Analysis of Vietnam’s business opportunity

CCIE Ho Chi Minh City

VIETNAM GENERAL OVERVIEW

In 2021, Vietnam experienced one of the highest growth rates in the world.
According to data from the General Statistics Office of Vietnam (GSO), in 2021 the
country had a GDP growth of + 2.58% (in the first, second, third and fourth quarters
it increased by + 4.72%, + 6.73%, + 6.02%, + 5.22%, respectively). Although this
increase was the lowest recorded in 2011-2021, it can be viewed as a success since
the pandemic hurt all socioeconomic sectors and the markets of other world
economies. In the first months of 2021, the country's GDP increased by 4.5%, a value
in line with that recorded in the previous quarter.

In parallel to the country’s economy, the widening Vietnamese middle class’s

disposal of money is expected to grow further, with a forecast of 5.9% for
2020-2030. Before the pandemic, consumption recorded an increase, confirmed by
the trend of previous years, above the 7% threshold. In 2019, the growth in
consumption of food and beverages increased by 9.4% and 6.7% respectively,
compared to 2018.

SOURCE: STATISTA

The demographic projections, added to the abundance of food, mark Vietnam

as the third country in terms of F&B sector development. The actual F&B value
was valued at $11 billion for 2021, bringing the potential market value to
approximately $ 678 million by 2025. Before the pandemic, Vietnam Briefing
estimated that consumption of alcoholic beverages would be around 429.9 million
liters in 2020, considering the increase in disposable income of Vietnamese
consumers and their growing interest in alcoholic beverages.

The Vietnamese Food & Beverage market is composed mainly by SME (with
less than 50 employees, 84% of the market). In the country are in fact well distributed
traditional retailers, such as wet markets or independent shops, but modern
distribution channels are indeed spreading across the country to face the growing
consumers’ demand. GSO data shows how in 2018 there were in the country around
8.475 traditional markets, 1009 supermarkets and 210 malls. Among the big
distributors, it should be mentioned, Aeon MegaMart, MM MegaMart, BigC, Co.op
Mart, Lotte Mart, Circle K. This last one, alongside other convenience stores such as
Familymart, Shop&Go, B’s Mart and the recent addiction of 7’s Eleven make up for
almost 70% of the market. The fast urbanization of a young population has
contributed to the success of such distribution channels. The majority of such stores
occupy spaces less of 500 square meters; this eases the requesting process of an
opening license for such a channel, according to a report by the Business Centre of
The British Business Group Vietnam (September 2020).

According to the same report, a young Vietnamese spends on average $80-120

on traditional aliments such as rice, corn, milk tea and Vietnamese coffee. The
growing obesity in big cities also confirms the positive trend of fast-food
consumption among families. Among those are Lotteria, KFC, Jollibee, Burger King
e McDonald’s. A growing popularity is seen for Korean and Japanese food, closer to
the Vietnamese’s tradition compared to Western food. Mexican, Indian and Pakistani
cuisine have also entered the Vietnamese market, even though the major consumers
of such food remain mainly Western.
PRODUCTION

The 2.58% of the overall growth rate of the entire economy is given by the
agricultural, forestry and fishing sectors which, in 2020, increased by 3.18%.

SOURCE: GSO

The agriculture industry in Vietnam presents a vast production of rice, in addition to

crops of maize, sweet potato, sugar cane, manioca, soy, vegetables, and legumes.
GSO provides data regarding the variation in production of pepper (+3.7%), coffee
(+3%), cashews (+10%), tea (+48%), oranges (+33.2%), mango (+4.9%), dragonfruit
(+9.1%), pomelo (+8%), lychee (+22.6%) and longan (+6.1%), pineapple (+3.6%).

