending levels are growing, suggesting a premiumisation trend. This is especially
prevalent in the wine and spirits category. Meanwhile, China offers a more developing alcoholic drinks market, where both
consumption and spending levels are increasing, driven by an attractive demographics profile and rising incomes.
• This quarter, we highlight New Zealand, a market that scores highly on risk indicators, making it a safe market for investors in the
region, particularly as global economic uncertainty and rising cost of living has hampered alcoholic drinks spending propensity
of many consumers in other markets.
• We also maintain our spotlight on Singapore, which presents opportunities for alcoholic drinks majors due to our positive
outlook for consumer income growths, growing premiumisation and healthification trends as well as its favourable business
environment, which presents low risks for investors. As a connecting destination, the recovery in global tourism also bodes well
for the industry.
Relatively Low-Risk Region

Asia - Alcoholic Drinks Risk/Reward Index
Solutions
New Zealand Is A Safe Market With Low Risks
In Q223, we spotlight New Zealand as a safe market for investors in the region, as global economic uncertainty persists. New
Zealand’s RRI score has increased to 62.3 out of 100 this quarter, up from 59.8 in Q123. As a result, the country has moved up the
regional ranks to sixth place in Q223 from seventh place in Q123 and by six positions globally to 21st place in Q223 from 27th place
in Q123. New Zealand’s greatest score improvement is within the Country Rewards pillar, with its score increasing to 42.8 out of 100
in Q223 from 39.4 in Q123, due to an improving outlook of alcohol growth over our 2023-2027 forecast period. We project that
total alcohol spending will grow by an annual average of 5.1% over the medium term (2023-2027), increasing from NZD8.1bn in
2023, reaching NZD9.7bn by 2027. We highlight that New Zealand has a 'mass affluent class' indicator score that is far above
the regional average, at 77.7 out of 100, as compared to the regional average of 55.6. By 2027, 55.7% of New Zealand households
will have disposable income of above USD50,000, increasing from 36.8% in 2023 and this will support the spending on premium
alcoholic drinks.
Despite the beer segment dominating the share of total alcohol consumption at 69.8% in 2023, we expect wine consumption to
steadily gain ground over the medium term (2023-2027) with the segment's growth at 3.1% y-o-y, outperforming the beer
segment's growth of 2.1% y-o-y. By 2027, the wine segment will hold 26.4% of the share of New Zealand's consumer alcohol
consumption.
New Zealand's High Risks Scores Make It A Safe Market For Investments
New Zealand - Risk Index Categories
Additionally, New Zealand boasts a very attractive Risk profile, ranking in the top 25% of markets with an overall Risk score of 74.7
out of 100. A stable political environment (with scores of 90.4 and 86.2 out of 100 for our Short-Term and Long-Term Political Risk
scores respectively) ensures market stability, while ease of doing business (with an Operational Risk score of 88.3 out of 100) makes
New Zealand an easy market to enter and rapidly expand. Similarly, a score of 75.5 out of 100 for our Logistics Risk indicator
highlights how relatively easy it is for beverage majors to transport products into and around the country.
South Korea Tops The Asia Region With Australia And China Close Seconds
In our Q223 RRI update, South Korea tops our Asia region and ranks seventh globally, with an overall RRI score of 69.6 out of 100.
However, Australia and China are a close second and third, scoring 68.9 and 68.8 out of 100 respectively. All three markets rank in
the top 10 alcoholic drinks markets globally. South Korea and Australia have more developed alcoholic drinks markets, supported by
better Risks scores (78.5 and 76.6 out of 100 respectively for our Risks pillar). In these markets, alcoholic drinks spending
outperforms consumption growth, as consumers cut down on their consumption and focus on more premium products.
Meanwhile, China boasts a more developing alcoholic drinks markets, with an attractive demographics profile (it scores 98.9 out of
100 for our Total Population and 100 out of 100 for our Urban Population pillar) and income growth supporting a rise in both
consumption and spending levels.
Contrast In Alcoholic Drinks Profiles For Top Three Markets

South Korea, Australia & Mainland China - Alcoholic Drinks Risk/Reward Index
South Korea and Australia both boast low-risk operating environments (78.7 and 81.9 out of 100 respectively for our Operational
Risk pillar), with high levels of formalisation in the market (68.1 and 81.9 out of 100 respectively for our Food & Drink Formalisation
pillar). Combined with more wealthy consumers (92.6 and 96.8 out of 100 respectively for our Mass Affluent Class pillar), alcoholic
drinks majors are more willing to retail premium products. South Korea has a strong drinking culture, in particular due to ‘hweshik’,
which is a social obligation in Korean companies for co-workers to go out together for after-work drinks. In addition, while the long-
standing ‘chimaek’ trend of consuming fried chicken with beer has meant that beer has long been the most regularly consumed
alcohol by South Koreans, many consumers, especially younger generations, are shifting away from consuming large quantities of
the traditionally dominant and cheap beer, into consuming more expensive wine, but in lesser quantities. A similar trend is playing
out in Australia, but with more of a shift into spirits. Australia has a strong drinking culture, and as such, alcohol plays a key role in
many social gatherings and functions with liquor stores located on most streets with a wide range of offerings. Many Australians
also enjoy weekend road trips out to countryside locations such as Yarra Valley in the Australian state of Victoria where they can
enjoy wine-tasting sessions and purchase bottles to bring home.
In China, per capita consumption of alcoholic drinks is still on the rise and is forecast to grow from 47.4 litres per adult in 2023, to
52.7 litres by 2027. The Covid-19 pandemic and its related restrictions sped this up, by changing traditional perceptions around
consuming alcohol at home. Previously, alcoholic drinks consumption, especially wine, was reserved for special occasions and
purchases were largely gift-based. With consumers spending more time at home, perceptions shifted, normalising the consumption
of alcohol at home. This was more prevalent among female consumers as well as younger consumers, especially regarding ready-
to-drink products. These tend to have a lower alcohol content and are more palatable, making them an easier choice for these
groups to try alcoholic beverages. These channels will continue to drive both consumption and spending levels over the medium
term (2023-2027).
Premiumisation Trend Continues In Singapore
In our Q223 update, Singapore has maintained its ranking of 10th regionally out of the 18 countries in Asia and grew to 31st
globally from its previous ranking of 36th. With an overall score of 58.0 out of 100 within our Alcoholic Drinks RRI, Singapore offers
an attractive alcoholic drinks market, which is well developed and open to the most recent trends in the sector. With a score of 99.5
out of 100 for our Food & Drink Formalisation indicator, Singapore has the most urbanised market in the region, making it easier for
alcohol majors to reach a larger pool of consumers. The country's main Rewards offering comes from its Country Rewards profile,
scoring an impressive 90.4 out of 100 for our Mass Affluent Class indicator. Singapore ranks third for the Mass Affluent Class
indicator within the region, illustrating Singaporean consumers wealth levels. Around 80.7% of households (or 1.4mn households) in
the market are projected to have a disposable income of USD50,000 in 2023 and this figure is forecast to reach 88.9% (or 1.6mn
households) by 2027.
Combined with solid scores for our International Tourism Receipts Total (93.6 out of 100) and our International Tourism Receipts Per
Visitor (93.6 out of 100) indicators, the Singapore market offers alcohol companies and those involved in the wider retail and
hospitality sectors with a market that supports two key alcoholic drinks trends (premiumisation and healthification) across a number
of our alcoholic drinks categories.
Premiumisation Taking Hold In Singapore's Alcoholic Drinks Market

Asia - Alcoholic Drinks Risk/Reward Index Categories
Public campaigns advocating responsible drinking are also indirectly fuelling the rise in more premium and more healthy alcoholic
drinks options, albeit at the cost of lower volume. Mainstream commercial beer will be the most affected by these trends, as
consumers shift to smaller quantities of higher-quality beers. The craft beer segment continues to experience double-digit growth,
albeit from a low base, a trend that has been observed in most developed markets. Premiumisation and health awareness will also
favour the further development of the wine market. Younger drinkers are driving this trend, with the mentality of 'less but better'
when shopping for their alcoholic beverages.
In 2023, spending on alcohol-free beer, wine and spirits in Singapore will see strong growth. In 2022, Carlsberg launched two
alcohol-free offerings in Singapore, the Carlsberg Alcohol-Free Pilsner and the Carlsberg Alcohol-Free Wheat. We believe
Singaporean consumers who continue to purchase alcohol-free variants will substitute these drinks for their typical alcoholic drinks,
which will contribute to a lower alcohol consumption over the medium term. In October 2022, Singapore-based brewery Trouble
Brewing launched the first Singapore-brewed hard seltzer, Joe's Singapore Seltzer. Brewed and fermented with champagne
yeast and a plant-based sweetener, the beverage has zero sugar, gluten-free and has lesser calories than the average seltzer. We
believe the growing healthification wave in Singapore would underpin the trend of more health-centric alcohol offerings
progressively introduced in the Singapore market.
We believe the premiumisation trend in Singapore will continue over the medium term, with Singaporean consumers continuing to
trade up for lower-volume/higher-value alcoholic drinks, such as wine and spirits. As a result, we forecast wine and spirits
consumption as a share of total alcohol consumption to increase by 0.5 percentage points over the medium term, from 12.9% in
2023 to 13.4% in 2027, while beer consumption will decrease by the corresponding amount over the same period, going from
87.1% in 2023 to 86.6% by 2027. In order to better cater to local flavours, there is a growing number of home-grown gin distilleries
in Singapore producing craft gin with a unique Singaporean touch. Local distilleries such as Compendium, Brass Lion
Distillery and Tanglin Gin often use local ingredients in their recipes, aiming to cater to local consumers seeking a familiar taste
and international consumers looking for offerings unique to Singapore.
ASIA ALCOHOLIC DRINKS RISK/REWARD INDEX

Industry Country Rewards Industry Country Risks RRI Regional Global
Rewards Rewards Risks Risks Rank Rank
South Korea 63.7 68.9 65.7 70.9 86.0 78.5 69.6 1 7
Australia 63.8 68.4 65.6 68.1 85.1 76.6 68.9 2 8
Mainland 66.5 75.3 70.0 58.5 73.3 65.9 68.8 3 9

China
Japan 56.0 66.2 60.1 73.4 81.7 77.6 65.3 4 15
Taiwan, 58.0 58.5 58.2 76.2 87.4 81.8 65.3 5 16

China
New Zealand 66.3 42.8 56.9 63.8 85.6 74.7 62.3 6 21
Vietnam 63.5 63.3 63.4 50.7 62.6 56.6 61.4 7 25
Malaysia 41.1 73.7 54.1 78.0 69.9 74.0 60.1 8 27
India 58.7 78.5 66.6 37.2 52.0 44.6 60.0 9 28
Singapore 37.2 49.2 42.0 98.4 91.8 95.1 58.0 10 31
Philippines 57.6 73.1 63.8 26.2 46.3 36.3 55.6 11 36
Hong Kong, 43.6 37.0 41.0 94.9 83.0 88.9 55.3 12 37

China
Indonesia 44.0 75.5 56.6 41.8 57.9 49.9 54.6 13 39
Thailand 48.4 63.0 54.3 56.0 53.5 54.8 54.4 14 40
Cambodia 54.2 48.4 51.9 27.1 24.8 26.0 44.1 15 60
Laos 47.2 43.6 45.7 14.2 20.9 17.6 37.3 16 75
Myanmar 41.0 63.8 50.2 9.2 4.3 6.8 37.1 17 76
Sri Lanka 35.3 35.1 35.2 20.9 25.0 23.0 31.5 18 89
Global 50.0 50.0 50.0 50.0 50.0 50.0 50.0 ~ ~

average
Regional 52.6 60.2 55.6 53.7 60.6 57.1 56.1 ~ ~

average
ASIA ALCOHOLIC DRINKS INDUSTRY REWARDS

Alcohol Alcohol Total Alcohol Alcohol Alcohol Alcohol Industry Rewards
Consumption 5-Year Consumption Spending Spending Spending Rewards
Per Capita Growth Per Capita 5-Year Total
Rate Growth
Rate
South Korea 53.2 24.5 84.0 53.2 87.2 79.8 63.7 65.7
Australia 70.2 12.8 74.5 95.7 38.3 91.5 63.8 65.6
Mainland 34.0 44.7 100.0 28.7 93.6 97.9 66.5 70.0

China
Japan 26.6 33.0 83.0 76.6 20.2 96.8 56.0 60.1
Taiwan, China 41.5 68.1 68.1 57.4 46.8 66.0 58.0 58.2
New Zealand 66.0 39.4 33.0 98.9 85.1 75.5 66.3 56.9
Vietnam 50.0 60.6 93.6 29.8 83.0 63.8 63.5 63.4
Malaysia 5.3 64.9 23.4 42.6 55.3 55.3 41.1 54.1
India 9.6 70.2 96.8 11.7 76.6 87.2 58.7 66.6
Singapore 23.4 67.0 13.8 52.1 39.4 27.7 37.2 42.0
Philippines 27.7 73.4 85.1 25.5 73.4 60.6 57.6 63.8
Hong Kong, 42.6 14.9 34.0 55.3 78.7 36.2 43.6 41.0
China
Indonesia 0.0 51.1 31.9 31.9 64.9 84.0 44.0 56.6
Thailand 38.3 50.0 80.9 40.4 9.6 71.3 48.4 54.3
Cambodia 75.5 94.7 69.1 20.7 43.1 21.8 54.2 51.9
Laos 78.7 84.0 56.4 17.0 31.9 14.9 47.2 45.7
Myanmar 11.7 90.4 58.5 20.7 43.1 21.8 41.0 50.2
Sri Lanka 21.3 95.7 45.7 23.4 0.0 25.5 35.3 35.2
Global 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0

average
Regional 37.5 57.7 62.9 43.4 53.9 59.9 52.6 55.6

average
ASIA ALCOHOLIC DRINKS COUNTRY REWARDS

Population Mass Urban Spending International International Country Rewards
Affluent Population Population Tourism Tourism Rewards
Class Receipts Receipts Per
Total Visitor
South Korea 74.5 92.6 79.8 28.7 76.6 86.2 68.9 65.7
Australia 57.4 96.8 64.9 54.3 88.3 95.7 68.4 65.6
Mainland 98.9 57.4 100.0 44.7 73.4 74.5 75.3 70.0

China
Japan 90.4 80.9 93.6 0.0 86.2 68.1 66.2 60.1
Taiwan, China 56.4 78.7 62.8 36.2 98.9 98.9 58.5 58.2
New Zealand 19.1 77.7 23.4 51.1 68.1 94.7 42.8 56.9
Vietnam 87.2 20.2 78.7 67.0 64.9 38.3 63.3 63.4
Malaysia 61.7 66.0 72.3 94.7 71.3 39.4 73.7 54.1
India 100.0 22.3 98.9 92.6 80.9 88.3 78.5 66.6
Singapore 24.5 90.4 33.0 48.9 93.6 93.6 49.2 42.0
Philippines 89.4 29.8 88.3 85.1 62.8 77.7 73.1 63.8
Hong Kong, 28.7 71.3 38.3 9.6 72.3 23.4 37.0 41.0
China
Indonesia 96.8 40.4 95.7 69.1 67.0 55.3 75.5 56.6
Thailand 84.0 46.8 77.7 43.6 97.9 96.8 63.0 54.3
Cambodia 46.8 42.6 22.3 81.9 33.0 27.7 48.4 51.9
Laos 29.8 36.2 14.9 93.6 22.3 16.0 43.6 45.7
Myanmar 76.6 35.1 60.6 83.0 13.8 33.0 63.8 50.2
Sri Lanka 55.3 16.0 19.1 50.0 27.7 53.2 35.1 35.2
Global 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0

average
Regional 65.4 55.6 62.5 57.4 66.6 64.5 60.2 55.6

average
ASIA ALCOHOLIC DRINKS INDUSTRY RISKS

Regulatory F&D Formalisation Logistics Risks Industry Risks Risks
Environment
South Korea 50.0 68.1 94.7 70.9 78.5
Australia 47.9 81.9 74.5 68.1 76.6
Mainland China 57.4 39.4 78.7 58.5 65.9
Japan 28.7 91.5 100.0 73.4 77.6
Taiwan, China 68.1 64.9 95.7 76.2 81.8
New Zealand 33.0 83.0 75.5 63.8 74.7
Vietnam 77.7 12.8 61.7 50.7 56.6
Malaysia 86.2 63.8 84.0 78.0 74.0
India 38.3 8.5 64.9 37.2 44.6
Singapore 98.9 99.5 96.8 98.4 95.1
Philippines 29.8 16.0 33.0 26.2 36.3
Hong Kong, China 95.7 99.5 89.4 94.9 88.9
Indonesia 37.2 30.9 57.4 41.8 49.9
Thailand 76.6 22.3 69.1 56.0 54.8
Cambodia 60.6 2.1 18.6 27.1 26.0
Laos 24.5 10.6 7.4 14.2 17.6
Myanmar 20.2 6.4 1.1 9.2 6.8
Sri Lanka 12.8 0.0 50.0 20.9 23.0
Global average 50.0 50.0 50.0 50.0 50.0
Regional average 52.4 44.5 64.0 53.7 57.1
ASIA ALCOHOLIC DRINKS COUNTRY RISKS

