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SAVOURY SNACKSIN VIETNAM - ANALYSIS

Country Report | Sep 2020

KEY DATA FINDINGS MarketSizes

COVID-19 boosts the appeal of some flavorysnacksas suitable complements for at

Sales of Delicious Snacks
home activities duringlockdown in 2020 Retail Value RSP - VND billion - Current - 2006-2025

In 2020 retail salesgrow by 11% in currentvalue termsand 6% in volume terms to

reach VND16.3 trillion and 86,800 tonnes 16,287 Forecast
30,000 won
Rice snacks sees the highest retail currentvalue salesgrowth of 14% in 2020

The average retail current unit price rises by 5% in 2020

25,000 won

Orion Food Vinaleads in 2020with a 17% retail value share

20,000 won
A 12% retail currentvalue CAGR (8% 2020 constantvalue CAGR) is expected over the
forecast period
15,000 won

2020 IMPACT
10,000 won

COVID-19 fosters demand for delicious snacks as consumers look for

diverse and healthier options during lockdown 5,000 won

Savourysnacks is projected to see its fastest retail volume and currentvalue growth
0
rates of the review period over 2020 asa whole. Lockdown, with consumers working 2006 2020 2025
from home,and schoolsand foodservice and entertainmentvenues closed, was quite short-
lived,as Vietnam coped effectively with the outbreak of the Coronavirus (COVID 19). In
addition, modern and traditional groceryretailers remain open during retail lockdown,
prompting access to savourysnacksand minimisingthe potential for channel Sales Performance of Savory Snacks
% YOY Retail Value RSP Growth 2006-2025
shifts.Stockpiling,as consumers tried to limit theirvisits to the shops, wasvisible,
butgenerallyshort-lived.

Traditionally,youngand olderconsumersare familiar with savourysnacks, which

10.9%
Forecast
20%
gained importance as some households looked for non-sugarysnacks to help while
awaylong periods of time spent in the home.Savourysnacksalso benefits from widely
perceived suitability with avariety of drinksand various consumption.
Vietnamese consumers popularconsume sweet snacks with coffee or tea,as well as
15%
dried squid and other fish snacks peanuts or peanuts with beer.Thus, the established
and widely used habit of usingsavourysnacks is expected to continue to fostersales growth
through 2020.
ten%

Puffed snacks' large snack range fits well with at-home lifestyle during
COVID-19

Although savourysnacks isa diverse categoryin Vietnam, puffed snacks is set to 5%

continue to accountcomfortablyfor the highest retail volume and currentvalue sales over
2020 asa whole. Puffed snacksalso benefited as manyconsumers were increasingly
likelyto lookfor non- or low-sugarsnacks to help pass the time at home duringlockdown.
0%
In whilingawaylong hours in the home, manyconsumers looked to entertainmentactivities 2006 2020 2025
like watchingTV and films, which fit well with the consumption of puffed and
othersavourysnacks. Puffed snacks are considered suitable forvarious other occasions,
such as snackingat breaktimesand as complements to non-alcoholicand alcoholic drinks.
Consumers concerned about high sugar orsalt intake during the global health crisis,are
likely to have seen puffed snacksas healthier options.These products are typicallyconsist
of potato orcereal (eg wheat, maize) snacks, which can be flavored (egcheese, prawn) or
unflavoured.Semi-prepared and unfried extruded snacks from Asia(egkerupok,also known
as crackers)are also included in the category. A large range of products the category's
strong position within flavorysnacks.

Availability during COVID-19wasalso enhanced bythe high number of manufacturers

active in puffed snacks, offering popularand established brands like Oishi,Tooniesand
Poca. In addition, the categorysees significant brand-buildingactivities, which help puffed
snacks remain top-of-mind amongsnackingconsumers. Furthermore, puffed snacks enjoy
the largest penetration in distribution terms, from independent small grocers in remote
areas to large hypermarkets in urban areas, supported byfamiliarity with and the low unit
prices of manytypes.

