18-Mar-2023 Intellasia |
VIR |
5:02 AM
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Foreign confectionery makers are eager to ramp up operations in Vietnam while tuning into the changing habits of consumers.
Snack maker Lotte Confectionary, part of the Lotte Corporation, last month inaugurated a second factory in the southern province of Binh Duong with a total capital of $21 million. The 4-hectare factory is set to produce chocolate pies under the Chocolat brand for the Vietnamese market, which will be rolled out into the market from next month.
The company also intends to upgrade its first chewing gum factory with a solar power generation system to reduce plastic materials.
A couple of months previously, Thai snack manufacturer Variety Foods International signed an agreement with Thai Corp International Vietnam to boost its Mix biscuits in Vietnam. The brand has been distributed to over 3,500 supermarkets and 7,000 traditional points of sale in Vietnam. The latest tie-up is expected to strengthen the distribution of Mix products in the Vietnamese market.
Elsewhere, Orion Food Vina, the producer of the popular ChocoPie snack, plans to spend $59 million on a new production line in 2023. The move comes after it set record revenues of $400 million in Vietnam last year. The company is currently operating 32 production lines, producing 84,000 tonnes of products per year.
Park Se Yeol, CEO of Orion Food Vina, said the company led sales in Vietnam’s confectionary industry last year thanks to its strategy of focusing on local demand. The company initially offered only ChocoPie, but it later expanded to produce cookies, custard, rice snacks, and other sweets.
“In rural areas, traditional sales channels such as grocery stores and markets are still the main channel, accounting for 77 per cent of the confectionary market share. The traditional market still holds ample potential in Vietnam. It needs a knowledgeable sales force to get products into the hands of consumers,” Yeol said.
Kim Le Huy, vice president of Business Unit Consumer Goods at DKSH Vietnam told VIR that many overseas confectionery producers have seized the chance to integrate and expand into the Vietnamese market as a result of the country’s consistent growth in the fast-moving consumer goods (FMCG) sector.
“This not only makes the market one of the most competitive by incentivising domestic firms to innovate their processes, but it also accelerates the growth rate for the entire market,” Huy said. “For businesses to stay strong in this market, it is crucial to sustainably improve their abilities by enhancing local understanding as well as market coverage. In addition, logistics management is another area that companies need to prioritise to preserve a competitive advantage.”
In 2020, DKSH expanded regional collaboration with Japanese confectionary company Morinaga to Vietnam. This helped Morinaga drive sales of its two key brands, Dars chocolate and chewy candy Hi Chew, and increase their reach among the Vietnamese target group with wide store coverage.
According to Euromonitor International, snacks are anticipated to maintain decent growth over the next five years, in line with the Vietnamese economy recovering and more players entering the industry. Existing players are likely to invest further in their categories in a bid to appeal to a wider audience and gain greater market share.
One area of concern for these producers, however, is the changing customer behaviour in recent times. Consumers have been mindful of their spending, while snacks and confectioneries are not considered essential purchases.
Nevertheless, according to data analysts Nielsen, Vietnam is among the top three fastest-growing snack markets in Asia, with a market evaluation of dozens of billions of US dollars based on the monthly spending on snacks of young Vietnamese people. It is expected that the expansion of the Vietnamese market has significant potential in the coming years, along with the increasing growth rate of the FMCG market in general, Nielsen said.
Huy from DKSH added that, besides seizing opportunities for growth among mass consumers, manufacturers also need to adapt to changing consumer behaviours to improve their product quality, in addition to catering to a new lifestyle of wellbeing for consumers. “Furthermore, cost efficiency in operations is also one of the main aspects that companies are concerned about when it comes to expansion plans,” he added.
https://vir.com.vn/confectionary-groups-take-bigger-bite-in-vietnam-100440.html
Category: Business, Vietnam
Article source: https://www.intellasia.net/confectionary-groups-take-bigger-bite-in-vietnam-1154528