Long-Term Short-Term Long-Term Short-Term Operational Country Risks Risks
Economic Economic Political Risk Political Risk Risk Index
Risk Index Risk Index Index Index
South Korea 93.6 100.0 84.0 80.9 78.7 86.0 78.5
Australia 88.3 92.0 81.9 84.6 81.9 85.1 76.6
Mainland China 85.1 92.0 53.2 81.9 63.8 73.3 65.9
Japan 71.3 66.0 89.4 93.6 85.1 81.7 77.6
Taiwan, China 100.0 97.9 67.0 72.3 93.6 87.4 81.8
New Zealand 87.2 73.4 86.2 90.4 88.3 85.6 74.7
Vietnam 62.8 68.1 41.5 92.6 55.3 62.6 56.6
Malaysia 70.2 77.1 44.7 74.5 76.6 69.9 74.0
India 41.5 71.8 46.8 58.5 46.8 52.0 44.6
Singapore 80.9 89.4 80.9 100.0 100.0 91.8 95.1
Philippines 51.1 75.0 40.4 53.7 28.7 46.3 36.3
Hong Kong, 89.4 96.8 30.9 83.0 98.9 83.0 88.9

China
Indonesia 67.0 71.8 43.6 52.1 56.4 57.9 49.9
Thailand 68.1 69.1 25.5 33.0 62.8 53.5 54.8
Cambodia 12.8 21.8 27.7 48.4 19.1 24.8 26.0
Laos 9.6 9.6 18.1 67.0 10.6 20.9 17.6
Myanmar 3.2 12.2 0.0 0.0 5.3 4.3 6.8
Sri Lanka 6.4 13.8 39.4 21.3 34.6 25.0 23.0
Global average 50.0 50.0 50.0 50.0 50.0 50.0 50.0
Regional 60.5 66.5 50.1 66.0 60.4 60.6 57.1

average
Please Note: Our Risk/Reward Indices are updated frequently and, as a result, the scores in this section may not match the scores
in the rest of the report.
Market Overview
Food
Owing to Vietnam's vast population, the state's focus on ending its reliance on food imports has been a concern. As a result, the
country's agricultural sector has become one of its most important industries, also serving as a major employment provider,
particularly in rural areas.
Recent Developments
• Under the newly drafted Agriculture and Rural Development Strategy 2030, the government is looking to support sustainable
agriculture and to strengthen production, while also incorporating COP26 targets.
• Vietnamese agricultural produce and seafood exports will benefit from the recently signed Regional Comprehensive Economic
Partnership.
• The northern province of Bắc Giang is transforming its agricultural infrastructure with a strong emphasis on agri-tech and
productivity improvements. The province aims to have around 40% of agricultural output in line with the Good Agricultural
Practices by 2025.
• International tourism, a major driver of hospitality and gastronomy sales in the country, has resumed and can be expected to
provide a strong boost to food and drinks spending.
• In November 2022, Nestlé Vietnam announced that it would be signing a cooperation agreement with the Vietnam Women's
Union to continue the 'Nestlé accompanies women' program. The program, which would last between 2022 to 2027, aims
to promote gender equality and women’s empowerment, contributing to supporting women’s comprehensive development,
especially those in rural areas.
Market Drivers And Trends
Food Processing
Despite a significant proportion of processed food being imported, the consumption of imported products remains fairly low,
although it has increased in the main centres of Ho Chi Minh City and Hanoi. Overall, the Vietnamese food processing industry
remains largely fragmented and is dominated by relatively small domestic operators. However, an increasing number of consumer
goods investors are entering Vietnam, and we expect competitive pressures to heat up quickly. In May 2017, CJ Group spent
USD13.4mn to acquire a 64.9% stake of Minh Dat Food, considered the biggest Vietnamese private meatball company. In late April
and early May 2017, CJ also acquired a 20.0% stake of Cau Tre Export Goods Processing Joint Stock Company after acquiring
a 51.0% stake in the company. Cau Tre specialises in making frozen food from seafood and meat and in tea products.
In November 2014, Mondelēz International acquired an 80.0% stake in the domestic snack company Kinh Do. In 2012,
Philippine food major Jollibee Foods Corporation acquired a 50.0% interest in SuperFoods Group, which would gave it a 49.0%
stake in SF Vung Tau Joint Stock Company in Vietnam and a 60.0% share in Blue Sky Holdings in Hong Kong, China.
In March 2020, Viet-Uc Seafood Corporation was expected to begin construction of a shrimp processing plant in the high-quality
shrimp production complex in Bac Lieu Province. In April 2020, Viet-Uc Seafood Corporation also signed a memorandum of
understanding with BioMar, a Denmark-based supplier of high performance feed for the aquaculture industry, to establish a
collaboration on aquafeed production in Vietnam. This partnership provides Viet-Uc Seafood Corporation with the research and
development capability to produce 'perfect' shrimp, focusing on provide sustainable, high-quality shrimp to the domestic and export
market.
In February 2021, Vietnam culled more than 100,000 poultry in a bid to contain the spread of bird flu, since small-scale outbreaks
had sporadically occurred in the country over the last few years. Vietnam reported outbreaks of the highly pathogenic H5N1 and
H5N6 bird flu strains in 14 provinces. In July 2021, the H5N8 avian flu variety was also reported in Vietnam's Quang Ninh province
but the impact has so far been limited.
Food Consumption
Vietnam's economic growth has led to the expansion of modern lifestyles and a rise in disposable incomes, particularly in major
urban centres. This has increased consumer demand for snacks, convenience food and premium food items. Domestic food
manufacturers are slowly beginning to respond to this trend and are increasing the range of ready-to-eat and semi-prepared foods.
Domestic food producers also have to respond to increasingly Western consumption habits and brand preferences, particularly
among younger and more affluent consumers. The dairy sector, in particular, has experienced strong growth in recent years,
alongside increasing urbanisation and rising incomes. Huge multinational companies have managed to sway consumer
preferences with their considerable advertising and promotional power, and domestic firms have had to work hard to secure brand
loyalty.
Foreign brands are making better headway than domestic brands in the Vietnamese consumer goods industry. The modest
presence of domestic brands in Vietnam can be attributed to the distribution hurdles faced by local consumer goods players and
the stronger brand appeal and perceived better quality of foreign goods. In our view, local players will need to improve their product
quality and tailor their portfolio to meet the needs of the Vietnamese consumer.
• Distribution Challenges: The majority of domestically produced consumer goods can be found in local supermarket stores
such as Saigon Co-op and Big C. However, domestic consumer firms have a less extensive reach than their foreign
counterparts across the traditional retail channels such as wet markets and independent stores. Given that organised grocery
retail remains a newer concept in Vietnam, traditional retail networks provide the best reach to the end-consumer market, which
explains the weaker presence of domestic brands in the country.
• Perceived Better Quality Of Foreign Goods: Foreign consumer goods are typically considered to be of better quality than
domestically produced goods among local consumers. As foreign consumer goods investors typically have stronger financial
power, they are equipped with a greater capacity to invest in production infrastructure and in research and development to
improve product quality.
• Stronger Brand Appeal Of Foreign Brands: Foreign consumer firms typically enjoy stronger brand appeal than their
domestic counterparts, which can largely be attributed to the aggressive branding initiatives they employ. Foreign brands, such
as US coffee firm Starbucks, are generally associated with social prestige. As consumer affluence grows, more consumers are
likely to associate themselves with foreign rather than local brands.
With more multinationals entering Vietnam looking to benefit from the country's dynamic consumer growth story, domestic
companies are likely to find it more difficult to compete for market share gains. Thai brewer Singha, Philippines-based fast-food
chain Jollibee and Japanese retailer Aeon are looking to further expand in Vietnam, fuelling competitive pressure for domestic firms.
As competition heats up, domestic firms must tailor their product offerings to cater for the unique tastes of the Vietnamese
consumer and improve their product quality to compete against their foreign counterparts. Domestic companies typically have a
competitive advantage over foreign companies with regard to understanding local market needs and preferences and they could
use this insight to grow their market share. Although domestic firms have a weaker competitive advantage in terms of distribution
reach, the ongoing spread of organised grocery retail is likely to ease distribution challenges for these companies.
Food Services
Over the years, Vietnam’s growing urban population and increasing disposable incomes have contributed to the healthy growth of
the consumer food service. Since Vietnam reported its first cases of Covid-19 in January 2020, the government stepped up its
efforts to curb the spread of the virus including the closure of eateries that have more than 30 seats. With social distancing orders
enforced in some areas, many businesses were impacted as revenues from dine-in customers plummeted.
Despite Vietnamese consumers having predominantly traditional tastes when it comes to eating out, international fast-food brands
are beginning to make inroads into the market. KFC was one of the first major Western brands to arrive in the country, opening its
first outlet in 1997 and now boasting more than 140 outlets in cities across the country. Pizza Hut opened a decade later and
reached its 100-restaurant mark in January 2021. Their main challenger Domino's Pizza opened in Vietnam in 2010 and has
around half the number of outlets. South Korea-based Lotteria sells burgers, fried chicken and other traditional fast foods. Since its
establishment in Vietnam in 1998, it now has more than 210 restaurants across the country.
US fast-food giant McDonald's launched its first restaurant in Vietnam under franchise in 2014 in the commercial capital Ho Chi
Minh City. Vietnam is the 38th Asian market that McDonald's has entered. Despite plans to open 100 outlets across the country in
10 years, it has only 20 stores in the country as of 2022. Burger King also had ambitious expansion plans when it entered the
Vietnamese market in 2011 (expecting to have opened 60 outlets by 2017). As of 2021, the food chain had 23 outlets across the
country. The company has reportedly closed some of its outlets, but pledges not to exit the market entirely. The disappointment of
these two fast-food chains comes from the wide array of street food options in the country, which are often faster for consumers to
grab and go without the queue and checkout at McDonald's or Burger King. In July 2019, Australian restaurant chain Oporto
announced plans to launch in Vietnam under local franchisee Ben Thanh Group, planning to open 24 restaurants across the
territory in the next 10 years.
The first Jollibee fast food store was opened in Vietnam in 2005. The chain has announced an aggressive expansion plan for
Vietnam, looking to expand at a rate of 20-30 stores per year. By March 2022, the company had 150 stores in the country.
Drink
In the coming decade, as incomes continue to rise, coffee consumption in Vietnam is expected to grow as coffee becomes more
accessible to the general population. Carbonated soft drinks are also expected to outperform, largely supported by purchases made
by young people with low incomes.
Recent Developments
• In November 2022, Carlsberg launched a challenge, providing free beer to consumers who are able to pronounce the brand's
name to an AI-infused billboard, which comes with an automatic beer dispenser. The challenge was inspired by the fact that
many Vietnamese consumers have difficulty in pronouncing the brand's name. The initiative aims to strengthen the brand's
presence in the country, partly in the Southern regions of Vietnam, where the brand is less popular.
• In October 2022, Saigon Alcohol Beer and Beverages Corporation (Sabeco) was the main sponsor and partner of the
Vietnam Culture and Tourism Festival in Korea. This marks the latest in a series of partnership between Sabeco and the
Vietnamese authorities aimed at promoting culture and tourism.
Hot Drinks
As the Vietnamese population grows more affluent, opportunities at the premium end of the coffee market are likely to strengthen.
In 2013, US Starbucks launched in Vietnam, opening its first coffee shop in Ho Chi Minh City. However, Starbucks has been slow in
expanding, opening only 63 stores in comparison to its regional counterparts in Thailand and Indonesia that have more than 300
stores each. It has, nevertheless, opened its 63rd store as a concept outlet at a new urban development called Ecopark in Hung Yen
near Hanoi. This is a testament to both the increasing retail spending power of the Vietnamese, as well as an attempt at adopting
eco-friendly practices in a developing market. In 2019, Ten Ren Vietnam closed all of its 23 stores, according to announcements by
local franchise holder Vietnam Coffee Trading Service.
We expect more regional players to enter the Vietnamese coffee market over the coming years. This is demonstrated by Masan
Consumer's ownership of a 53.2% stake in VinaCafé Bien Hoa Joint Stock Company. Masan put itself in a strong position to
benefit from demand dynamics in the Vietnamese coffee sector. Meanwhile, domestic players have also developed a strong
presence in the coffee retail segment. Trung Nguyen Group is Vietnam's largest coffee chain with more than 60 outlets in the
country.
Domestic players are also expanding rapidly in the country. In 2014, Vietnamese-American coffee chain Highlands
Coffee expanded from 60 to more than 200 stores, after being acquired by Jollibee Foods Corporation in 2012. Highlands
Coffee had over 430 outlets in Vietnam by 2022. Other fast-growing startups include The Coffee House, based in Ho Chi Minh
City, which plans to open as many as 700 outlets across Vietnam in the next five years at an average of 10 new stores each month.
Since 2007, Cộng CàPhê has grown to more than 59 locations.
The crowded coffee segment is expected to become more competitive, especially among local companies that have a more
intuitive grasp of the local market and what consumers are looking for. This is apparent from the fact that Trung Nguyen,
Highlands Coffee, Passio and VinaCafé are all launching morning stores or outlets that serve the lower- and middle-income
consumer, a strategy that aims to serve a larger proportion of the population. This is in stark contrast to Starbucks's more upmarket
branding strategy, which is yet to pay off in Vietnam.
Soft Drinks
Per capita consumption of soft drinks in Vietnam is still low, but it is growing quickly and becoming more dynamic on the back of
positive demographic trends and rising consumer affluence. The country's large youth consumer group holds potential for strong
future growth in the carbonated soft drinks sub-segment. The soft drinks sector is dominated by multinationals The Coca-Cola
Company and PepsiCo. In 2013, PepsiCo signed a strategic alliance with Suntory Beverage & Food Limited, under which
Suntory PepsiCo Vietnam Beverage (SPVB) operates. The Coca-Cola Company is set to open a USD300.0mn production facility
in Hanoi, which will make it the fourth factory in the country. Other multinational players include the Taiwanese Uni-President,
which acquired SaiGon Beverages Joint Stock Company (Tribeco) in 2012, and Nestlé through its popular bottled water brand
La Vie.
In June 2020, Vinamilk and Kido signed a memorandum of understanding to set up a joint venture, Vibev, producing ice cream
and healthy non-carbonated soft drinks. Vinamilk and Kido will own 51.0% and 49.0% of the new entity's shares respectively. This
resolution was approved in February 2021, and Vibev products were slated to be sold to customers by April 2021. Kido Group's
representative noted that they are 'very optimistic' on the potential of the joint venture and believe that this tie-up will help them to
capitalise on the Vietnamese beverage market.
A noteworthy aspect of the Vietnamese drinks market is that the major focus of multinational soft drinks manufacturers is on
carbonated beverages, while small local drink firms produce other types of drinks and compete among themselves for the
remaining market share.
Alcoholic Drinks
The government levies substantial duties on all imported alcoholic beverages along with consumption taxes. In January 2017, the
tax rate on beer and spirits increased from 55.0% to 60.0% with further tax hikes planned. As a result, a substantial black market for
smuggled products has developed and the government estimates that a third of spirit sales come from smuggled goods.
The Vietnamese government targeted excessive consumption of alcohol by the January 2020 introduction of a ban on the
advertising of alcohol on radio and TV from 18:00 to 21:00 or before or after children's programmes. Another bill that aimed to
restrict the hours for alcohol sales failed to pass in parliament. However, the enforcement of laws against driving under the influence
may cause alcoholic drink sales and revenues to decrease, and there has already been anecdotal evidence that this is the case.
The government may enact further regulations limiting alcohol sales and consumption. This is amid concerns about underage
drinking, which may be worsened by the fact that many drinks that have the same alcohol content as beer (4%-5%) are not labelled
as alcoholic in the country.
Owing to the inherent price-sensitivity of Vietnamese consumers, the majority of alcoholic drink products in the country are at the
economy end of the market. However, this is changing gradually, particularly within wealthier urban centres, and the brewing
industry is a major driver of the slow move towards premiumisation.
Western immigrants and tourists remain the biggest consumers of wines and spirits in Vietnam. Nevertheless, domestic drinking
habits are changing in line with higher consumer incomes and greater exposure to Western cultures. Traditional alcohol
consumption habits of the Vietnamese consumer involves cheap beer and whiskies. However, we are now witnessing a shift in
consumption habits towards quality wines at reasonable prices. Wines are often perceived as a symbol of social prestige and, as
living standards improve, the demand is likely to increase.
Beer
Despite rising foreign interest in recent years, domestic brewers continue to dominate. Saigon Beer Alcohol Beverage Corporation is
the market leader, accounting for 45%-50% of beer sales in the country, with a very strong presence in the south. Hanoi Alcohol
Beer and Beverage Company (Habeco) is another leading player, with a strong presence in the north. The dominance of
domestic state-backed brewers in their respective regions shows the less competitive nature of the sector. This is set to change as
foreign presence increases and the Vietnamese state reduces its stake in these two brewers. Sabeco was sold to ThaiBev,
Thailand's largest beverage enterprise, in December 2017. The deal, worth USD4.8bn for a 53.9% stake, was considered the largest
merger and acquisitions deal in Vietnam at the time. In November 2018, the company announced that it had removed its cap on
foreign ownership. After acquiring 100% of shares in Vietnam-based Hue Brewery, Carlsberg is planning to increase its shares in
Habeco, Vietnam's second-largest beer maker, from 17.5% to 61.8%.
In January 2021, AB InBe