Orion Food Vina is set to consolidate leadership over 2020 despite

COVID-19's impact on higher-priced delicious snacks

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Orion Food Vinais predicted to remain the leading player in retail value share terms over
Sales of Delicious Snacks by Category
2020 asa whole.The company owns major brands in the category, such asToonies,
Retail Value RSP - VND billion - Current - 2020 Growth Performance
Marine Boyand Khoai Tayo!These brands enjoysignificant brand loyalty, despite
carryingabove-average prices, supported by quality distribution coverage. Orion Food
Nuts, Seeds and Trail Mixes
Vinaalso invests heavily in aggressive marketing activities, includingthe use of 928.3
majorcelebrities in Vietnam to promote brands on social media platforms like Facebook.
Salty Snacks
However, the player's offer of mid-priced and premium products has been experienced by 10,034.1
COVID-19, as some consumers looked to trade down to cheaper options. however, the strong
Savory Biscuits
popularity of its brands is expected to see a rebound as the countryrecovers from the public 2.512.8
health crisis, with an increase in retail value share projected for 2020 asa whole.
Popcorn
-

Pretzels
While international brands lead savourysnacks, local brands enjoy exclusive
-
competitive advantages in some categories. International brands benefit from high profile
productsand quality distribution, supported by huge budgets foraggressive marketing OtherSavoury Snacks
2,812.1
programmes. However, the owners of local brands leverage a deep understanding of the
tastes and traditions of Vietnamese consumers. Against the backdrop of the push towards 0% ten% 20%

buying Vietnamese products, which receives heavy government support, local brands are SAVOURY SNACKS CURRENT % CAGR % CAGR
16,287.2
increasingly perceived asappealing, for reasons of national pride as well as lower prices. YEAR % 2015-2020 2020-2025
GROWTH
Domestic brands have also achieved traction through stronger marketingactivitiesand sales
systems. International playersare expected to retain the leading positions in the category, but
face toughercompetition from local rivals.The residual economicconcerns in the wake of
COVID-19 are likely to enhance the demand for local brands.
Competitive Landscape

RECOVERY AND OPPORTUNITIES Company Shares of Delicious Snacks

% Share (NBO) - Retail Value RSP - 2020
Wide consumption occasions set to boost delicious snacks sales over the
Orion Food Vina Co Ltd 17.1%
forecast period
Mondelez Kinh Do Vietnam... 13.5%
Savourysnacks is projected to seeincreasingretail volume and value (at constant 2020
Liwayway Food Industry C... 11.5%
prices) growth ratesas the forecast period progress. COVID-19 is not expected to have
along-lasting negative effect,although some consumersare likely to continue to trade down in PepsiCo Vietnam (PIVN) 10.8%

the short term due to heightened economicconcerns. On the other hand, tasteysnacks fit well
Tuyen Ky Co Ltd 6.7%
with at-home entertainments, which boosted demand as consumersadapted to home seclusion
and social distancingregulations. Vietnam One One Food JSC 3.4%

Moreover, the reopening of entertainmentand foodservice venues is restoring popular Mondelez International I... 3.4%
consumption occasions.The return to school and workplaces similarly benefits the consumption
Thien Ha Kameda JSC 1.8%
of forsavourysnacks.Some of these types of snacks, such as puffed snacks, riceand
“other”savourysnacks,also fit with the needs of an increasingly health-conscious consumer Procter & Gamble Vietnam... 0.7%
base, which is expected to be swelled by the outbreak of the global pandemicin Vietnam.
Viet Hoa Co 0.7%
While carrying higheraverage unit prices perkgthan most othersnacks,a wide range of
productsand packsizes means that savourysnacksare often competitively-priced in terms of Meiji Holdings Co Ltd 0.7%

initial outlay, while carryinga loweraverage unit price than chocolate confectionery. Hence,
LBB Vietnam Foodstuff JS... 0.6%
tasteysnacks is set to remain the best-sellingcategory within snacks in Vietnam over the
forecast period. Haiha Confectionery JSC 0.4%

Nhat Anh Trading Pte 0.3%

Growing health awareness and local trend to support shift to natural
Trang An Confectionery C... 0.2%
ingredients and Vietnamese products
Tan Tan Food & Foodstuff... 0.2%