Regarding the livestock sector, Vietnam production includes buffalos

(estimated decrease of -3%), other bovines (+1.3%), pigs (+3%) and poultry (+2%).
Fishery has observed an increase of +0.9%, in particular, the shrimp catch increased
by + 4.3%. Aquaculture has experienced a total increase of + 1%, of which shrimp
and other crustaceans (+ 5.6%).
SOURCE: GSO

FOOD

Meat

In the country, meat is widely eaten by the majority of the population. Vietnam
ranks the second country in Asia for pork consumption, second only to China.
Chicken meat is also widely consumed in Vietnam, with a preference for fresh
chicken rather than frozen ones, despite their more competitive price. Regarding beef,
Vietnam, despite having its own production, imports most of this meat from the US,
India, Australia, Argentina, New Zealand, and Brazil. Italy exports to Vietnam a good
number of meats, for a total value of €6.8 million in 2021 (ISTAT). The entry in force
of the EVFTA, which will grant numerous advantages for Italian exports, will also
guarantee the protection of Italian products such as: Bresaola della Valtellina,
Mortadella Bologna, Prosciutto di Parma, Prosciutto di San Daniele, Prosciutto
Toscano.

Fruits & Vegetables

Fruit and vegetable consumption is rising all over the world and Vietnam is no
exception; in 2017, in fact, according to a report made by the European Commission,
the country ranked as the fastest market in terms of fruit and vegetable consumption.
Fruit, in particular, plays an important role in Vietnamese culture; while being eaten
after meals and during a break, it is used as a gift on family altars and temples, as an
offering to the ancestors. The country enjoys an important production of tropical fruit,
especially in the Mekong Delta region in the south, composed mainly of bananas,
pineapples, mango, rambutan, dragonfruit, litchy. Nontropical fruit, such as apple,
citrus, peach, plum, grapes, cherry and olive are imported from foreign suppliers. The
EVFTA, when in force, will guarantee the protection of Kiwi Latina and Mele Alto
Adige apples.

Something that requires particular attention is also the growing demand for food
processing machinery, a sector in which Italy shows a strong potential of attraction
for buyers in Vietnam. Precisely in this field, there are several Italian companies that
have collaborated with or are associated with ICHAM. In this regard, the series of
events organized by the Chamber itself over the years should be noted: Machinery
Made in Italy. The latter are B2B meetings, in presence or, following the events of
the pandemic, online, aimed at bringing together the Italian supply and the
Vietnamese demand, but also of other countries in the region, in the field of
machinery for the transformation and packaging of foodstuffs. Exports in 2021 of
generic agricultural and food processing machinery to Vietnam amounted to € 5.7
million. In the period 2010-2021 there is, therefore, a growth of 290%.

SOURCE: ISTAT
Oil

Vietnam largely utilizes vegetable oil, mainly palm oil, soy, sesame and
sunflower seed oil. Palm oil, in particular, composed 70% of the market in 2015.
Vegetable oil consumption, according to the Ministry of Industry and Trade, is
estimated to reach around 18.5kg per capita in 2025. The improvement in living
standards has led the Vietnamese consumer to prefer vegetable oil rather than animal
ones, and to choose a product with a keener eye in terms of quality and healthiness.
Considering this, it is easy to explain the rising popularity of olive oil, imported in
Vietnam from Spain, Italy and Greece. In particular, regarding oil labeled as HS 1510,
Italy confirms its position after years of being Vietnam’s main supplier. The main
competition, for the Italian entrepreneur, is given by Spain, which still remains the
biggest olive oil exporter to Vietnam. Even after the entry in force of EVTA, it should
be mentioned that, while Spanish and Greek oil will be protected by the agreement,
there is no mention regarding the protection of Italian oils. However, Aceto
Balsamico di Modena vinegar will benefit from the agreement’s protection, a factor
that will likely influence the consumer about the benefits of vinegar and its use in the
kitchen.