InBevv acquired Vietnam's SAB Beer after having received the green light from the Ministry of Industry and
Trade. A legal representative of AB InBev said that the merged company will have the capacity and resources to operate with 'higher
productivity' and to 'improve both competitiveness and quality' in the Vietnamese market. SAB Beer's brewery will produce
Budweiser and Beck's while AB InBev's local brewery will continue to brew Hoegaarden beer and some products for the
Japanese and South East Asian markets.
Foreign brewers have increased their presence in Vietnam in recent years. Among international companies, Heineken has
established the strongest presence through majority-owned Vietnam Brewery Limited - the second-largest beer company in the
country - and fully owned Asia Pacific Brewery (Hanoi). Other players include SABMiller, now under AB InBev (through a 50/50
joint venture with Vinamilk), Carlsberg (operating both alone and through its stake in Habeco) and AB InBev, which opened its first
brewery in the country in June 2015. Japanese brewers Sapporo, Kirin and Asahi also operate in the country, alone or through
joint ventures. Finally, Thai beer company Singha is also increasingly interested in entering the market, due to stagnating sales in its
home market.
Wine
Vietnam has seen its main wine import partners change over the past decade. Historically, France has always been the country's
main wine partner, accounting for 68.5% of all total wine value imports in 2001. However, the dominance of French wines in
Vietnam has gradually been reduced. We point to three main reasons for this:
• New World began aggressively expanding their wine offerings.

• Consumers are demanding more affordable, as well as different, wines.
• Trade deals have lowered market prices.
By 2020, French wine only accounted for 22.6% of total Vietnamese wine imports. Italy and Chile accounted for just 1.4% and 0.4%
of total wine imports in 2001. By 2020 (latest data available), Italian wine was the largest partner, accounting for 29.9% of
Vietnamese wine imports, while Chilean wine accounted for 23.3%.
Red wines account for the large majority of Vietnamese wine imports at approximately 80%. Red wine has historically been the
most popular varietal. The most popular varietals are French reds from Bordeaux, Chilean Cabernet Sauvignons and red blends.
White wine typically accounts for between 10% and 15% of total wine imports and mostly comes from Chile, with Sauvignon Blanc
and Chardonnay being the most popular.
Mass Grocery Retail

As the number of supermarkets and shopping centres increased over the past five years, the number of the traditionally dominant
position of open-air markets in urban areas has gradually decreased. Modern mass grocery retail outlets are concentrated around
Vietnam's major urban centres, particularly Hanoi and Ho Chi Minh City, although also appearing in smaller central towns and cities.
Recent Developments
• In October 2022, Saigon Co-op announced that it would be partnering with Giftee Mekong, a digital vouchers solutions
company, to offer vouchers for Saigon Co-op businesses on the Giftee platform.
• In September 2022, Masan launched the WINLife concept store. Dubbed as a new 'retail ecosystem'. WINLife stores are a
catch-all store with many existing Masan businesses incorporate such as the Winmart+ convenience store, coffee chain Phuc
Long Coffee & Tea, financial services firm Techcombank, pharmacy Dr.Win and telecommunication services provider Reddi.
Having opened 27 WINLife stores in Hanoi and Ho Chi Minh City by September 2022, the company was aiming to expand to 100
stores by the end of the year.
• In January 2022, Aeon Vietnam announced plans to expand its MaxValu large-scale retail from four locations in Hanoi to 100
nationally by 2025. Aeon's MaxValu locations operate on over 500sq m of floor space.
Major Players
Saigon Co-op remains the domestic market leader within the country's MGR sector. As Vietnam's leading retailer, it has around 200
convenience stores and almost 75 supermarkets. The majority of its stores are located in Ho Chi Minh City, where Co-op controls
50% of the supermarket sector. It also has a chain of convenience stores called Co-op Food. Its network is oriented towards low-
income consumers, while it increasingly resembles the modern retail concept thriving in the country. In July 2019, the company
fully acquired French retailer Auchan's Vietnamese operation. Accordingly, Saigon Co-op took over 18 stores, 15 of which the
French retailer had previously closed, three that had been operating at a profit, and the e-commerce platform and online application
from Auchan Vietnam. However, as competition from foreign retailers has increased in recent years, Saigon Co-op has had to
innovate. In January 2020, it launched a new supermarket concept, Finelife, in Ho Chi Minh City. The store occupies a 660sq m area,
featuring more than 4,000 premium items including organic food, cosmetics, utensils, garments and imported beverages. In January
2021, Saigon Co-op said it launched new Co-op Food stores in several provinces across Vietnam and aims to expand its network to
at least 2,000 stores across Vietnam.
Big C is the leading player in the hypermarket format and has 35 stores (hypermarkets and supermarkets) as of August 2017. In
May 2016, Casino Group sold its Vietnamese operations of Big C to Thailand's Central Group as part of its programme to reduce
its debt burden and to focus on its core assets. While its upmarket positioning compared with Saigon Co-op means that it does not
have access to lower-income consumers, we believe that the retailer will strongly benefit from rising incomes.
In March 2022, Japan-based Sumitomo Corporation announced it will expand its FujiMart grocery supermarket chain in
Vietnam, opening 50 new stores by 2028. Sumitomo signed an agreement to extend its partnership with BRG Group, one of
Vietnam's leading, private, multi-sector, enterprises, to develop the FujiMart chain. The first FujiMart store opened in Hanoi in 2018,
with three currently in operation. The partners plans to open five to 10 new stores per year, beginning in 2022.
In September 2019, a consortium led by GIC paid USD500.0mn for a minority stake in a retail unit of Vingroup JSC. The
consortium acquired a stake in VCM Services and Trading Development Joint Stock Company, a unit that Vingroup set up to
oversee the operations of its supermarket and convenience store chains. VCM operates VinMart+ and VinMart outlet stores in
Vietnam. Vingroup has more than 108 VinMart supermarkets and some 1,700 VinMart+ convenience stores, continuing to
strengthen its portfolio in convenience stores. Its retail arm VinCommerce, which manages Vinmart supermarkets and Vinmart+
convenience stores, will update infrastructure, staff and goods at the acquired stores. Vinmart also launched virtual stores in June
2019. Each store provides images and QR codes of more than 100 product groups for customers to scan and order via the VinID
app. The products are then delivered in two to four hours.
Japanese FamilyMart also operates in the segment. South Korea's GS25 is expanding in Vietnam, after entering the market in
2018 through a joint venture with the SonKim Group. It currently operates about 50 stores, but plans for 2,000 over the next
decade. Japan's 7-Eleven, under the Seven & I Holdings Company, signed a franchise contract with Vietnam's Seven System.
It currently operates 24 stores and plans to build 1,000 new stores, mostly focused on Ho Chi Minh City and Hanoi. Having been
present in Vietnam since 2008, Lotte Group has invested more USD390.0mn there The company has 14 shopping malls, one
department store, and two duty-free shops operating across the country. Meanwhile, Vietnamese petroleum retailer
Petrolimex announced plans to build a convenience store chain in May 2019. The group plans to add stores across its network of
5,200 locations across the country.
In December 2019, MM Mega Market Vietnam Company officially launched its first retail MM supermarket in Vietnam, with a
total area of 7,000sq m and more than 10,000 products.
While several international retailers are already present in the market, we believe that Vietnam will continue to offer the greatest
investment opportunities in South East Asia, as the MGR market is still highly fragmented and will continue to expand. In June 2014,
Auchan and CT Group signed a partnership to open supermarkets in the country, illustrating the appeal of the Vietnamese market.
In March 2020, the first Matsumoto Kiyoshi Vietnam store opened, with 10 to 15 stores projected to open in the next five years,
before expanding to hundreds of outlets. Matsumoto Kiyoshi Vietnam features health food, functional foods and beauty products
from Japanese brands including exclusive product lines such as Blanc White and Argelan. We believe that the entrance of leading
global retailers such as Tesco, Carrefour or Walmart is unlikely, as they are refocusing on domestic activities and overseas
operations in places where they have the potential to become market leaders. The exit of German Metro in August 2014 illustrates
this dynamic.
Vietnam's rapid economic development is likely to spur the emergence of a new consumer class in major urban centres which is
interested in modern consumption trends and can afford to participate. This will help grow sales in the MGR sector since it will
guarantee a growing consumer segment that is receptive to branded food and drink products. As consumers become more
affluent, we expect them to embrace formal food retail and gradually move up the value chain, switching to higher price points. We
forecast household incomes to increase rapidly over our forecast period, with the USD5,000-USD10,000 income bracket
experiencing the greatest gains in the next five years.
The Covid-19 pandemic resulted in a greater focus on health and wellness and dining at home, as well as a broad-based shift
towards e-commerce. As Vietnamese consumers become accustomed to these habits, many of these are likely to become
permanent changes in the post-Covid environment. Supermarkets and grocery stores were one of the few retail operations that
were allowed to remain open and saw greater footfall. In the context of Covid-19, growth of large modern trade formats including
hypermarkets and supermarkets outpaced that of traditional trade formats. This is due to the wide variety of products, brands and
pack sizes which they offer, which Vietnamese consumers preferred to reduce travel and social contact. During the uncertainty
from the pandemic, Vietnamese consumers visited hypermarkets and supermarkets more often than before.
In addition to their brick-and-mortar stores, modern trade retailers also saw other channels face a surge in demand. For instance,
supermarket operator Saigon Co-op saw its telephone orders surge upwards by four to five times, and visits to its e-commerce
platform increase tenfold since January 2020. This suggests an overall shift towards greater omnichannel shopping, a behaviour
which can be expected to continue even after the pandemic subsides
Owing to the higher profitability per store for supermarkets and hypermarkets, these formats will continue to dominate the MGR
sector. These formats, often anchored in shopping centres, are proving popular among consumers and reflect increasingly Western
modes of consumption. In our view, they also provide a stronger alternative to wet markets or traditional small-scale outlets for
consumers who seek more product diversity. In line with rising incomes, Vietnamese consumers are increasingly demanding more
product variety. As a result, supermarkets and hypermarkets are expanding their product offering with food sold alongside
products including toys, gifts and electrical appliances. In fact, MGR outlets in Vietnam focus more on non-food items than similar
stores in the West. Daily food items are still, for the most part, purchased from markets.
Despite rapid expansion of modern trade outlets across Vietnam, traditional grocery retailers still have an important role to play in
the overall retail market and continue to exhibit steady growth. For many rural consumers and lower-income urban consumer
segments who need to budget daily for food and make purchases in small quantities, traditional grocery retailers, such as local
markets and mom-and-pop stores, are a convenient and affordable alternative to modern trade outlets, such as supermarkets.
Although Vietnam is equipped with the aforementioned elements that are necessary to support strong growth in mass grocery
retailing, the sector is unlikely to reach its full potential in the near future. Organised retail accounts for less than 20% of overall
grocery sales, highlighting the prevalence of mom-and-pop shops. In our view, the low degree of formalisation, combined with
market fragmentation, allows for new entrants.
While Vietnam has traditionally had a restrictive business climate, we expect ongoing reforms and the recent liberalisation of the
retail sector to attract foreign interest. Vietnam is still a volatile place to do business due to a lack of transparency in laws and
regulations, poor transport infrastructure that complicates distribution, and rising labour costs. Nonetheless, the government is
stepping up efforts to reform the business climate and attract foreign investment. Regulations surrounding foreign direct
investment in the retail sector were relaxed in January 2015 and 100% foreign ownership is now allowed. We therefore expect
foreign interest to pick up over the coming years.
The fresh fruit business may be an area that supermarkets should increase their offerings in to capitalise on growing incomes and
appetite for variety. Vietnam's increasing GDP per capita and a growing middle class will allow its citizens to consume higher-priced
fresh produce.
Competitive Landscape
KEY PLAYERS IN VIETNAM'S FOOD SECTOR
Company Sub-sector Ownership
Bibica Corp Food - confectionery Private company
Ha Long Canned Food Joint Stock Food - canned seafood, meat, fruit and Private company
Company vegetables
Hanoi Milk Joint Stock Company Food and beverages - dairy Public company: Hanoi Stock Exchange
Masan Consumer Food - instant noodles, sauces Parent company: Masan Group Corporation
Nam Viet Corporation Food - seafood Public company: Ho Chi Minh Stock Exchange
Nestlé Vietnam Food and beverages Parent company: Nestlé
San Miguel Pure Foods Vietnam Food and beverages - miscellaneous Parent company: San Miguel Pure Foods International,
Limited
Sao Ta Foods Joint Stock Company Food - seafood Parent company: Hung Vuong Corporation
Unilever Vietnam Food and beverages Parent company: Unilever
Vietnam Dairy Products (Vinamilk) Food - dairy Public company: Ho Chi Minh Stock Exchange
Source: Trade press, company data, Fitch Solutions
KEY PLAYERS IN VIETNAM'S DRINK SECTOR

Company Sub-sector Ownership
Coca-Cola Vietnam Beverages - soft drinks Parent company: The Coca-Cola Company
Habeco Beverages - alcoholic Majority owner: Ministry of Industry and Trade Vietnam
Hanoi Milk Joint Stock Company Food and beverages - dairy Public company: Hanoi Stock Exchange
Nestlé Vietnam Food and beverages Parent company: Nestlé
Pepsi-IBC Vietnam Beverages - soft drinks Parent company: PepsiCo
Sabeco Beverages - alcoholic Majority owner: ThaiBev
San Miguel Pure Foods Vietnam Food and beverages - Parent company: San Miguel Pure Foods International,
miscellaneous Limited
Tan Hiep Phat Group Beverages - alcoholic and soft Private company
Trung Nguyen Corp Beverages - coffee Parent company: Trung Nguyên
Unilever Vietnam Food and beverages Parent company: Unilever
Vietnam Brewery Beverages - alcoholic Parent company: Heineken Asia
VinaCafé Bien Hoa Joint Stock Beverages - hot drinks Public company: Ho Chi Minh Stock Exchange
Company
Vinamilk Beverages - dairy Public company: Ho Chi Minh Stock Exchange
SAB Beer Beverages - alcoholic Parent company: Anheuser-Busch InBev
Source: Trade press, company data, Bloomberg, Fitch Solutions
KEY PLAYERS IN VIETNAM'S MASS GROCERY RETAIL SECTOR

Parent Company Market Of Origin Ownership Fascias Format
Saigon Co-op Vietnam Private company Co-op Mart Supermarkets
Co-op Convenience
stores
Co-op Food Convenience

stores
CP All Thailand/ Parent company: CP Group FreshMart Convenience

Vietnam stores
Central Group Thailand Parent company: Central Group Big C Hypermarkets
Hanoi Trade Corporation Vietnam Private company Hapro Supermarkets
Hapro Convenience
stores
Saigon Trading Vietnam Private company Saigon Supermarkets

