The Vietnam Food Drink Report provides independent forecasts and competitive intelligence on Vietnam's food and drink industry.

While the Vietnamese economy will not be immune to the current global recession, the outlook appears promising. There are forecasts of real GDP growth of 2.9% in 2009; while this is a downward revision from our previous forecast of 5%, we expect Vietnam to outperform much of Asia in 2009-2010, returning to rapid growth by 2011. This positivity is reflected in some of the industry activity seen in the country this quarter, as discussed in this newly published Vietnam Food and Drink Report for Q309.

Vietnam’s mass grocery retail (MGR) sector has witnessed the most activity this quarter. In April 2009, Japanese convenience retailer FamilyMart announced its intention to open its first Vietnamese outlet in Ho Chi Minh City in September, in partnership with local distribution company Phu Thai. Although the convenience retail sector is expected to be the slowest-growing format in the country over the forecast period, growth is still expected to be an impressive 81.7% to 2013, and FamilyMart is hoping to establish a strong foothold in the country before demand for the convenience format really takes off. Staying with retail, this quarter has also seen Saigon Co-op announce plans to expand its supermarket chain from 35 stores to approximately 50 by the end of the year. Supermarket sales are forecast to increase by 97.4% to 2013 and Saigon Co-op is hoping to take advantage of this.

Moving to the drinks industry, in March 2009 Anglo-South African brewer SABMiller bought out local partner Vietnam Dairy Products Joint Stock Company (Vinamilk) leaving the former free to pursue its own strategy. SABMiller is expected to invest heavily in its Vietnamese unit, particularly as beer volumes are expected to increase by 56.1% to 2013. Following the buy-out, Vinamilk is feeling positive and plans to focus its efforts on the domestic dairy industry. However, despite posting positive Q109 revenues of US$118.8mn, the company has revised down its 2009 net profit target by 3.5% to US$84mn, reflecting the pressures that producers face.

Meanwhile, the country’s food-processing sector received confirmation from the Asian Development Bank (ADB) that it would receive a loan of US$95mn in order to better equip its food industry to adhere to health, safety and quality requirements needed to enable it to integrate with international markets. These efforts will help to boost Vietnam’s image in the country’s all-important export market. Activity this quarter underlines the fact that Vietnam is still an attractive investment opportunity despite the current global recession.

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