Dairy product

With a pro capita consumption estimated to reach 28 liters in 2020, Vietnam is one of
the countries with the fastest growth for dairy product demand. Not only liquid milk,
the Vietnamese market offers great opportunity also for powder milk and condensed
milk; this last one, in particular, is widely used in the production of coffee with milk,
served across all the country. An increase in living standard has led Vietnamese
consumers to enjoy breakfast or meals outside, adding to their own dish elements like
yogurts or milkshakes, commonly associated with a healthier and sporty diet. Talking
about yogurt, the European Commission’s foresees a 7,80% growth per annum in
consumption, reaching 306.4 thousand tons in 2025.
Domestic milk production is at the moment unable to satisfy the national demand, of
which Vinamilk remains the major domestic supplier.
Among dairy products, in addition to yogurt and milkshakes, Italian gelato and
cheese find a widening door as well from Vietnamese market. Specifically, talking
about cheese, the entry in force of the EVFTA will guarantee the protection of
Asiago, Fontina, Gorgonzola, Grana Padano, Mozzarella di Bufala Campana,
Parmigiano Reggiano, Pecorino Romano, Provolone Valpadana and Taleggio cheese.

Bakery

The French influence in Vietnam has left an important bakery tradition, in the form
of Banh My, a sort of Vietnamese baguette. Whilst rice remains at the top position in
terms of people consumption, wheat holds its second position in big cities. The
demand for wheat, which reached 1.50 million tons in 2017, it is estimated to grow
by 50 tons every year. Due to a reduced domestic production, however, the country
imports from foreign countries such as Australia, Argentina, US, Russia and Central
Asia countries, due to the trade agreements ratified by Vietnam in the past. In the
specific, imports of raw or semi-processed flours grew by 31% in the period between
2010-2019, halting imports only in 2020 due to Covid-19 pandemic. In parallel to the
growing consumption of wheat goes a growing production of its derivatives, as
shown by the ongoing openings of bakery and pastry shops across the whole country.

SOURCE: ISTAT
Pasta

In a country where the food culture is mostly based on rice, pasta is seen as a valid
alternative for the average Vietnamese consumer. Despite promotional activities
organized by Italian agencies and associations, of which ICHAM, are trying to
present to the country the diver types of pasta, spaghetti and long pasta still remain
the favorite kind in Vietnam, considered their similarities with Asian noodles. In the
country there are already some Italian brands, such as Divella, De Cecco and Barilla,
this last one easily found in every Vietnamese distribution channel. Together with
pasta are sometimes sold sauces, mainly the tomato one.

With a demographic and a disposable income increase, the pasta market as well could
benefit from growing demand, but it should come together with a tight cooperation
with bigger retailers already rooted in the country. A good example is Lotte Mart,
which sells under its brand Italian pasta products, guaranteeing the quality of Made in
Italy, but succeeding in appealing to the Vietnamese consumer who has already a
consolidated bond with the supplier.

BEVERAGE

With its own beer culture and a society that does not obstacle the production and
consumption of alcohol (like the Islamic markets of Malaysia and Indonesia do, for
example), since 2010, Vietnam ranks the first country in terms of beer consumption in
the whole Southeast Asia. Considering pre-Covid 19 estimates created by ‘Dezan
Shira & Associates’ beer consumption in Vietnam should have growth to $4.5 million
liters
SOURCE: ISTAT

in 2020, with alcohol and liquor consumption at around 350 million liters, and that of
other beverages to 8.8 billion liters per year. The beverage market shows a sustained
growth on par with the raising standards of living among Vietnamese families. In
comparison to other emerging markets, the packaged foods and beverages expense
per capita is still low, but shows enormous growth potential. In regards to data from
‘World Top Export’, just in 2018, Vietnam imported beer for around $46.9 billion,
with per capita consumption of around 44.5 liters. The demographic and standard of
living growth are influencing other alcoholic beverages too, like wine, which is
drawing growing demand, becoming a beverage associated with higher quality and
standards of living. Some estimates calculate the Vietnamese wine market at around
$266 milion (Statista), with an expected market growth of 5.26% each year
(2021-2025).