Corporation
Dairy Farm Vietnam Parent company: Dairy Farm International Giant Hypermarkets
Holdings
Seiyu Japan/Vietnam Parent company: Seiyu Seiyu Supermarkets
BJC TCC Group Vietnam Parent company: BJC TCC Group MM Mega Hypermarkets
Market
Vingroup Vietnam Parent company: Vingroup VinMart Supermarkets
Lotte Co. Ltd. South Korea Parent company: Lotte Co. Ltd. Lotte Mart Hypermarkets
Source: Company financials, Trade press, Bloomberg, Fitch Solutions
Company Profile
Carlsberg
• Carlsberg's strong financial capacity enables it to make • Distribution infrastructure remains problematic; having brewing
significant capital investment without the need for immediate facilities in separate regions overcomes this despite the
returns. obvious expense.
• The famous Carlsberg brand is popular with young, brand- • Carlsberg lacks a presence in the economy end of the price-
oriented consumers. sensitive market.
• Early pursuit of a diverse regional presence has given Carlsberg
a head start.
• Carlsberg acquired Scottish & Newcastle's expansionary
Vietnamese business, significantly lifting its output.
• Corporate social responsibility (CSR) and socio-cultural
programmes such as football tournaments have been met with
relative success.
• The return of international tourism will likely be a boost to beer • In line with market liberalisation, the beer market is expected to
sales. receive a flood of investment in the coming years, dramatically
• Economic growth is likely to boost sales of Carlsberg's premium increasing competition levels.
international brands. • While beer dominates alcoholic drinks spending in Vietnam,
• Small-scale brewers, struggling with increased competition, wine and spirits are outpacing beer in terms of growth.
could be acquisition targets. • While wine and spirits still lag behind in sales, demand for forms
• Strong perceived CSR and strengthened brand recognition in of alcohol other than beer is rising, as real incomes rise.
consumers may help enhance sales.
Company Overview
Carlsberg entered Vietnam in 1993 via the acquisition of a 60.0% stake in South East Asia Brewery in northern Vietnam. It has since
expanded, acquiring 50.0% of Central Vietnam's Hue Brewery in 1994, and 30.0% of Ha Long Brewery in the north east in early
2007, and acquiring the remaining 50.0% in 2009. The Danish company now has a market share of around 10.0% in Vietnam, which
increased following the completion of the Hue Brewery acquisition. It is the country's second-largest international player (fourth
overall), behind Heineken-backed Asia Pacific Breweries.
Strategy
One of Carlsberg's key objectives is to improve its regional presence. In 1994, Carlsberg formed a joint venture with the Thua Thien
Hue Province People's Committee for the construction of the Hue Brewery. The brewery is now 100% owned by Carlsberg after
acquiring a 50.0% stake from its partner in 2011.
Carlsberg's focus remains on economy local brands, such as Hue. However, it is increasingly targeting tourists and wealthy urban
residents with its premium Carlsberg brand. As the Vietnamese beer market continues to attract major investment,Carlsberg will
want to ensure that its early entry will see it retain a favourable position. Inorganic growth will be integral to this and Carlsberg is
expected to play an active role in the future auction of small-scale brewers. With its increased stake in Hanoi Beer Alcohol and
Beverage Joint Stock Corp (Habeco), the company is optimistic about achieving market leadership, after which regional growth is
likely to become a priority. The company has also been investing in marketing and brand building and is now the sponsor of the
Carlsberg Golf Classic in the region.
In 2019, Carlsberg reported that its Vietnam business delivered double-digit volume growth, with local power brand Huda and the
line extension Huda Ice Blast as the key growth drivers. The price mix strategy improved, mainly due to price increases and
supported by brand mix from the growth of the Carlsberg brand.
Recent Developments
2022
In November, Carlsberg launched a challenge, providing free beer to consumers who are able to pronounce the brand's name to an
AI-infused billboard with an automatic beer dispenser. The challenge was inspired by the fact many Vietnamese consumers have
difficulty in pronouncing the brand's name. The initiative aims to strengthen the brand's presence in the country, partly in the
southern regions, where the brand is less popular.
In April, following the Russian invasion of Ukraine, Carlsberg announced that it would be selling its Russian assets and focusing more
on its Asia business unit, including the company's business in Vietnam.
2021
Carlsberg noted in its Q321 guidance that a number of APAC markets, including Vietnam, were witnessing slower recovery owing to
the emergence of Delta and Omicron variants and the restrictive recovery measures including social distancing still in place at the
time.
In April, Carlsberg announced that it saw a good start to the year in India and Vietnam, while markets such as Nepal and Malaysia
were impacted by lockdowns and restrictions.
2020
In October, Carlsberg Vietnam and local committee 'Vietnam Fatherland Front' donated 6,000 care packages to citizens in the six
hardest-hit provinces following severe floods. The packs contain urgently needed drinking water, food and other essentials.
In July, Carlsberg said that its Q2 net profit dropped 7.3% to USD458mn as all its markets were affected to a greater or lesser extent
by the global Covid-19 outbreak.
In April, Huda, a brand owned by Carlsberg Vietnam, launched a CSR campaign 'Fresh water for beloved Central' across four central
provinces in Vietnam to tackle the lack of clean water that central Vietnam residents face. The project was set to positively impact
15,000 local people across nearly 4,000 households. At the same time, Carlsberg Vietnam launched a new product line, Festival
Beer, while making a donation of VND2.0bn to support the frontline forces of the central provinces contending the Covid-19
pandemic.
The new drink driving law, enforced in 2020, may hurt revenues and profits of beer makers, including Carlsberg, as many
supermarkets had already reported that sales dropped between 25% and 30%.
2019
Carlsberg's Asia business delivered organic revenue growth of 12.3% and organic operating profit of 23.4% mainly driven by strong
performance in China, Vietnam, Laos and Malaysia.
Financial Data
Financial year ending in December
Total Revenues (Asia Region)
• 2021: DKK15.4bn
• 2020: DKK16.6bn
• 2019: DKK18.4bn
• 2018: DKK15.5bn
• 2017: DKK13.9bn
• 2016: DKK14.7bn
Hanoi Beer Alcohol And Beverage Joint Stock Corporation (Habeco)

• Backing from the global beer giant, Carlsberg, will provide • Habeco's relatively weaker presence in the more affluent,
access to capital as well as the ability to enhance its product southern part of Vietnam limits the potential for stronger
offering. Habeco is seeking regional expansion, profitable revenue growth.
partnerships and premium brands. • Its focus on the economy segment could eventually impede
• It has a good position in what is perceived as one of the world's growth as incomes increase.
highest-potential beer markets.
• Its economy-heavy portfolio means that Habeco brands tend to
perform well even during periods of low consumer confidence.
• Vietnam's proximity to the dynamic frontier beer markets of • The alcoholic drinks industry experienced turmoil from laws in
Laos, Cambodia and Myanmar offers huge opportunities for 2020 by the government that strictly enforce reduced drunk
regional expansion. driving.
• The company's relationship with Carlsberg is likely to facilitate • Moreover, the Covid-19 pandemic shifted consumer
wider distribution and synergies. demand from non-essentials such as alcohol towards essential
• Vietnam's beer market has grown rapidly supported by items.
economic growth, rising tourism and favourable age • Competition in the sector continues to intensify as
demographics. multinationals seek out the few remaining explosive growth
opportunities in the regional beer market.
• The pace of expansion by market leaders has raised concerns
that the beer industry is now over-supplied, particularly
considering that much of the population earn very low
incomes.
• Carlsberg's internal problems could limit investment in Habeco.
Company Overview
Hanoi Beer Alcohol And Beverage Joint Stock Corporation, Habeco, is the third-largest Vietnamese brewer which dominates sales in
the north, particularly in the increasingly affluent city of Hanoi. Danish beer company, Carlsberg, is the company's largest single
investor, with a stake of around 17.5%. Carlsberg has been in talks with the government to fully privatise Habeco by buying over the
remaining shares, but the deal fell through in July 2020.
As Carlsberg offers a number of popular Western beer brands, Habeco could look to bring in these brands to bolster its premium
portfolio and to ramp up its presence beyond its northern stronghold. For the time being, the firm has focused on economy brands,
which has helped it to ward off international competition and has delivered sustained growth. The firm is also positioning itself for
growth in the spirits market. In 2008, through its subsidiary, Hanoi Liquor Joint Stock Company (Halico), the firm entered into a joint
venture with Diageo, the world's largest spirits company. The two companies have joined forces to expand within what remains a
fledgling branded spirits industry and to exploit the strong growth potential that exists in the market.
Strategy
While Habeco has a sizeable presence in northern Vietnam, the company will have to work on improving its reach in the higher-
spending southern region and the higher-end beer segments to establish a strong competitive foothold. The Vietnamese beer
market has previously been regionalised, with Habeco dominating in the north and Saigon Alcohol Beer and Beverages Corporation
(Sabeco) in the south. However, the rapid influx of investments from regional brewers such as Asia Pacific Breweries and Carlsberg
has seen competition intensify. Given the rapidly growing middle class in Vietnam, Habeco will need to expand into the higher-
spending southern region to take advantage of increased consumer spending. On this front, Habeco could leverage the financial
backing of its expansion-oriented shareholder, Carlsberg, to facilitate expansion across the market.
Habeco's focus on the economy segment could prove to be an impediment to growth as incomes increase and spur the
premiumisation trend. The brewer's expansionary efforts are primarily focused on the low-margin, high-volume Bia Hoi draught beer
segment. The unique distribution challenges of Bia Hoi, which is sold in Hanoi's street cafés, mean that Habeco is largely catering to
the lower-income crowd. As Habeco builds a nation-wide presence across Vietnam, it is also important for the company to calibrate
its product portfolio towards the higher-end and to position itself to better capture the increasingly sophisticated tastes of the
Vietnamese consumers. Habeco currently has a market share of 16.0% in the Vietnam beer market, which pales in comparison to
Sabeco's 40.0% share.
Recent Developments
2021
In November, Habeco announced its quarterly earnings for Q321, with sales reaching VND1.7trn, down 36.7% y-o-y. Its profit after
tax declined by 59.8% y-o-y, despite the efforts made to reduce expenses.
In August, Habeco announced its quarterly earnings for Q221, with sales reaching VND1.9trn, down 9.0% y-o-y. Its profit after tax
declined by 26.0% y-o-y, with the increase in expense mainly due to advertising, promotion and support.
In April, Habeco reported that it expected sales to be hit by Covid-19 and profits to plummet to a decade low. The brewery was
targeting post-tax profits of VND255.0bn, representing a decline of 64.0% y-o-y. The company's chairman stated that
the resurgence of Covid-19 cases in January meant tourism companies, hotels and restaurants continue to suffer, directly causing a
decline in the sales of alcoholic beverages.
In February, Habeco released its 2020 full-year financial results, reporting a 20.0% y-o-y drop in revenues, to VND7.5trn. Weeks
before in January, Habeco announced that dividends in arrears for 2018 and 2019 will be paid on March 31 2021, totalling
VND656.0bn.
2020
In August, Habeco released its Q220 business results reporting a 13.0% y-o-y drop in revenues, to VND2.1trn. Over H220, according
to management, tourism, service and restaurant activities will be slow to recover. In addition, the economic pressure of high
unemployment and slower income growth will reduce consumer demand. The continued tightening of Decree 100 (on driving
under the influence) will continue to weigh on spending levels over the medium term.
In July, talks of buying over the government's share in Habeco fell through when Carlsberg could not agree with officials on a sales
price.
In May, Habeco reported a loss of VND96.0bn (USD4.1mn) in the first quarter, hit by the stringent new drunk driving laws and
Covid-19. This loss is almost the same as its first quarter pre-tax profit the previous year. Revenues fell 50.0% y-o-y to VND774.0bn
(USD33.0mn), while operating costs remained mostly unchanged, according to its financial report. Habeco said Vietnam's new
decree on drunk driving, which imposed stiff penalties, has caused a slump in beer demand. This is exacerbated by the pandemic,
which caused restaurants, bars and other places of entertainment to close down for much of the quarter.
In April, to support Covid-19 efforts, Habeco donated 2,000 barrels of UniAqua purified water, and 480 bottles of HaliClean
disinfectant solution to the National Hospital of Tropical Diseases. Habeco was to continue to give gifts to frontline hospitals,
security checkpoints and concentrated isolation facilities including 29,000 barrels of bottled drinking water, 7,200 bottles
of antiseptic solutions and 1,000 medical protective suits.
2019
In March, Habeco forecast its post-tax profit for 2019 would fall 36.0% y-o-y to VND310.0bn (USD13.3mn), the lowest in 10
years. The total revenue for 2019 was predicted to reach VND8.27trn and pre-tax profit was expected to touch VND384.5bn.
In January, the company set a revenue target of more than VND12.0trn (USD515.0mn) for the year, 9.0% higher than the previous
year's figure.
Financial Data
Financial year ending on December 31
Total Revenue
• 2021: VND5,265bn
• 2020: VND7,464bn
• 2019: VND9,335bn
• 2018: VND9,100bn
• 2017: VND9,802bn
• 2016: VND9,996bn
Net Income
• 2021: VND317bn
• 2020: VND722bn
• 2019: VND540bn
• 2018: VND499bn
• 2017: VND657bn
• 2016: VND791bn
Masan Consumer Corporation

