Confectionery Market in Vietnam: A Quick Guide
Creating & Selling Sweets In Vietnam
The candy business in Vietnam is thriving in various aspects. Besides the abundant potential to produce sweets in Vietnam for international markets, the country also harbors a deep love for sugary delights.
Traditional cakes and confections indigenous to Vietnam hold significant allure for families, particularly the little ones, owing to their diverse assortment of delectable flavors and delightful textures.
Local sweet foods include various regional delicacies such as 'banh chung' (a type of sticky rice cake), 'banh day' (sticky rice dumplings), 'banh bo' (steamed rice cake), and 'che' (a delectable sweet dessert soup). These gastronomic delights are just a glimpse of the diverse array of regional specialties available.
However, Vietnamese individuals in search of a sugary treat also have a strong desire for foreign sweets. As they are now seen as a potential consumer base for confectionery goods from various countries, an increasing number of companies are entering the Vietnamese market. The growing demand paves the way for even more businesses to thrive in this industry.
In this blog post, we explore the possibilities for companies to manufacture sweets in Vietnam and meet the needs of both local and international markets. Furthermore, we analyze the local market competition in the candy industry to gain a deeper understanding of its present condition and future growth opportunities.
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According to Statista, the confectionery industry in Vietnam is projected to bring in a total revenue of approximately US$8.5 billion by 2023. It is expected to experience a steady annual growth rate of 10.17 percent between the years 2023 and 2028. The consumption of sugar-based confectionery products currently holds the top spot in the market, followed closely by cakes and preserved pastries.
In the Vietnamese confectionery industry, there is currently a significant competition between local and foreign companies. Even though the import tax on candy from ASEAN countries has been reduced to 0 percent, confectionery products made within Vietnam still hold the majority share in the market, making up more than 90 percent of the total confectionery sales in the country, as reported by the state media.
Based on information provided by UNICEF, the prevalence of obesity in Vietnamese youngsters is on the rise. Specifically, there has been a notable surge in the percentage of children aged 5 to 19 who are classified as overweight, escalating from 8.5 percent in 2010 to 19 percent in 2020. This shift towards increased obesity levels can be attributed to multiple factors, including urbanization, changes in lifestyle habits, and a heightened awareness of personal well-being. Consequently, there has emerged a substantial need in Vietnam for confectionery products that are both low in sugar and low in calories.
Nowadays, Vietnamese people are showing a growing interest in products and services that are environmentally friendly. In addition, promoting sustainable consumption is an important part of Vietnam's Green Growth Strategy for the years 2011-2020 and beyond.
From this perspective, companies ought to adopt sustainable methods. They must give utmost importance to acquiring ingredients that are both environmentally friendly and ethically sourced. Additionally, they should explore the use of packaging materials that can be recycled, thus minimizing their impact on the environment. Seeking out certifications that endorse eco-conscious practices and openly communicating these endeavors with customers can further foster trust and loyalty.
Making And Shipping Sweets
Raw materials play a vital role in the manufacturing sector. Vietnam boasts a rather robust agricultural industry, even though it grapples with the difficulties presented by natural calamities and unfavorable climatic conditions. Nevertheless, the industry persists in its growth, thriving particularly in the cultivation of essential elements employed in confectionery making, such as sugarcane and cocoa.
As a result, Vietnam emerges as a fantastic provider of top-notch cocoa beans. Last year, the amount of cocoa produced in Vietnam reached an impressive 5.75 million kilograms. Additionally, Vietnam's cocoa supply was honored with the prestigious ICCO Fine Flavor Cacoa recognition in 2021.
Check out: A Brief Overview of Vietnam’s Farming Industry in 2023
Manufacturing sweets in Vietnam also brings numerous advantages when it comes to shipping confectionery to foreign countries. Presently, Vietnam boasts several free trade agreements (FTAs) that have significantly diminished trade impediments for the industry. For instance, Vietnam's confectionery holds a strong position in the Korean market, thanks to a near-zero tax rate secured by the Vietnam-Korea FTA.
Also check out: The Impact of the Vietnam-Korea Free Trade Agreement on Vietnam's Economy
Confectionery Sales In Vietnam
Expanding Consumer Base
Vietnam, ranking as the third most densely populated nation in Southeast Asia (following Indonesia and the Philippines) and the fifteenth worldwide, has recently achieved a significant milestone. Its population has exceeded 100 million, reaching an all-time high. Hence, confectionery companies from abroad might perceive Vietnam as an appealing market solely because of its extensive and continuously growing consumer pool.
However, Vietnam is not only densely populated, it is also experiencing a boost in economic prosperity. In the initial six months of 2023, the average salary in Vietnam reached VND 7 million (equivalent to approximately US$296), which is twice the average income of workers in 2013. As disposable income continues to rise, a larger segment of the population is now able to splurge on luxuries such as confectionery. Consequently, a burgeoning market for premium, gourmet products is emerging.
Also check out: Vietnam's High-End Product Market: A Craving for Luxury
In Vietnam, there is tough competition among confectionery businesses, including well-known local companies like Huu Nghi and Hai Ha, along with several international enterprises such as Mondelez and Orion.
In order to expand their portion of the market, numerous large corporations have also acquired domestic candy brands. For example, Pan Group, around the midpoint of the previous year, raised its ownership of the Bibica brand to 98.3 percent.
KIDO has also acquired a 25 percent stake in the Tho Phat dumpling brand and plans to increase its ownership in Hung Vuong Plaza to 76 percent soon.
Kido, a popular Vietnamese food company, was founded in the year 1992. Primarily focusing on delightful treats such as cookies and candies, they also have a diverse range of offerings including cooking oil and instant noodles. They proudly state that they dominate a substantial 44.5 percent market share in Vietnam's ice cream industry.
"Huu Nghi Food Co.: Savoring Tastes"
Huu Nghi Foods runs various prominent labels in Vietnam. These encompass Staff, Tipo, and Daisy. The primary goods it produces are sugary cookies and wrapped pastries. At present, it manages three establishments situated in Hanoi, Binh Duong, and Bach Ninh, and prides itself on having over 1500 individuals on its workforce.
Vietnam, a rapidly growing market, holds great potential for various businesses venturing into the confectionary industry. Recent years have witnessed an increasing number of local and international companies diversifying their product offerings to cater to the evolving market demands. Nevertheless, there remains ample opportunity for existing companies to expand further and for new players to enter the market successfully. The key to success lies in comprehending the local preferences and current trends, and wisely molding business strategies to align with them.
To get help in entering the confectionery market in Vietnam, get in touch with the business advisory professionals at Dezan Shira and Associates.
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Dezan Shira & Associates offer insightful data, thorough investigations, lawful expertise, tax assistance, and advisory solutions in Vietnam and the broader Asian territory. We have established branches in Hanoi and Ho Chi Minh City, as well as numerous locations across China, Southeast Asia, India, and Russia. If you require aid with investing in Vietnam, kindly reach out to us via [email protected] or explore our website at www.dezshira.com.