Considering the low domestic production of local wines, which is composed by a

limited number of players (such as Ladofoods [Lamdong Foodstuffs JSC], Halico,
Thang Long Liquor Company), the country has to import the majority of its wines
from abroad, mainly from Chile, South Africa and Europe. Italy in particular is
associated with a healthy and diverse gastronomic tradition, thanks to the
characteristics of the Mediterranean diet. Despite French competition, Vietnamese
consumers are equally interested in Italian wines. This is also thanks to the numerous
promotional initiatives organized by Italian agencies such as the Italian Embassy or
the
General Consul in Vietnam, such as the Borsa dei Vini 2018, that aimed to raise
awareness among the local consumers.

Despite having inherited its wine culture from France, unlike Western consumers the
average Vietnamese prefers to buy wine not from a winery or a specialized shop, but
keeps on trusting retailers or supermarket brands already rooted in the territory. It
should be also noted that 60-70% of wine is sold in Vietnam during special occasion
such as Christmas, New Year or, particularly, Tet.
Aware of the economic damage caused by fake and imitation, the responsible of the
EVFT Agreement, have put a notable attention to the protection of Italian wines. The
products that will benefit from the agreements are identified in: Acqui, Asti,
Barbaresco, Bardolino Superiore, Barolo, Brunello di Montalcino, Chianti,
Conegliano

SOURCE: ISTAT

Valdobbiadene – Prosecco, Prosecco, Dolcetto d’Alba, Franciacorta, Lambrusco di

Sorbara, Lambrusco Grasparossa di Castelvetro, Marsala, Montepulciano d’Abruzzo,
Sicilia, Soave, Toscano, Veneto, Vino Nobile di Montepulciano. Same goes for
Grappa Italiana.
From 2018 a tax on alcoholic consumption has been put on products whose alcohol
gradation is less than 20° (35%), and equal or superior to 20° (65%). The Ministry of
Industry and Trade has also put a limit to the sale and the distribution of alcoholic
beverages to 249 retailer licenses and of 996 wholesalers until 2025.

SOURCE: ISTAT

Coffee
Introduced by French colonizers in XIX century, coffee became an important habit
among the modern Vietnamese population. The habit of drinking coffee is deeply
rooted both in Vietnam and in Italy, with both countries having famous products like
‘espresso’ or ‘ca phe sua’. Although it lacks dairy production, Vietnamese coffee is
often served with condensed milk, in order to counterbalance the strong bitter taste of
the ‘Robusta’ variety cultivated in the country. Aside from the traditional ways of
preparing coffee in Vietnam, additional ways have been introduced by international or
local coffee chains, which are very common especially among the younger
population. Among these, there are Aha Coffee, Cong CaPhè, Highlands Coffee, The
Coffee House and Trung Nguyen, among the most popular and widespread chains in
Vietnam. Both Robusta and Arabica variants are cultivated in the country, with the
former making up the bulk of local production with 30.2 million bags of 60 kg in the
period 2019/2020, while with the latter amounting to just over 1 million bags of 60
kg.

Vietnamese coffee exports amounted to 23,4 million bags in 2021, however there are
also imports from Italy for a value of about €496 thousands in 2019, of about €143,4
thousands in 2020, of about €151,1 thousands in 2021. Despite quite large coffee
imports, Vietnam is among the largest exporters of coffee in the world. world. In
addition, coffee is included in the products included in the EVFTA agreements, with
interesting specifications related to export to Vietnam, for which we invite you to
watch the appositely created video on our Youtube channel:
https://www.youtube.com/channel/UCW132KlpdoLRZr3O7vfKRPA

ITALY – VIETNAM MARKET

With an overall trade balance between the two countries equal to €4,4 billion in 2019,
€3,9 billion in 2020 and €3,8 billion in 2021, Vietnam market provides good business
opportunities for Italian entrepreneurs. Concerning the F&B sector the trade balance
is as follow: €421 million in 2019, €381 million in 2020 and €337 million in 2021
(source ISTAT Country Data SH2 from 1 to 22, except 13-14). Albeit the trade
balance hangs in favor to Vietnam, which exports towards Italy a remarkable amount
of goods (especially fishes, spices, and fruits), the increasing interests of Vietnamese
population towards Italian cuisine and Made in Italy products paves the way to
considerable market prospects.