• Steady revenue recovery in 2021. • Local consumers generally do not exhibit strong brand loyalty
• A nationwide distribution network gives Masan rare access to or a preference for Vietnamese products.
both the high-spending urban centres and the low-spending • Domestic and multinational competition is high, even in a
rural population. fragmented marketplace.
• Established strong brands are a significant advantage in the • Masan will have to continue pouring in capital investment to
current environment of regional food hygiene and safety secure its market share.
scares.
• Investment from a leading private equity fund is likely to
provide capital for expansion, both organically and via
acquisitions.
• Its increasingly diversified product portfolio caters specifically
to local tastes.
• A young, fast-growing population presents a receptive audience • Despite having an established nationwide distribution network,
for branded foods. the movement of goods remains a problem given the country's
• Further development of healthy and innovative products is a underdeveloped infrastructure.
long-term opportunity, even if the audience for such goods is • The arrival of multinationals focused on branded food sales will
currently small. jeopardise Masan's market share.
• Masan has received investment from a number of • Volatile input costs could threaten margins as these costs
multinationals, providing funds for product launches, marketing remain difficult to pass on to consumers in what remains a
campaigns and expansion. price-sensitive environment.
• The company has confirmed it will consider mergers and
acquisitions to accelerate growth.
Company Overview
Masan Consumer Corporation is a Vietnam-based company primarily engaged in the food processing sector, with major
undertakings in the manufacture and wholesale of diversified condiments and processed food. The company's leading products
include convenience food such as instant noodles, porridges and sausages; sauces, dressings and seasonings including soy sauces,
fish sauces and chili sauces; and beverages, namely soft drinks, energy drinks, bottled water and coffee concentrates. Masan
Consumer is also involved in the leasing of warehouses and storage facilities as well as the provision of consultancy services.
Strategy
Masan has been a key local player in terms of Vietnam's transition from non-branded to branded foodstuffs. If it is to maintain
healthy growth rates in the long term, it may look to further diversify its portfolio. Increased investment from international food and
drink companies with powerhouse brands along with immense marketing resources will create additional competitive pressure for
Masan. The company does have the advantage of an existing distribution reach and an established domestic name.
Masan's significant capital investments will help facilitate its move into non-food consumer products including beverages, home
and personal care. To aid its diversification, Masan will seek to establish umbrella brands to leverage its existing strong brand name.
This is an advisable strategy if it is under pressure from Western powerhouse brands. The company is also likely to pursue increased
manufacturing efficiency, a priority that must be balanced against expansionary investments during such a period of volatile input
costs. Demonstrating its diversification ambitions, Masan has acquired a 50.1% stake, valued at around VND1.1trn (USD51.0mn), in
Vietnamese coffee producer VinaCafé Bien Hoa Joint Stock Company.
A dynamic consumer story continues to take shape in Vietnam, and Masan's investment underlines its confidence in the country's
consumer outlook. By acquiring a controlling stake in VinaCafé, Masan has put itself in a strong position to benefit from the exciting
demand dynamics of the Vietnamese coffee sector. According to the Vietnam Coffee and Cocoa Association, VinaCafé is the
country's second-largest coffee exporter, and Masan could tap into the company's expertise and brand name to increase its
presence in the domestic coffee sector.
The backing of expansion-oriented private equity player Kohlberg Kravis Roberts (KKR) will also continue to support Masan's
expansion plans beyond the processed food sectors into other consumer goods. At the beginning of 2013, KKR doubled its
investment in Masan Consumer, investing an additional USD200.0mn. KKR's Regional Head of Asia Pacific Ming Lu said: 'Doubling
our investment in less than two years demonstrates our strong conviction in Vietnam's growth story, Masan Group as our partner of
choice in Vietnam, and Masan Consumer as a leading Vietnam consumption platform.'
Given KKR's growing appetite for emerging market-based assets, we believe that it will continue to commit significant investment to
expanding Masan's domestic scale. Soon after KKR's injection of equity capital into Masan, the latter announced that it could
commit as much as USD500.0mn to pursue acquisitional growth, which is likely to leave Masan increasingly well placed to reap the
attractive rewards in Vietnam.
Recent Developments
2022
In September, Masan launched the WINLife concept store. Dubbed as a new 'retail ecosystem'. WINLife stores are a catch-all store
with many existing Masan businesses incorporate such as the Winmart+ convenience store, coffee chain Phuc Long Coffee & Tea,
financial services firm Techcombank, pharmacy Dr.Win and telecommunication services provider Reddi. The company has opened
27 WINLife stores in Hanoi and Ho Chi Minh City by September and aims to expand to 100 stores by the end of 2022.
In April, the company invested USD65.0mn in Vietnam-based fintech firm Trusting Social. The investment aims to develop an AI-
based consumer tech platform which will offer customised retail and consumer financial products in Vietnam. The investment will
also help Masan leverage Trusting Social’s AI system for retail store selection, demand and supply planning, and product assortment
and development.
WinMart+, a business unit of Masan's Wincommerce General Commercial Services JSC, opened its first two franchised grocery store
locations in in Hanoi and Bắc Giang in Q122. Masan Group plans to have 20,000 franchised stores and 10,000 company-owned
grocery stores by 2025.
In January, the company published its Q421 financials, noting that revenue came in at VND9.7trn, up from VND7.5trn in Q421. Net
profits after tax for the three months ending in December 2021 came in at VND2.0trn, up from VND1.5trn a year earlier.
Furthermore, for the 12 months ending in December 2021, the total revenue came in at VND28.0trn, up from VND23.9trn in 2020.
Net profits for FY21 were posted at VND5.5trn, up from VND4.6trn a year earlier.
2021
In November, South Korea's SK Group announced that it will invest USD340.0mn in Crown X, a consumer retail platform within
Vietnam’s Masan Group, in an effort to expand its strategic partnerships in South East Asia.
In August, Masan Group announced that revenues for H121 rose 16.4% y-o-y to VND41.2trn, due to a double-digit growth in retail
and meat businesses.
In May, a Bloomberg report found that Masan Group company is planning an IPO for its subsidiary Masan MEATLife in 2022-2023.
The company hopes to achieve a 10.0% market share of the local USD10.2bn meat market and earn USD2.0bn in revenue by 2022.
In January, Masan Group announced its 2020 financial results, with consolidated revenue across the group totalling VND77,218.0bn.
Masan Consumer Corporation and VinCommerce, which are both subsidiaries of the newly founded CrownX Corporation, achieved
18.0% y-o-y growth in total revenue to VND54,227.0bn, making it the second-largest consumer company in terms of revenue in
Vietnam.
Nguyen Dang Quang, chairman of Masan Group, stated that Masan Group aims to transform Vincommerce from a 'pure shopping
point' to a 'platform serving essential needs', providing consumers with a seamless online-to-offline experience.
2020
During the year, Masan closed 421 VinMart+ convenience stores and 12 VinMart supermarkets as it re-structures the retail business
it acquired during the year from VinGroup. Most of the closed stores were located within Ho Chi Minh City. Despite the closures,
Masan opened 57 new VinMart+ outlets and one new VinMart supermarket within the year, while launching three new concept
VinMart+ store formats in Ho Chi Minh City and Hanoi with an improved layout to understand consumer behaviour.
In June, Masan announced that it was set to buy the remaining 1.5% stake in VinaCafé Bien Hoa to raise its ownership to 100%.
In Q1, revenues of Masan Group Corporation more than doubled, with its retail platform well on the way to breaking even. This was
driven by 59.7% growth in convenience foods, 300.0% growth in processed meats and 75.0% growth in sales through modern
distribution channels.
In April, Masan Consumer accompanied the Center for Social Work - Vocational Training in Ho Chi Minh City to organise 10,000
meals with full nutrition and 300 gifts to labourers in eight districts in Ho Chi Minh City, and to organised gifts for 10,000 young
workers in difficult circumstances due to the impact of Covid-19.
In April, Masan Group Corporation reported consolidated net revenues of VND17.6trn (USD753.08mn) in the first quarter of financial
year 2020, a y-o-y increase of 116.1%. VinCommerce delivered revenue growth of 40.3% over the same period last year to
VND8.7trn (USD372.6mn).
In February, Masan HPC, a wholly-owned subsidiary of Masan Consumer Corporation, successfully acquired a 52.0% stake of Net
Detergent JSC at an average price of VND48,000.0 (USD2.07) per share.
Masan's acquisition of a majority stake in Vingroup's minimart chain is its first step in breaking into consumer retail, as well as a way
to bring added value to MEAT Deli, Masan's clean meat brand.
After purchasing the retail chain from Vingroup's VinCommerce in January, Masan Group plans to close hundreds of ineffective
VinMart and VinMart+ stores, while planning to open between 300 and 500 new Vinmart supermarkets and Vinmart+ convenience
stores this year.
2019
In December, Vingroup JSC's retail and agriculture units merged with Masan Consumer Holdings, a subsidiary of Masan Group Corp,
to create the new corporation focused on consumer retail.
The Masan group announced plans to rename its Nutri-Science subsidiary to Masan MEATLife as part of the development of a
branded meat division. Over the past four years, Masan MEATLife has shifted from an agri-commodity business into a branded
packaged pork meat business.
In December, Masan Consumer Corporation said that Masan HPC, a newly established home and personal care subsidiary, had
made an offer to buy up to a 60.0% stake in Net Detergent JSC.
Financial Data
Financial year ending December 31
Total Revenue
• 2021: VND28.0trn
• 2020: VND23.3trn
• 2019: VND18.5trn
• 2018: VND17.0trn
Net Profits
• 2021: VND5.5trn
• 2020: VND4.6trn
• 2019: VND4.0trn
• 2018: VND3.4trn
Nestlé Vietnam
• Nestlé Vietnam has a large market share. • In 2019, Nestlé Vietnam had the highest growth rate in Nestlé
• In 2019, factories invested in by Nestlé, namely Olam SEA, but mainly due to the low base, given that it is not a large
International Ltd, Tata Group and CCL Products India Ltd, made market within SEA.
up about 70.0% of the total market share. • Nestlé has struggled to turn a profit in Vietnam since entering
• Strong brand appeal increases its reach to young, aspirational the country.
Vietnamese consumers. • Domestic and multinational competition is high, even in this
• Its commitment to health and wellness will appeal to an fragmented marketplace. The company will have to continue
increasingly affluent middle class. adding capital investment to secure its market share.
• Strong price propositions will appeal to emerging consumers, • Non-organised retailers account for the majority of grocery
especially in light of the effects of the coronavirus pandemic. sales.
• Disposable incomes are still very low and necessity remains a
far more important purchasing determinant than health.
• High birth rates create strong sales opportunities for Nestlé's • Local company Intimex is a key challenger to Nestlé, as it
infant nutrition products. entered the instant coffee market and aims to expand
• Urbanisation and middle-class growth could dramatically production rapidly.
increase the company's existing consumer base. • Further expansion in Nestlé's core dairy sector will necessitate
• Rising incomes could increase the demand for non-essential significant supply chain investments to improve distribution
consumer items. infrastructure.
• Relative sector immaturity provides massive long-term growth • Input cost volatility cannot easily be passed on to consumers in
opportunities. such a price-sensitive environment.
Company Overview
Nestlé Vietnam is a wholly owned subsidiary of Swiss food and beverage major Nestlé. The subsidiary manufactures beverages,
dairy products, prepared meals and cooking ingredients in three Vietnamese production plants. The company also distributes
imported pharmaceuticals in Vietnam. In terms of food and beverage brands, the company markets Nescafé, La Vie, Gau, Milo,
Nestea and Maggi in Vietnam.
Strategy
Given Nestlé's enormous global product portfolio, its Vietnamese product offerings are fairly limited. The company has not turned a
consistent profit in the country despite being one of Vietnam's leading consumer goods players.
Recent Developments
2022
In November, Nestlé Vietnam announced that it would be signing a cooperation agreement with the Vietnam Women's Union to
continue the 'Nestlé accompanies women' program. The program, which would last between 2022 to 2027, aims to promote
gender equality and women’s empowerment, contributing to supporting women’s comprehensive development, especially those in
rural areas. By October 2022, existing partnerships have seen at least 20 Vietnamese provinces and cities implement the program,
allowing 1.2mn households to access nutritional knowledge and helping 3,000 program members start and grow their business.
In July, Nestlé introduced the Starbucks At Home instant coffee range and the We Proudly Serve Starbucks Coffee programme in
Vietnam. The Starbucks At Home range, which includes instant coffee serving sticks of Dark Roast, Caramel Latte, Caffè Mocha and
Caffè Latte flavours, is available online from Singaporean digital retailer Lazada and from several Vietnamese supermarkets,
including Topsmarket, CoopXtra and Vinmart.
2021
In Q421, the CEO of Nestlé Vietnam noted that the company would invest an additional USD132.0mn to boost its high quality
coffee production capacities and double them due to surging demand.
In 2021, Nestlé Vietnam released a QR code in its Milo Teen Protein drinks, becoming the first company to utilise SIG's QR code
closure in its packaging. The food manufacturer aims to appeal to Gen Z consumers and to strengthen brand loyalty via a
differentiated reward program that runs until September 2021.
2020
In August, the company announced that it was committing to using 100% recycled and re-used packaging by 2025. Nestlé Milo, a
subsidiary of Nestlé Vietnam, has also pledged to put to use more than 16mn paper straws in 2020, contributing to a reduction of
6.7tonnes of plastic waste.
In April, Nestlé Vietnam implemented assistance and supply activities for foodstuffs and nutritious drinks in the amount of more
than VND5.0bn to frontline personnel in the fight against Covid-19. This includes doctors, health workers, military and police forces
and volunteers, and people quarantined in several cities and provinces of the country were also beneficiaries of these assistance
activities. Nestlé Vietnam will continue to devote around VND7bn to assist in pandemic prevention and management activities.
In March, Nestlé Vietnam entered the popcorn category with its new Air Popcorn products targeted at the growing number of
younger consumers who snack.
In March 2020, Nestlé Vietnam introduced Nescafé Aromatico and Nescafé Excellente - the two latest products made of premium-
quality coffee beans sourced from the Central Highlands region, and made at the state-of-the-art Nestlé Trị An factory in the
southern province of Đồng Nai.
In March 2020, Nestlé Milo announced it will put to use more than 16mn paper straws this year, contributing to a reduction of 6.7
tonnes of plastic waste.
Ho Chi Minh City-based Intimex, which was a state-owned company before being sold to private investors in 2006, aims to overtake
Nestlé as Vietnam's biggest pure instant-coffee supplier in the next five years by expanding annual capacity fivefold to 20,000
tonnes.
2019
In March, Nestlé reported that Vietnam was Nestlé's fastest-growing market in Asia, with Nestlé South East Asia posting solid growth
last year, underpinned by double-digit growth in Vietnam.
Nestlé Vietnam opened the second phase of its Bong Sen plant extension in the northern province of Hung Yen last year, its sixth
factory in Vietnam. The expanded factory will double Nestlé's production capacity at an accumulated cost of USD100.0mn.
Milo was the strongest brand for Nestlé Vietnam along with four other brands including Nescafé, Maggi, Nestlé itself and NAN, infant
nutrition.
Saigon Alcohol Beer And Beverages Corporation (Sabeco)