Natural local-origin ingredientsare expected to appeal to consumers seeking healthier

Ha Noi Confectionery Co 0.2%
snacking options in the forecast period. In line with the health and wellness trend, which is set
Tai Tai Co 0.2%
to be accentuated by the experience of COVID-19, Vietnamese consumers are looking for
healthier optionsacross packaged food. Manufacturers of potato chips and puffed snacksare Others 27.6%
likelyto emphasize the use of natural ingredients through marketingactivities. In addition,
PepsiCo Vietnam (PIVN) and Orion Food Vinaare set to continue to highlight theircollaboration
with local farmersand use of fresh potatoes grown in Vietnam to tap into the localisation trend
being pushed by the government. In puffed snacks, LiwaywayFood Industry has upgraded its
processing technologyto offer better foryou (BFY) products under the Oishi brand, such
asvegetarian chicharrones (porkrinds) with zero trans-fatand unfried options.The highlighting
of product freshnessand local-origin ingredients is set to become an increasingly important
marketing message in the short to medium term.The global pandemicmayaccentuate the
localisation trend, with consumers beingincreasingly willing to trust local-origin over foreign
products.

The localization trend is also expected to become increasingly visible in nuts, seedsand trail
mixes,as more local manufacturers enter the fray.Sources of raw materials for these
productsare quite abundantand popular in Vietnam, including peanuts, cashews and
macadamia nuts. Localare set to take advantage of local resources to improve the quality of
their offer of nuts, seedsand trail mixes, manufacturers while offering competitive prices to
appeal widely to local consumers. Importantly, local consumers consider nuts, seedsand trail
mixes to be healthiersnack options.Furthermore, local manufacturers can expect the support
of the government, which continues itsattempts to increase the value of and consumption of
local agricultural produce.

Familiarity and trust in ingredients favors offers strong development and

growth opportunities in rice snacks

Rice snacks continues to be more quickly and widelyaccepted by Vietnamese

consumers, in comparison with some other types of snacks, as consumers enjoythe

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taste of rice, which isastaple food option in Vietnam.The category has received a boost Brand Shares of Delicious Snacks
from numerous new entrants, such as Orion An seaweed baked rice cakes in convenient % Share (LBN) - Retail Value RSP - 2020
111.3g packs. In addition, the majorTaiwanese Want-Want rice cake company opened
afactoryin Vietnam in late 2019.The USD70million investment is expected to see Vietnam Oishi 11.0%

become the company's hub in Southeast Asia duringthe forecast period.The abundance
Lay's 9.0%
of rice and white sugarsources in Vietnam has played a keyrole in the company's
stronginvestment in the market. AFC 8.7%

Tuyen Ky 6.7%
Such new entriesare increasingthe competition in the countryand pushing other players
to expand theiractivities in the category. In terms of new product development, besides Toonies 6.3%

populargenerictastes (saltyand sweet), local consumersare able to choose from a 4.6%

Marine Boy
wideningarray of new flavors/variants, such as honey, shrimp and seaweed. Consumersare
Ostar 4.3%
increasingly interested in new flavors and variants of rice snacks, often as trial purchases in
the first instance. However, as consumers search for healthierand good qualitynacks in the OneOne 3.4%
wake of COVID-19, such productsare expected to become the preferred option formore and
Slides 3.4%
more snackers. Asaresult, rice snacks is projected to continue to see the highest retail value
salesgrowth over the forecast period. Ritz 3.4%

Potato Tayo! 1.9%

Summary 1 Other Delicious Snacks by Product Type: 2020 Poca 1.8%

ICHI 1.8%
Product type

Meat jerky Sachi 1.4%

Seaweed snacks Pringles 0.7%

Burnt rice
Viet Hoa 0.7%

Rice paper snacks

Meiji 0.7%
Noodle snacks
Richy 0.6%

Source: Euromonitor International from official statistics, trade ass ociations, trade press, company Pinattsu 0.5%
res earch, store checks, trade interviews, trade s ources
Others 29.1%

5-Year Trend
Increasing share Decreasing share No change

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