SOURCE: ISTAT

SOURCE: ISTAT

Compared to other European competitors, Italy is placed in an excellent position in

each of the goods of the F&B sector exported toward Vietnam. In the beverage
industry, according to ASEAN stats, Italy is Europe’s number four, outdated only by
France, Germany, and Belgium. Its performance is better regarding oil exports, being
the country second only to Berlin.
Promotional activities regarding Mediterranean Diet and Made in Italy cuisine have
contributed to giving Italian food a healthy and heterogenic image in Vietnam. The
increase in green consumers, keener on the origin and production of their alimentary
products perfectly matches the demand for Italian products associated, indeed, with
high quality and healthiness.  Among the Italian firms active in the F&B sector in
Vietnam we should mention: B&V Vietnam Co. LTD, Cuore Italia Food Corporation,
Matrunita Vietnam Co., Perfetti Van Melle Viet Nam Limited, Punto Italia, The Oasis
Trading Service Co., The White Box S.R.L., Vietnam Italy Ice-Cream Company
Gelato Italia, Vita Food Joint Venture Co. LTD, Viet-IT Wines Import Company
Limited, Viet AU International Company Limited, Pacorini Vietnam Co.

SOURCE: ISTAT
SOURCE: ISTAT

In Italy, the regions that most actively trade with Vietnam are Emilia-Romagna,
Piedmont, Lombardy, Veneto, and Campania, as can be seen from the 2021 data
published by ISTAT and related to food (including agricultural and fishery products)
and beverages. In recent years, the trend sees a commercial gravity centre that shifts
more and more towards Central and Southern Italian regions.

ITALIAN SOUNDING

Speaking of the Italian F&B sector, it must be mentioned the economic damage of the
so-called Italian Sounding phenomena and its consequences for the Italian economy.
The phenomenon consists in the use of references, denomination, wording, pictures,
and symbols that recall Italy and its products in order to promote products made
abroad that have nothing to do with their original Italian counterpart. The consumers’
low awareness regarding Italian products, in particular in Extra-EU countries, in
addition to a lack of proper legislation which protects the Italian eno-gastronomic
labels, allows Non-Italian companies to steal economic opportunities from original
Italian products. According to Direzione Generale della Lotta alla Contraffazione of
the Italian Ministry of Economic Development, “The yearly amount of Italian
Sounding is estimated to range around €54 billion […] more than double the value of
the Italian exports in terms of alimentary products (€23 billion)”.
ICHAM, together with the others Italian Chamber of Commerce abroad, is dedicated
to monitor the presence of Italian Sounding products in the Vietnamese market, and it
has been promoting numerous events aiming to raise awareness of domestic
consumers, chefs, importers and food bloggers regarding Italian products and their
characteristics. A recent format that deals with it is “Ci vediamo in Camera”, a food
talk related to the F&B sector but also to Made in Italy in general, attended by people
connected to the topics. This project, financed by MAECI and realized by
Assocamerestero in partnership with the numerous Italian Chamber of Commerce
abroad, is part of the “True Italian Taste” event that aims to tackle the Italian
Sounding.
According to the Chamber, the Vietnamese market is filled with fake products such as
dairy products, pasta, pizza, sauces, oils, wines, and coffees. An ICHAM’s research
shows that most fake products are cheeses (Parmesan, Fake Mozzarella, Fake
Mascarpone, mainly produced in Australia, New Zealand, Netherlands, and
Germany), pasta (specifically Australian pasta), sauces (Australian, Romanian,
Turkish etc.) and oils. In addition to actions taken by the Chamber and other Italian
agencies like the Embassy of Italy and the General Consulate, the entry in force of
the Free Trade Agreement between the European Union and Vietnam will guarantee
the protection of specific Italian products in the Asian country.