• Dominance in one of the world's highest-potential beer • In 2020, a tough law enacted and closely enforced by the
markets provides strong growth opportunities. government to reduce driving under the influence may
• Strong economy beer brands Saigon Beer and Beer 333 are permanently slow growth of beer companies including Sabeco.
popular in the south. • A predominantly economy portfolio reduces Sabeco's
• Its economy-heavy portfolio means that Sabeco brands tend to competitiveness in wealthy urban centres and its ability to
perform well even during periods of low consumer confidence, utilise the tourist dollar.
seen during the Covid-19 pandemic.
• A multinational corporation partnership would improve its • The expansion pace of market leaders has raised concerns that
brand portfolio and boost the availability of capital. the beer industry is now over-supplied, particularly when
• Tourism represents an excellent opportunity for Sabeco to considering that much of the country's population have limited
enter the premium brand segment. incomes.
• Regional diversity allows for easy expansion in what remains an • Significant expansion plans from Carlsberg, APB and Habeco
immature market despite investment levels. could threaten Sabeco's market share.
• With the government looking to sell off its remaining stake in
Sabeco, full private ownership of Sabeco may allow the firm's
controllers to increase efficiency and innovation.
Company Overview
Saigon Alcohol Beer and Beverages Corporation (Sabeco) is Vietnam's leading brewer, controlling around 40.0% of total beer sales
in the country. Privatisation began when Thai Beverage (ThaiBev) acquired a 54.0% ownership stake in 2017, with the government
continuing to offload its shares in the company since.
Strategy
Sabeco's initial public offering (IPO) was used to raise funds to support continued expansion - a vital requirement if it is to continue
to dominate the market amid intense local and international competition. Although short of initial targets, IPO funds are likely to
drive further expansion, with regional diversity thought to be a priority.
As well as expansion, brand diversification remains a key element of the company's strategy as it looks to complement its popular
local economy brands with some premium, potentially international, products. Finding a multinational partner could contribute
enormously towards this and it should not be a difficult objective for such an attractive firm.
Sabeco's main competitors are Habeco (also owned by the Ministry of Industry and Trade), with a market share of 14.0%, and
Vietnam Brewery Limited, with a market share of 23.0%. Vietnam Brewery Limited is a joint venture of Singapore's Asia Pacific
Breweries and Saigon Trading Group, which brews and sells Heineken, Tiger Beer and Larue Beer in Vietnam.
Recent Developments
2022
In October, the company was the main sponsor and partner of the Vietnam Culture and Tourism Festival in Korea. This marks the
latest in a series of partnership between Sabeco and the Vietnamese authorities aimed at promoting culture and tourism.
In April, the company announced that it was setting its 2022 revenue target at VND34.8trn (USD1.7bn) and after-tax profit of
VND4.6trn (USD199.0mn), a 32.0% and 17.0% y-o-y increase respectively.
In March, the company revealed a new taste, packaging and positioning for Bia Saigon Special, a Sabeco brand. Bia Saigon Special
has been a popular beer from the company for over 20 years and the revamp is meant to target the changing demands of
consumers.
In January, the company stated that revenue for 12M21 came in at VND6.5bn, down from VND28.1bn in 2020 due to the prolonged
lockdowns and social restrictions in the country. That said, Q421 revenue was posted at VND9.0trn, up from VND7.9trn in Q420 as
some restrictions eased in late H221. Net profits were down in both Q421 and FY21 y-o-y.
2021
In October, Sabeco announced revenue of VND4.3trn for Q321, decreasing by 47.0% y-o-y. The manufacturer still actively spent on
advertising and promotions with more than VND1.6trn, up 34.0% over the same period.
In July, Sabeco announced revenue of VND13.1trn for H121, a growth of 9.0% y-o-y.
In January, Sabeco announced its financial performance for full year 2020. For the financial year 2020, Sabeco sales revenue saw a y-
o-y decline of 26.2%, whilst sales revenue for Q4 y-o-y saw a 19.4% decline.
2020
In September, the Vietnamese Ministry of Trade & Industry transferred the 36.0% holding in Sabeco to a government-owned
investment company. The holding company, State Capital Investment Corp, will be responsible for selling the stake to new owners.
In July, the Vietnamese government announced that it will sell its remaining 36.0% stake in Sabeco. By the end of August, the
Ministry of Industry and Trade will complete the transfer of the stake to the state-owned State Capital Investment Corp to pave the
way for the sale.
In May, Sabeco's post-tax profit in Q1 nearly halved y-o-y to less than VND720.0bn (USD31.0mn), the lowest since 2013. The brewer
confirmed a net revenue of VND4.9trn (USD210.0mn), down 47.0% y-o-y. Beer still accounts for an overwhelming proportion of
revenue at 88.0%, the rest stemming from packaging, other beverages and wine. This decline has been attributed to the impact of
Covid-19 and the new alcohol laws enacted in January 2020, which have dampened demand.
In April, Sabeco actively worked with agencies to implement an essential item support programme for more than 20,000 individuals,
including health workers, logistics staff and those in isolation at isolation centres nationwide. It sent 2.5 tonnes of rice, 572,288
bottles of pure water and other drinks, as well as 40,460 bottles of hand sanitiser.
In January, Vietnam enforced a crackdown on public drinking, which lowered alcohol sales across the country. Beer sales in the
country have dropped by at least 25.0% anecdotally since strict penalties on inebriated drivers took effect on January 1, while the
police issued more than 6,200 fines.
ThaiBev, the new owner of Sabeco, indicated an ambition to expand its overseas (non-Thailand) business from 40.0% of annual
revenues to 50.0% by 2020.
2019
In August, the company announced the rejuvenation of its flagship Bia Saigon brand as part of its long-term strategy to cement its
leading position in the market.
ThaiBev, through its subsidiary BeerCo, reached an agreement to acquire another 50.0% in Vietnam F&B Alliance, the entity that
owned a nearly 54.0% stake in Sabeco at the time. BeerCo was to purchase more than 34.0mn shares in Vietnam F&B for
USD14.7mn and increase its holding to 99.0%.
2018
The company continued its efforts to privatise, with the company announcing in November that it had removed a cap on foreign
ownership in the company.
In April, the brewer was ordered by the Ministry of Finance to pay around VND2.5trn (USD111.0mn) worth of undistributed profit to
the government.
In January, the company announced that it had produced nearly 1.7bn litres of beer in 2017, an increase of 7.0% compared with the
previous year and exceeding the year's target by 5.0%. As a result, Sabeco continued to lead the Vietnamese beverage market with
a 40.0% share, amid increasing pressure from domestic and foreign competitors.
Financial Data
Total Revenue
• 2021: VND26.5trn
• 2020: VND28.1trn
• 2019: VND37.9trn
• 2018: VND35.9trn
Net Profits
• 2021: VND3.9trn
• 2020: VND4.9trn
• 2019: VND5.4trn
• 2018: VND4.2trn
Saigon Co-Op
• Saigon Co-op has a very strong brand in the south, where its • For Saigon Co-op to remain competitive, it will have to make
name is synonymous with low prices. enormous costly scale-building investments.
• Operating in both the supermarket and convenience sectors • Unlike its potential rivals, the company cannot make high-risk
diversifies its audience. investments as it needs immediate returns in order to remain
• With a focus on low-cost and, increasingly, private label goods, afloat.
the company is well positioned for strong performance during • Being a domestic operator does not give it a major advantage
periods of low consumer confidence. over its foreign counterparts, unlike in many other markets in
the region.
• As consumers remain price-conscious, Saigon Co-op's • Rising incomes mean that consumers, especially from the
reputation as a price-friendly retailer is attractive to consumers. growing middle class, might be looking for a more premium
• Saigon Co-op's low-profit markup will give it a strong edge over shopping experience provided by competitors.
its multinational rivals, if they enter Vietnam. • The imminent arrival of international retailers poses a real
• Price-cutting promotions are an excellent means of generating threat to Saigon Co-op's market leadership, as it is far less
customer loyalty, although they are becoming increasingly hard experienced than the entrants.
to offer. • Its Vietnamese brand focus could backfire as Western brands
• Seeking partnerships is a wise means of building scale in a low- boom.
risk manner.
• Planned fresh food and convenience offerings are strong long-
term growth prospects.
• The retailer has announced plans to launch an outlet in
neighbouring Cambodia, which has a far less developed MGR
sector, giving it a first-mover advantage.
Company Overview
Saigon Co-op is Vietnam's leading retailer. The firm has around 200 convenience stores and almost 75 supermarkets. The majority
of its stores are located in Ho Chi Minh City, in which Co-op controls 50.0% of the supermarket sector. It has also launched a chain of
convenience stores called Co-op Food. Its network is oriented towards low-income consumers, though it increasingly resembles the
modern retail concept which is thriving in the country.
Strategy
Saigon Co-op targets Vietnam's low-income population, providing choices at affordable prices. Its strategy includes the
maintenance of this image. Since it had to raise prices in 2008 due to high wholesale costs, it has promoted a five-pronged
approach to keeping prices low: requesting suppliers to justify price increases, building stockpiles of basic items, improving
distribution to ensure supply and reduce panic-buying, accepting lower profit margins and looking for further cost-cuts through
efficiency. The company is targeting new supermarkets, logistical improvements, and further joint ventures (JVs) and partnerships to
help meet its store-opening aims, particularly in cities where it lacks expertise or infrastructure.
The company's slim margin markup is likely to help it in the face of multinational competition. It has responded to the trend towards
private label goods, recently developing its Co-Op Mart brand for frozen and dried goods and its SGC brand for clothing. It has also
launched a chain of small-scale convenience stores, Co-Op Food. Bringing convenience to the residential areas of Ho Chi Minh City,
along with further supermarket openings, is part of the company's strategy for preparing for the arrival of multinational competition.
The firm has also announced plans to build its first ever overseas supermarket in Cambodia.
Saigon Co-op's partnership with Singapore's MGR operator NTUC FairPrice will also give it a strong boost in the Vietnamese MGR
market. NTUC and Saigon Co-op signed a JV agreement to establish a chain of hypermarkets in Vietnam, looking to capitalise on the
emerging market's demand that is expected to play out over the next decade. For Saigon Co-op, the partnership deal makes clear
strategic sense as it would be able to leverage NTUC's expertise in the hypermarket sector to build and grow its domestic presence.
An enlarged scale of operations would also raise its bargaining power and strengthen its competitive position in this price-
competitive retail environment.
By 2025, Saigon Co-op plans to expand its network to at least 2,000 stores. it will give priority to improving the investment efficiency
of Co-op Mart stores and Co-op Food stores as well as to developing large-scale outlets to sharpen its competitiveness.
Recent Development
2022
In October, Saigon Co-op announced that it would be partnering with Giftee Mekong, a digital vouchers solutions company, to offer
vouchers for Saigon Co-op businesses on the Giftee platform.
In May, Saigon Co-op announced that it has gone live on the Oracle Cloud Infrastructure to transform its data management
platform. The aim is to have an integrated data and analytics platform to collect, store, manage and analyse data from various
touchpoints which would increase productivity and build an analytics-driven culture.
2021
In August, Saigon Co-op announced that they will provide price discounts for more than 2,000 essential products including seafood,
vegetables, fruits, dairy products and personal hygiene products with discount rates varying from 15% to 50%. This comes amid the
surge of Covid-19 cases across the nation, resulting in lockdowns and panic buying.
In February, Saigon Co-op opened its fourth store in Ho Chi Minh City’s District 7. The store stocks local and imported organic
products such as fresh and processed foods, cosmetics, deli foods, fruits, vegetables, beverages and more.
2020
In September, Saigon Co-op partnered with Vietcombank to launch a gift card that can be used for everyday purchases. The card
can be loaded with several different denominations, ranging from VND1.0mn to VND5.0mn.
In August, the retailer reduced prices for several products for 21 days to support households that were under financial pressure as a
result of the Covid-19 pandemic.
In July, Saigon Co-op announced that it had sufficiently increased its reserves of essential goods and made a road map to gradually
re-start preventive measures in supermarkets and shops, should the country see a spike in Covid-19 infections.
In May, Saigon Co-op opened Co-op Mart and Co-opXtra. Food supermarkets saw an increase of 30% in orders in the two days of
April 30 and May 1 compared to the period before social distancing was imposed. On May 1 alone, the number of orders via phones
and the Zalo app spiked, mainly orders of seafood, vegetables and fruits, soft drinks, face masks and kitchen and cooking items with
promotions.
In April, Saigon Co-op renewed its participation in Vietnam's price stabilisation programme. It had stockpiled 30%-40% more goods
than usual and could meet the demand for three to six months at unchanged prices. Saigon Co-op was also designated the main
distributor of face masks and hand sanitisers by the Department of Industry and Trade.
In March, Saigon Co-op had seen orders by phone increase, including by 10 times the normal number in some areas, as a result of
demand on the back of the Covid-19 pandemic as consumers choose to eat at home to reduce their exposure to the virus.
In January, Saigon Co-op launched a new supermarket concept, Finelife, in Ho Chi Minh City. Located in the upmarket Ha Do
Residential Area in District 10, Finelife occupies a 660sq m area featuring more than 4,000 premium items including organic food,
cosmetics, utensils, garments and imported beverages.
Due to the growing threat of the coronavirus, Co-op mart supermarkets posted a sales growth of 44.0%, of which face mask and
hand wash were the most consumed products from the second to the fifth day of the Lunar New Year.
In January, Saigon Co-op and mobile wallet MoMo signed a strategic cooperation agreement to boost digitalisation across the
retailer's stores. With the partnership, MoMo became the official e-wallet of over 800 supermarkets, shopping centres and stores
operated by Saigon Co-op nationwide. More developments from the MoMo Saigon Co-op partnership are expected. In particular,
the two planned to deploy a series of new digital services and products including vouchers and prepaid cards. MoMo was also to
team up with Saigon Co-op to build electronic stores and introduce money transfer services to the retailer's customers. MoMo
additionally partnered with PetroVietnam Oil Corporation (PVOIL) to allow customers to pay for petroleum using the mobile wallet at
stations of PVOIL and COMECO nationwide.
2019
In October, Saigon Co-op announced that it had signed an agreement with the East Saigon Investment Corporation to open a
Sense City shopping mall at the Saigon Hi-Tech Park in Ho Chi Minh City's District 9. The mall was expected to open in Q320. Sense
City East Saigon is Saigon Co-op's second Sense City shopping mall in the city after the first opened in the Thủ Đức District in early
2019.
In July, Saigon Co-op and French retailer Auchan announced completion of the handover process of the whole business operations
of Auchan in Vietnam. Accordingly, Saigon Co-op will take over 18 stores, 15 of which the French retailer had previously closed,
three that had been operating at a profit, and the e-commerce platform and online application from Auchan Vietnam.
Co-opXtra, the JV between Saigon Co-op and Singapore-based NTUC FairPrice, which incorporates the new hypermarket concept
targeting busy shoppers in more compact stores, was planning to add one to two stores per year in Ho Chi Minh City, where the
retailer had four stores at the time.
San Miguel Pure Foods Vietnam

• Its parent company, San Miguel Corporation, is South East Asia's • Questions have been raised about Pure Foods's ability to
largest publicly-listed food, beverage and packaging company, balance meat farming, feed manufacture and branded food
with significant financial power behind it. operations, with product focus tending to be the industry
• It has a strong tradition in health food production, which places buzzword during periods of high operating costs.
it in good stead as the global health trend catches on in • It has faced significant negative publicity in recent years with
emerging Asia. accusations that its plant has allegedly caused serious
• The company has a diverse portfolio of goods. environmental and health issues.
• High feed prices are likely to help supplement Pure Foods's • Regional food hygiene scares have served to undermine
profits as long as grain demand from the alternative energy consumer confidence in local meat producers.
sector remains strong. • Growing competition from international food manufacturers
• Branded consumer food products represent an important long- could undermine any competitive advantage Pure Foods
term growth channel for the company. possesses from being a regional player.
• Processed meat products, which meet the emerging demand • Just as higher animal feed costs will benefit Pure Foods in its
for convenience, are likely to be the next logical step for Pure feed division, they could make life more challenging in the
Foods. company's meat-farming sector.
• Kirin owns 48.0% of its beverages arm, putting it in good stead
for expansion.
Company Overview
Pure Foods is a leading Vietnamese food and beverage company. It is part of the Philippines-based San Miguel Corporation, which
owns 97.0% of the company after purchasing Hormel's 49.0% stake in 2015. In 2003, Pure Foods acquired a pig farming and
feeding mill facility from Taiwan Tea Corporation. It was the food division's first acquisition, now contributing around 15.0% to the
group's revenue. In Vietnam, 80.0% of the unit's output is used directly by the business, while the remainder is sold to customers in
the country.
Strategy
Pure Foods is focused on increasing revenues and improving profit margins by boosting operating efficiencies across all divisions.
Accordingly, it embraces and attempts to use the most up-to-date technologies in its business activities. In terms of specific
strategies, the company intends to increase the size of its hog farm by 19.0% as the division has contributed significantly to profits.
The company has recently opened five Monterey Meatshops in southern Vietnam: three are in major supermarkets in Ho Chi Minh
City, while the remaining two are in Bình Dương.
San Miguel has interests in a range of businesses in Vietnam including a glass production plant, a non-alcoholic beverage
production plant, a feed mill, a processed meat plant and six hog farms. The company is well diversified in Vietnam, as is its parent
company in the Philippines.
San Miguel is looking to sell up to 49.0% of Pure Foods in order to finance its diversification into other sectors. Such a capital
injection could benefit the Vietnamese subsidiary. The parent company's diversification strategy has meant that Pure Foods has not
received significant expansionary investments in recent years. A renewed focus, triggered by a new partner, could be beneficial.
Recent Developments
2020
Despite the economic effects of the Covid-19 pandemic, San Miguel reported that Vietnam was one of its more favourable markets
over H120.
In September, San Miguel partnered with the Chinese e-commerce giant JD.com to list branded fruit products on its platforms.
2019
In September, the company assured customers that its bacon and canned products were safe to eat and were not affected by an
African Swine Fever outbreak.
In August, the company was eyeing exports to the Gulf Arab states after two of its facilities received halal certification. Pure Foods
Hormel's facilities for the production of Pure Foods Corned Beef and Tender Juicy Chicken Franks have been halal-certified by UAE-
based Prime Group.
Financial Data
Financial year ending in December 2020
Total Revenue
• 2020: PHP279.3bn
• 2019: PHP310.8bn
• 2018: PHP286.4bn
Net Profits
• 2020: PHP12.2bn
• 2019: PHP18.3bn
• 2018: PHP18.2bn
Unilever Vietnam
• A focus on developing in emerging markets with high growth • Limited food product offerings compared with other food and
potential should yield greater revenue and profits in the coming drink multinationals limits further sales opportunities.
years. • The absence of a local partner could affect its ability to respond
• A strong showing in the personal care department. to changing local preferences.
• Strong brand appeal facilitates its reach to Vietnamese • Supply-chain investment may be needed for food sector
consumers. expansion, owing to the underdeveloped infrastructure.
• Its diverse product portfolio with multiple-price entry points • Weak distribution infrastructure makes it difficult to reach
allows the company to capitalise on varying demand from consumers.
different income groups.
• Complete ownership of its local subsidiary means that it has full
operational control.
• Focusing on affordability ensures that the company has access
to a wide lower-income consumer base.
• Urbanisation and middle-class growth could dramatically • Increased competition from rival multinationals and
increase Unilever Vietnam's existing consumer base. expansionary local and regional players could undermine the
• Rising incomes could increase the demand for non-essential company's strong market share position.
consumer items. • Input cost volatility cannot be easily passed on in such a price-
• The relative immaturity of the sector provides long-term sensitive environment.
growth opportunities.
• Vietnam's favourable demographic profile is well suited to
Unilever's fast-moving consumer goods portfolio.
Company Overview
Unilever Vietnam is a wholly owned subsidiary of Anglo-Dutch fast-moving consumer goods (FMCGs) leader Unilever. The parent
company took full control of the subsidiary in mid-2009, buying the 33.3% stake it had not already owned from its local partner.
Personal care products account for the largest section of Unilever's portfolio in Vietnam by far. The company also has a large
number of home care brands. Its presence in the food sector is smaller than that of its other consumer products, but it does have
some notable brands in Knorr, Lipton and Wall's.
Strategy
Reaching Vietnam's rural consumer base has not been particularly easy for consumer goods manufacturers, whether local or
multinational. Lower-income, rural consumers have a smaller discretionary appetite for higher-value consumer goods, which has
made it tougher for Unilever to sell some of its products. In rural areas, weak distribution infrastructure frustrates the expansion
efforts of consumer goods producers, while the dominance of traditional retail makes it even harder to reach would-be consumers
efficiently.
However, these challenges have not deterred Unilever from setting up shop in the Vietnamese rural consumer market, clearly
underlining the immense potential in this market. According to Kantar Worldpanel's Brand Footprint ranking, Unilever is the most
bought brand in Vietnam's rural areas, reflecting the company's successful expansion in these areas. Unilever is offering some of its
products, such as shampoo and fabric softener, in cheaper, small sachets which cost around VND500.00 (USD0.02) to familiarise
consumers with its products.
Rising incomes, sector immaturity, the spread of organised retail and a plethora of macroeconomic driving factors make the
Vietnamese consumer goods sector a high-growth prospect. The rural consumer market stands to benefit strongly from these
dynamics. Rural sales make up half of this, revealing strong growth prospects in the rural consumer market. These dynamics mean
that multinationals and local consumer goods players have been keen to position themselves early. They will continue expanding in
rural markets in order to reap exciting rewards.
According to Chief Executive Officer Alan Jope, Vietnam along with Bangladesh, Pakistan and Myanmar will be the top growth
markets for consumer goods giant Unilever over the next few years as a rapidly growing population and an emerging middle class
drive demand for FMCGs.
Recent Developments
2022
In December 2022, it was announced that Unilever has started a range of programs and initiatives for a net zero value chain by
2039, contributing to Vietnam government's net zero carbon emissions vision by 2050.
In May, the company announced that it wants to reduce emissions arising from Unilever's internal operations by 70.0% by 2025 as
part of its company-wide sustainability initiative.
2021
In December 2021, the company stated that Unilever and Unilever Vietnam both remained committed to the long-term sustainable
development strategy with multiple initiatives aimed at reducing emissions, working towards climate change responsibilities,
improving waste management strategies and tree planting efforts.
2020
As part of the company's recently announced EUR1.0bn 'nature and climate fund', Unilever will partner with the 2030 Water
Resources Group and the Alliance for Water Stewardship on several projects, supporting water management resilience in key water-
stressed countries including Vietnam.
In April 2020, Unilever announced that its Vietnam and Indonesia business performed strongly despite the Covid-19 outbreak.
In April 2020, Unilever Food Solutions partnered with Carousell, the Southeast Asian marketplace platform, on #SupportLocal, an
initiative that enables 180,000 food and beverage (F&B) businesses in Southeast Asia to connect with local diners. This initiative
helps F&B businesses in Singapore, Malaysia, Vietnam and the Philippines to reach customers directly by being listed on Carousell's
newly-created local F&B category for free.
In April 2020, Unilever Vietnam announced its 'Stay Strong Vietnam' initiative, a wide-ranging set of measures to support the
community and people in the fight against Covid-19, committing VND50.0bn (USD2.2mn) to partner with the Ministry of Health and
the Ministry of Education and Training to implement initiatives that will protect people through hand-washing and hygiene habit
education programmes.
In March 2020, Unilever Vietnam pledged to donate 550 tonnes of products to more than 1.6mn people in need in 3,000 schools,
hospitals and isolated areas, especially frontliners such as doctors, nurses, teachers and volunteers. The donation includes personal
care and hygiene items, home cleaning and sanitisation products, and food products.
2019
Unilever announced that Vietnam will be one of the key drivers of growth for the company in the future. The combination of quite a
sizeable population, strong GDP growth and rapid consumption in the categories it sells means that markets like Vietnam, Pakistan,
Bangladesh, Myanmar and Ethiopia will be the growth stars over the next few years.
Unilever Vietnam was honoured as one of the top 10 firms in the Manufacturing Category in the Top 100 Sustainable Businesses of
2019, awarded by the Vietnam Chamber of Commerce and Industry and the Vietnam Business Council for Sustainable
Development. Unilever Vietnam has received this award for four consecutive years in recognition of its contributions and efforts to
implement its sustainable development plan.
Financial Data
Note: Unilever does not publish country-specific performance data. Vietnam is included within the Asia, Africa, and Central and
Eastern Europe operating regions.
Total Revenue (Asia, Africa, And Central And Eastern Europe)
• 2021: EUR24.3bn
• 2020: EUR23.4bn
• 2019: EUR24.1bn
• 2018: EUR22.9bn
Net Profits
• 2021: EUR4.5bn
• 2020: EUR4.1bn
• 2019: EUR4.4bn
• 2018: EUR4.3bn
Vietnam Demographic Outlook

Demographic analysis is a key pillar of our macroeconomic and industry forecasting model. The total population and demographic
profile of a market are key variables in consumer demand and are essential to understanding issues ranging from future population
trends to productivity growth and government spending requirements.
The accompanying charts detail the population pyramid for 2022, the change in the structure of the population between 2022 and
2050 and the total population between 1990 and 2050. The tables show indicators from all of these charts, in addition to key
metrics such as population ratios, the urban/rural split and life expectancy.
Population
Vietnam - Population, mn (1990-2050)
f = Fitch Solutions forecast. Source: World Bank, UN, Fitch Solutions
Population Pyramid
Vietnam – 2022 Male vs Female Population, '000 (LHC) & 2022 vs 2050 Population, '000 (RHC)
Source: World Bank, UN, Fitch Solutions
POPULATION HEADLINE INDICATORS (VIETNAM 1990-2025)

Indicator 1990 2000 2005 2010 2015 2020 2025f
Population, total, '000 66,912.6 79,001.1 83,142.1 87,411.0 92,191.4 96,648.7 100,104.0
Population, % y-o-y 1.12 1.01 1.07 1.05 0.91 0.61
Population, total, male, '000 32,660.5 38,652.1 40,824.1 43,048.3 45,481.5 47,726.2 49,492.9
Population, total, female, '000 34,252.1 40,349.1 42,318.0 44,362.7 46,709.9 48,922.5 50,611.1
KEY POPULATION RATIOS (VIETNAM 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020 2025f
Active population, total, '000 37,501.8 49,317.4 55,058.8 60,511.5 64,125.6 66,571.1 67,896.6
Active population, % of total population 56.0 62.4 66.2 69.2 69.6 68.9 67.8
Dependent population, total, '000 29,410.8 29,683.7 28,083.3 26,899.5 28,065.8 30,077.6 32,207.4
Dependent ratio, % of total working age 78.4 60.2 51.0 44.5 43.8 45.2 47.4
Youth population, total, '000 25,647.4 24,785.6 22,758.3 21,230.5 21,590.5 21,932.6 21,787.3
Youth population, % of total working age 68.4 50.3 41.3 35.1 33.7 32.9 32.1
Pensionable population, '000 3,763.4 4,898.1 5,325.0 5,669.1 6,475.3 8,145.0 10,420.1
Pensionable population, % of total working age 10.0 9.9 9.7 9.4 10.1 12.2 15.3
URBAN/RURAL POPULATION AND LIFE EXPECTANCY (VIETNAM 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020 2025f
Urban population, '000 13,554.5 19,255.7 22,682.0 26,587.8 31,169.0 36,088.6 40,951.5
Urban population, % of total 20.3 24.4 27.3 30.4 33.8 37.3 40.9
Rural population, '000 53,358.1 59,745.4 60,460.1 60,823.2 61,022.4 60,560.1 59,152.4
Rural population, % of total 79.7 75.6 72.7 69.6 66.2 62.7 59.1
Life expectancy at birth, male, years 64.8 67.8 68.5 68.8 69.1 70.8 70.5
Life expectancy at birth, female, years 73.7 77.1 78.0 78.3 78.7 79.9 79.7
Life expectancy at birth, average, years 69.2 72.5 73.3 73.5 73.9 75.4 75.1
POPULATION BY AGE GROUP (VIETNAM 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020 2025f
Population, 0-4 yrs, total, '000 9,119.4 7,161.4 7,095.3 7,129.4 7,485.3 7,429.6 7,035.5
Indicator 1990 2000 2005 2010 2015 2020 2025f
Population, 75-79 yrs, total, '000 736.4 951.1 1,041.3 1,230.2 1,182.4 1,228.8 1,668.8
Population, 80-84 yrs, total, '000 407.6 550.3 667.7 737.3 875.0 846.0 883.0
Population, 100+ yrs, total, '000 0.5 1.5 2.7 3.5 4.9 6.0 8.2
POPULATION BY AGE GROUP, % (VIETNAM 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020 2025f
Population, 0-4 yrs, % total 13.63 9.06 8.53 8.16 8.12 7.69 7.03
Population, 100+ yrs, % total 0.00 0.00 0.00 0.00 0.01 0.01 0.01
Food & Drink Glossary

Food & Drink
Food Consumption: All four food consumption indicators (food consumption in local currency, food consumption in US dollar
terms, per capita food consumption and food consumption as a percentage of GDP) relate to off-trade food and non-alcoholic
drinks consumption, unless stated in the relevant table/section.
Off-trade: Relates to an item consumed away from the premises on which it was purchased. For example, a bottle of water bought
in a supermarket would count as off-trade, while a bottle of water purchased as part of a meal in a restaurant would count as on-
trade.
Canned Food: Relates to the sale of food products preserved by canning. This is inclusive of canned meat and fish, canned ready
meals, canned desserts and canned fruits and vegetables. Volume sales are measured in tonnes as opposed to on a unit basis to
allow for cross-market comparisons.
Confectionery: Refers to retail sales of chocolate, sugar confectionery and gum products. Chocolate sales include chocolate bars
and boxed chocolates; gum sales incorporate both bubble gum and chewing gum; and sugar confectionery sales include hard-
boiled sweets, mints, jellies and medicated sweets.
Trade: In the majority of Fitch Solutions' Food & Drink reports, we use the UN Standard International Trade Classification, using
categories Food and Live Animals, Beverages and Tobacco, Animal and Vegetable Oils, Fats and Waxes and Oil-seeds and Oleaginous
Fruits. Where an alternative classification is used due to data availability, this is clearly stated.
Drinks Sales: Soft drinks sales (including carbonates, fruit juices, energy drinks, bottled water, functional beverages and ready-to-
drink tea and coffee), alcoholic drinks sales (including beer, wine and spirits) and tea and coffee sales (excluding ready-to-drink tea
and coffee products that are incorporated under Fitch Solutions' soft drinks banner) are all off-trade only, unless stated.
Mass Grocery Retail
Mass Grocery Retail: Fitch Solutions classifies mass grocery retail (MGR) as organised retail, performed by companies with a
network of modern grocery retail stores and modern distribution networks. MGR differs from independent or traditional retail, which
relates to informal, independent-owned grocery stores or traditional market retailing. MGR incorporates hypermarket, supermarket,
convenience and discount retailing, and in unique cases cooperative retailing. Where supermarkets are independently owned and
not classified as MGR, Fitch Solutions will state so clearly within the relevant report.
Hypermarket: Fitch Solutions classifies hypermarkets as retail outlets selling both groceries and a large range of general
merchandise goods (non-food items) and typically more than 2,500sq m in size. Traditionally only found on the outskirts of towns,
hypermarkets are increasingly appearing in urban locations.
Supermarket: Supermarkets are the original and still most globally prevalent form of self-service grocery retail outlet. Fitch
Solutions classifies supermarkets as more than 300sq m, up to the size of a hypermarket. The typical supermarket carries both fresh
and processed food and will stock a range of non-food items, most commonly household and beauty goods. The average
supermarket will increasingly offer some added-value services, such as dry cleaning or in-store ATMs.
Discount Stores: Although most commonly between 500sq m and 1,500sq m in size, similar to supermarkets, discount stores will
typically have a smaller floor space than their supermarket counterparts. Other distinguishing features include the prevalence of
low-priced and private label goods, an absence of added-value services, often called a no-frills environment, and a high product
turnover rate.
Convenience Stores: Fitch Solutions' classification of convenience stores includes small outlets typically less than 300sq m in size,
with long opening hours and located in high footfall areas. These stores mainly sell fast-moving food and drink products (such as
confectionery, beverages and snack foods) and non-food items, typically stocking only two or three brand choices per item and
often carrying higher prices than other forms of grocery store.
Cooperatives: Fitch Solutions classifies cooperatives as retail stores that are independently owned but club together to form
buying groups under a cooperative arrangement, trading under the same banner, although each is privately owned. The
arrangement is similar to a franchise system, although all profits are returned to members. The term is becoming more archaic, with
fewer cooperatives remaining that conform to this model. Most cooperative groups now have a more centralised management
structure, operate more like normal supermarkets, and are thus classified as such in Fitch Solutions' reports.
Food & Drink Methodology

Connected Thinking
We use a simple and transparent forecasting model as a base for our industry forecasts, but rely heavily on our analysts’ expert
judgement to ensure our forecasts capture all of the insights we derive using our unique Connected Thinking approach. We believe
analyst expertise and judgement are the best ways to provide the most accurate, up-to-date and comprehensive insight to our
customers.
Our Connected Thinking approach to forecasting and analysis integrates macroeconomic variables from Fitch Solutions Country
Risk to provide our customers with unique and valuable insight on all relevant macroeconomic, political and industry risk factors
that will impact their operations and revenue-generating potential in the industry/industries they operate in.
Food & Drink Methodology
Fitch Solutions Food & Drink Forecasting & Sourcing
For the Food & Drink industry we have historical data and five-year forecasts for 85 market-level core industry variables.
We use household spending figures that show spending on food and drink, for consumption at home. We divide food and drink into
two categories: (i) spending on food & non-alcoholic drinks, and (ii) alcoholic drinks.
For the alcoholic drinks sub-categories we use volume (in litres) consumption by household and per capita in each market.
Our forecasts are a combination of regression modelling and analyst expert judgement.
Our Food & Drink analysts interact with other analytical teams in Fitch Solutions, including Country Risk, Agribusiness and Consumer
& Retail. This is to ensure they have a comprehensive understanding of external factors that may impact the food and drink industry
outlook either on a market, regional or global level.
There is a constant rolling cycle of data monitoring, with databases being updated on a quarterly basis. Analysts will use their expert
judgement outside of these cycles to implement forecasts changes when necessary.
Food & Non-Alcoholic Drinks
Spending on food & non-alcoholic drinks is expressed in nominal terms.
We define spending on food & non-alcoholic drinks as the amount households spend on food for domestic consumption only. This
reflects items bought through all sales channels, based on the UN classification of individual consumption by purpose (COICOP).
Historical figures for spending on food & non-alcoholic drinks are based on household survey data, following the UN COICOP
classification.
Where spending data is not readily allocated into the COICOP format, Fitch Solutions applies a rigorous and logical approach in
allocating data to align with these categories, and if needed, applies aggregation methods or other techniques to achieve category
level data.
Our food & non-alcoholic drinks forecasts are based on a regression model, using a market’s own historical time series and key
macroeconomic explanatory variables from Fitch Solutions Country Risk and Consumer & Retail services. In addition, we also apply
analyst expert judgement to refine and finalise the food & non-alcoholic drinks spending forecast based on exogenous and
endogenous variables or events, not captured by our regression model.
Alcoholic Drinks
Spending on alcoholic drinks is expressed in nominal terms and volume terms.
We define spending on alcoholic drinks as the amount households spend on alcohol for domestic consumption only. This reflects
items bought through all sales channels, based on the UN classification of individual consumption by purpose (COICOP).
Historical figures for spending on alcoholic drinks are based on household survey data, following the UN COICOP classification.
Alcoholic drink consumption is defined as the total recorded volume of alcohol drinks consumed in a market. Data is presented in
volumes consumed as opposed to pure alcoholic volume. Refers to consumption by people aged 15 and older and all sales
channels of consumption, including out-of-home consumption, such as bars, restaurants etc.
We divide the alcoholic drinks category into beer, wine and spirits, as well as further breakdowns, where data is available, into sub-
categories of these segments.
Our alcoholic drinks forecasts are based on a regression model, using a market’s own historical time series. In addition, we also apply
analyst expert judgement to refine and finalise the alcoholic drinks spending forecast based on exogenous and endogenous
variables or events, not captured by our regression model.
Food & Drink (Non-Alcoholic Drinks) Risk/Reward Index
Our Food & Drink (Non-Alcoholic Drinks) Risk/Reward Index (RRI) quantifies and ranks a market's attractiveness within the context of
the food & non-alcoholic drinks industry, based on the balance between the Risks and Rewards of entering and operating in
different markets.
We combine industry-specific characteristics with broader economic, political and operational market characteristics. We weight
these inputs in terms of their importance to investor decision-making in a given industry. The result is a nuanced and accurate
reflection of the realities facing investors in terms of:
1) the balance between opportunities and risk; and
2) between sector-specific and broader market traits.
This enables users of the index to assess a market's attractiveness in a regional and global context.
The index uses a combination of our proprietary forecasts and analyst assessments of the regulatory climate. As regulations evolve
and forecasts change, so the index scores change providing a highly dynamic and forward-looking result.
The Food & Drink (Non-Alcoholic Drinks) RRI universe comprises 106 markets.
Benefits Of Using Fitch Solutions' Food & Drink (Non-Alcoholic Drinks) RRI
• Global Rankings: One global table, ranking all the markets in Fitch Solutions' universe for food & drink (non-alcoholic drinks)
from least (closest to zero) to most attractive (closest to 100).
• Accessibility: Easily accessible, top-down view of the global, regional or sub-regional risk/reward profiles.
• Comparability: Identical methodology across 106 markets for food & drink (non-alcoholic drinks) allows users to build lists of
markets they wish to compare, beyond the confines of a global or regional grouping.
• Scoring: Scores out of 100 with a wide distribution, provide nuanced investment comparisons. The higher the score, the more
favourable the profile.
• Quantifiable: Quantifies the rewards and risks of doing business in the food & drink (non-alcoholic drinks) industry in different
markets around the world and helps identify specific flashpoints in the overall business environment.
• Comprehensive: Comprehensive set of indicators, assessing industry-specific risks and rewards alongside political, economic
and operating risks.
• Entry Point: A starting point to assess the outlook for the food & drink (non-alcoholic drinks) sector, from which users can dive
into more granular forecasts and analyses to gain a deeper understanding of the market.
• Balanced: Multi-indicator structure prevents outliers and extremes from distorting final scores and rankings.
• Methodology is a combination of proprietary Fitch Solutions forecasts, analyst insights and globally acceptable benchmark
indicators (for example, Transparency International's Corruption Perceptions Index).
Weightings Of Categories And Indicators

Food & Drink (Non-Alcoholic Drinks) Risk/Reward Index
The RRI matrix is divided into two distinct categories:
Rewards
Evaluation of an industry's size and growth potential (Industry Rewards), and macro industry and/or market characteristics that
directly impact the size of business opportunities in a specific industry (Country Rewards).
Risks
Evaluation of micro, industry-specific characteristics, crucial for an industry to develop to its potential (Industry Risks) and a
quantifiable assessment of the political, economic and operational profile (Country Risks).
Assessing Our Weightings
Our matrix is deliberately overweight on Rewards (60% of the final RRI score for a market) and within that, the Industry Rewards
segment (60% of the final Rewards score). This is to reflect the fact that when it comes to long-term investment potential, industry
size and growth potential carry the most weight in indicating opportunities, with other structural factors (demographic, labour
statistics and infrastructure availability) weighing in, but to a slightly lesser extent. In addition, our focus and expertise in emerging
and frontier markets has dictated this bias towards industry size and growth to ensure we are able to identify opportunities in
markets where regulatory frameworks are not as developed and industry sizes are not as big (in USD terms) as in developed
markets, but where we know there is a strong desire to invest.
FOOD & DRINK (NON-ALCOHOLIC DRINKS) RRI INDICATORS - EXPLANATION AND SOURCES
Source Rationale
Rewards
Industry Rewards
Denotes per capita spending on food & non-alcoholic drinks in USD.