FREE TRADE AGREEMENTS (EVFTA)/(RCEP)

There are several Free Trade Agreements negotiated by Vietnam and that represent an
important stimulus for the trade sector. Among them we remember the AEC, ASEAN
Economic Community, and the EVFTA, European-Union Vietnam Free Trade
Agreement. It is the first free trade agreement between the European Union and a
developing country, and it is a clear sign of the increasing importance of Vietnam
within the world’s market. These agreements, in particular the EVFTA, aim to reduce
to zero tariffs and custom barriers that are added to the price of goods, making trade
with the Asian country definitely more accessible and easier than ever.

The EVFTA is an agreement signed by Vietnam and the EU on June 30th, 2019 and
ratified by the European Parliament on February 17th, 2020 that will cut tariffs and
custom taxes for most of the sectors in which Italy plays a major role, ranging from
F&B to pharmaceutical, from machinery to furniture and so on. For the F&B sector,
the Free Trade Agreement will cut custom taxes to zero for almost the totality of the

European alimentary products. This agreement entered into force on August 1st, 2020
and it already had positive impacts on many products. Italian goods which benefit
from it are:
Food
Aceto Balsamico di Modena Asiago
Bresaola della Valtellina Fontina
Gorgonzola Grana Padano
Kiwi Latina Mela Alto Adige
Mortadella Bologna Parmigiano Reggiano
Mozzarella di Bufala Campana Pecorino Romano
Prosciutto di Parma Prosciutto San Daniele
Prosciutto Toscano Provolone Valpadana
Taleggio

Beverage
Grappa Acqui/Branchetto d’Acqui
Asti Barbaresco
Bardolino Superiore Barolo
Brunello di Montalcino Chianti
Conegliano Valdobbiadene – Prosecco Prosecco
Dolcetto d’Alba Franciacorta
Lambrusco di Sorbara Lambrusco Grasparossa di Castelvetro
Marsala Montepulciano d’Abruzzo
Sicilia Soave
Toscana/Toscano Veneto
Vino Nobile di Montepulciano

RCEP – REGIONAL COMPREHENSIVE ECONOMIC PARTNERSHIP

The other agreement which is worth a mention is RCEP, namely a Free Trade
Agreement between ASEAN countries and five of its trading partners: Australia,
China, Japan, South Korea, and New Zealand. Even though it does not concern Italy
or the EU, it is useful to bear in mind that this partnership, signed on November 15th,
2020 during the ASEAN Summit in Vietnam, should entry into force within two
years from the ratification of the Member States. This agreement, which will give
birth to the world’s biggest economic bloc, encompasses 30% of global population
and GDP, and aims to move the focus of world’s economy towards Asia and to
stimulate the recovery of trade after the COVID19 pandemic.

Services offered by the CCIE Vietnam

The Italian Chamber of Commerce in Vietnam (CCIE Vietnam) is a private
association whose main activities are focused, mainly, around the promotion of trade
with Italy.
The Chamber aims to develop a networking web between organizations, agencies and
operators who work in Italy and Vietnam in order to develop economic and
commercial relations, while easing the internationalization of Italian firms in
Vietnam.
The Chamber is involved into a series of activities in order to achieve its aim: analysis
such as a study of the furniture, design and construction sector in Vietnam and the
pointing of potential partners in the country are just some of the services\support that
the Chamber can offer to the Italian operators.
It should be remembered that the Chamber can offer a variety of specific services in
support of Italian firms in their internationalization process.
Specifically, the Chamber can.

- Organize B2B meetings: Organize, plan and schedule Italian firms to B2B meetings
after having researched the perfect local partner. Also provide interpreter and other
logistics services.
- Offering a Follow up service: Support Italian firms in contacting, reminding and
following up with the Vietnamese partner after the B2B meeting.
- Organize seminaries on specific themes: Promote Italian products or tech from a
technical point of view for defined sectors.
- Organize visits in firm: Both to the producer or the importer\retailer’s company.
- Provide consultancy service for investments: Follow the investor during its whole
investment path, from the first step to the opening of its branch.
- Lobby: Providing lobby services with the government or local authority.

Contacts
For further information, please visit www.icham.org or send an email to:

- officer@icham.org
- madeinitaly@icham.org
- info@icham.org