F&D Spending Per Capita Fitch Solutions Forecast
Wealthier populations spend more on F&D products.
Denotes food & non-alcoholic drinks sector dynamism as a percentage.

F&D Five-Year Growth Rate Fitch Solutions Forecast Scores based on annual average growth over our five-year forecast
period.
Denotes total household spending on food & non-alcoholic drinks in

Total F&D Expenditure Fitch Solutions Forecast
USDbn. Large markets score higher than smaller ones.
Country Rewards
Size of the population in millions as a measure for the total addressable

Population Fitch Solutions Forecast
market.
Proportion of households with an income that exceeds USD10,000.

Mass Affluent Class Fitch Solutions Forecast Excludes those in poverty but demonstrates potential demand for
branded products.
Size of the urban population in millions. Higher urban population size is a

Urban Population Fitch Solutions Forecast positive for distribution, higher economic development and accessing
products through a network of retailers.
Proportion of the population between 20-39 years old as a percentage.

Spending Population Fitch Solutions Forecast This is typically the range that companies target as a high spending/
trendsetting generation.
Risks
Industry Risks
Fitch Solutions Operational Uses Operational Risk's Economic Openness as a proxy for determining
Regulatory Environment
Risk Index the ease of entering and doing business in a market.
Uses our urban/rural split (%) data as a proxy for determining the level of
F&D Formalisation Fitch Solutions Forecast retail/hospitality formalisation in the market. Highly urbanised markets
allow companies to easily serve more consumers.
Uses Operational Risk's Logistics Risk to determine the risks and costs
Fitch Solutions Operational associated with moving products around a market. Higher scores
Logistics Risk
Risk Index indicate quality transport, cheap fuel/electricity and high levels of tech
adoption
Country Risks
Takes into account the structural characteristics of economic growth, the

Long-Term Economic Risk Fitch Solutions Country Risk labour market, price stability, exchange rate stability and the
Index Index sustainability of the balance of payments, as well as fiscal and external
debt outlooks for the coming decade.
Seeks to define current vulnerabilities and assess real GDP growth,

Short-Term Economic Risk Fitch Solutions Country Risk inflation, unemployment, exchange rate fluctuation, balance of
Index Index payments dynamics, as well as fiscal and external debt credentials over
the coming two years
Long-Term Political Risk Fitch Solutions Country Risk Assesses structural political characteristics based on our assumption that
Source Rationale
liberal, democratic markets with no sectarian tensions and broad-based

Index Index income equality exhibit the strongest characteristics in favour of political
stability, over a multi-year time frame.
Short-Term Political Risk Fitch Solutions Country Risk Assesses pertinent political risks to investment climate stability over a
Index Index shorter time frame, up to 24 months forward.
Fitch Solutions Operational Focuses on existing conditions relating to four main risk areas: Labour
Operational Risk Index
Risk Index Market, Trade & Investment, Logistics, and Crime & Security.
Food & Drink (Alcoholic Drinks) Risk/Reward Index
Our Food & Drink (Alcoholic Drinks) Risk/Reward Index (RRI) quantifies and ranks a market's attractiveness within the context of the
food & drink (alcoholic drinks) industry, based on the balance between the Risks and Rewards of entering and operating in
different markets.
We combine industry-specific characteristics with broader economic, political and operational market characteristics. We weight
these inputs in terms of their importance to investor decision-making in a given industry. The result is a nuanced and accurate
reflection of the realities facing investors in terms of:
1) the balance between opportunities and risk; and
2) between sector-specific and broader market traits.
This enables users of the index to assess a market's attractiveness in a regional and global context.
The index uses a combination of our proprietary forecasts and analyst assessments of the regulatory climate. As regulations evolve
and forecasts change, so the index scores change providing a highly dynamic and forward-looking result.
The Food & Drink (Alcoholic Drinks) RRI universe comprises 96 markets.
Benefits Of Using Fitch Solutions' Food & Drink (Alcoholic Drinks) RRI
• Global Rankings: One global table, ranking all the markets in Fitch Solutions' universe for food & drink (alcoholic drinks) from
least (closest to zero) to most attractive (closest to 100).
• Accessibility: Easily accessible, top-down view of the global, regional or sub-regional risk/reward profiles.
• Comparability: Identical methodology across 96 markets for food & drink (alcoholic drinks) allows users to build lists of markets
they wish to compare, beyond the confines of a global or regional grouping.
• Scoring: Scores out of 100 with a wide distribution, provide nuanced investment comparisons. The higher the score, the more
favourable the profile.
• Quantifiable: Quantifies the rewards and risks of doing business in the food & drink (alcoholic drinks) industry in different
markets around the world and helps identify specific flashpoints in the overall business environment.
• Comprehensive: Comprehensive set of indicators, assessing industry-specific risks and rewards alongside political, economic
and operating risks.
• Entry Point: A starting point to assess the outlook for the food & drink (alcoholic drinks) sector, from which users can dive into
more granular forecasts and analysis to gain a deeper understanding of the market.
• Balanced: Multi-indicator structure prevents outliers and extremes from distorting final scores and rankings.
• Methodology is a combination of proprietary Fitch Solutions forecasts, analyst insights and globally acceptable benchmark
indicators (for example, Transparency International's Corruption Perceptions Index).
Weightings Of Categories And Indicators

Food & Drink (Alcoholic Drinks) Risk/Reward Index
The RRI matrix is divided into two distinct categories:
Rewards
Evaluation of an industry's size and growth potential (Industry Rewards), and macro industry and/or market characteristics that
directly impact the size of business opportunities in a specific industry (Country Rewards).
Risks
Evaluation of micro, industry-specific characteristics, crucial for an industry to develop to its potential (Industry Risks) and a
quantifiable assessment of the political, economic and operational profile (Country Risks).
Assessing Our Weightings
Our matrix is deliberately overweight on Rewards (60% of the final RRI score for a market) and within that, the Industry Rewards
segment (60% of the final Rewards score). This is to reflect the fact that when it comes to long-term investment potential, industry
size and growth potential carry the most weight in indicating opportunities, with other structural factors (demographic, labour
statistics and infrastructure availability) weighing in, but to a slightly lesser extent. In addition, our focus and expertise in emerging
and frontier markets has dictated this bias towards industry size and growth to ensure we are able to identify opportunities in
markets where regulatory frameworks are not as developed and industry sizes are not as big (in USD terms) as in developed
markets, but where we know there is a strong desire to invest.
FOOD & DRINK (ALCOHOLIC DRINKS) RRI INDICATORS - EXPLANATION AND SOURCES
Source Rationale
Rewards
Industry Rewards
Denotes per capita consumption of alcoholic drinks in litres. Measures which

Alcohol Consumption Per
Fitch Solutions Forecast populations consume more on alcohol products at the individual level rather
Capita
than total size.
Alcohol 5-Year Growth Denotes alcoholic drinks sector dynamism as a percentage. Scores based on
Fitch Solutions Forecast
Rate annual average growth over our five-year forecast period.
Total Alcohol Denotes total consumption of alcoholic drinks in millions of litres. Large
Consumption markets score higher than smaller ones.
Denotes per capita spending of alcoholic drinks in USD. Measures which

Alcohol Spending Per
Fitch Solutions Forecast populations spend more on alcohol products at the individual level rather
Capita
than total size.
Alcohol Spending Growth Denotes alcoholic drinks spending dynamism as a %. Scores based on
Rate annual average growth over our five-year forecast period.
Denotes total spending of alcoholic drinks in USD. Large markets score

Alcohol Spending Total Fitch Solutions Forecast
higher than smaller ones.
Country Rewards
Size of the population in millions as a measure for the total addressable

Population Fitch Solutions Forecast
market.
Proportion of households with an income that exceeds USD10,000. Excludes

Mass Affluent Class Fitch Solutions Forecast those in poverty but demonstrates potential demand for branded alcohol
products.
Size of the urban population in millions. Higher urban population size is a

Urban Population Fitch Solutions Forecast positive for distribution, higher economic development and accessing
products through a network of retailers.
Proportion of the population between 20-39 years old as a percentage. This

Spending Population Fitch Solutions Forecast is typically the range that companies target as a high spending/trendsetting
generation and are generally over the legal drinking age.
International Tourism Represents the total spend of international visitors. Provides another
Fitch Solutions Tourism Index
Receipts Total potential market opportunity for the alcoholic drinks sector.
Represents the total spend of international visitors on a per capita basis.

International Tourism
Fitch Solutions Tourism Index Measures economic potential of the alcohol drinks market at the individual
Receipts Per Visitor
level rather than total size.
Source Rationale
Risks
Industry Risks
Fitch Solutions Operational Uses Operational Risk's Economic Openness as a proxy for determining the
Regulatory Environment
Risk Index ease of entering and doing business in a market.
Uses our urban/rural split (%) data as a proxy for determining the level of
F&D Formalisation Fitch Solutions Forecast retail/hospitality formalisation in the market. Highly urbanised markets allow
companies to easily serve more consumers.
Uses Operational Risk's Logistics Risk to determine the risks and costs
Fitch Solutions Operational
Logistics Risk associated with moving products around a market. Higher scores indicate
Risk Index
quality transport, cheap fuel/electricity and high levels of tech adoption
Country Risks
Takes into account the structural characteristics of economic growth, the

Long-Term Economic Risk Fitch Solutions Country Risk labour market, price stability, exchange rate stability and the sustainability of
Index Index the balance of payments, as well as fiscal and external debt outlooks for the
coming decade.
Seeks to define current vulnerabilities and assess real GDP growth, inflation,
Short-Term Economic Risk Fitch Solutions Country Risk
unemployment, exchange rate fluctuation, balance of payments dynamics,
Index Index
as well as fiscal and external debt credentials over the coming two years
Assesses structural political characteristics based on our assumption that

Long-Term Political Risk Fitch Solutions Country Risk liberal, democratic markets with no sectarian tensions and broad-based
Index Index income equality exhibit the strongest characteristics in favour of political
stability, over a multi-year time frame.
Short-Term Political Risk Fitch Solutions Country Risk Assesses pertinent political risks to investment climate stability over a
Index Index shorter time frame, up to 24 months forward.
Fitch Solutions Operational Focuses on existing conditions relating to four main risk areas: Labour
Operational Risk Index
Risk Index Market, Trade & Investment, Logistics, and Crime & Security.
Fit
Fitch
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Colonnade
olonnade,, Canary W
Wharf
harf,, L
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ondon. E14 5GN, UK
Tel: +44 (0)20 7248 0468
Fax: +44 (0)20 7248 0467
Web: www.fitchsolutions.com
IS SN: 1749-3072
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This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 (‘FSG’). FSG is an
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Q2 2023

Industry Trends And Developments .....................................................................................................................................22

Industry Risk/Reward Index ....................................................................................................................................................27

Vietnam Demographic Outlook ..............................................................................................................................................83

Food & Drink Glossary ................................................................................................................................................................86

Food & Drink Methodology .......................................................................................................................................................87

Positive Food And Drink Spending In The Medium Term

e/f = Fitch Solutions estimate/forecast. Source: National statistics, Fitch Solutions

Latest Updates And Industry Developments

Inflation Is Elevated, But Will Gradually Ease Over 2023

Source: General Statistics Office, Fitch Solutions

Inflation Will Persist Over The Short Term

Source: Fitch Solutions

2023 Food Outlook

Food Sales To Accelerate In 2023

e/f = Fitch Solutions estimate/forecast. Source: National statistics, Fitch Solutions

FOOD SALES (VIETNAM 2021-2027)

Indicator 2021e 2022e 2023f 2024f 2025f 2026f 2027f

Indicator 2021e 2022e 2023f 2024f 2025f 2026f 2027f

Indicator 2021e 2022e 2023f 2024f 2025f 2026f 2027f

2023 Alcoholic Drinks Outlook

Consumption Growth Remains Steady Over Medium Term

e/f = Fitch Solutions estimate/forecast. Source: National sources, Fitch Solutions

TOTAL ALCOHOLIC DRINKS SPENDING AND CONSUMPTION (VIETNAM 2020-2027)

Indicator 2020e 2021e 2022e 2023f 2024f 2025f 2026f 2027f

Beer, litres mn,

Beer, litres per

Wine, litres mn,

Wine, litres per

Spirits, litres per

2023 Non-Alcoholic Drinks Outlook

Faster Non-Alcoholic Drinks Sales In 2023

e/f = Fitch Solutions estimate/forecast. Source: National Statistics, Fitch Solutions

NON-ALCOHOLIC DRINKS SALES (VIETNAM 2020-2027)

Coffee, teas and

Coffee, teas and

Indicator 2020e 2021e 2022e 2023f 2024f 2025f 2026f 2027f

Industry Trends And Developments

Dietary Shift Spending Overview

Food Spending Growth Consistently Outpaces Inflation

e/f = Fitch Solutions estimate/forecast. Source: National statistics, Fitch Solutions

Three Food Categories Dominate Spending Patterns

f = Fitch Solutions forecast. Source: National sources, Fitch Solutions

Households Consuming More Meat Due To Rising Income And Affordability

e/f = Fitch Solutions estimate/forecast. Source: National sources, Fitch Solutions

Fruit Spending Outperforms, Imported Fruits Are Extremely Popular

Healthier Food Categories Have Attracted Significant Growth

f = Fitch Solutions forecast. Source: National statistics, Fitch Solutions

Dairy Consumption Has Increased Significantly Over The Years

e/f = Fitch Solutions estimate/forecast. Source: OECD-FAO, Fitch Solutions

Industry Risk/Reward Index

Asia Region Offers A Strong Rewards Profile

Main Regional Features And Latest Updates

Asia Presents Strong Mix Between Risks And Rewards

f = Fitch Solutions forecast. Source: Local sources, Fitch Solutions

Mainland China Outperforms On Most RRI Pillars

Mainland China Has Some Of The Highest Scores In The Region

Malaysia Remains Attractive Despite Falling To Second Place

Malaysia's Consumer Profile Slows In Q223

ASIA FOOD & NON-ALCOHOLIC DRINKS RISK/REWARD INDEX

Mainland 80.3 74.3 77.9 60.0 74.0 67.0 74.6 1 2

Malaysia 74.9 72.4 73.9 78.4 71.5 75.0 74.2 2 3

Australia 73.0 67.1 70.7 69.5 86.2 77.9 72.8 3 5