Food and beverage industry to do well this year despite modest economy

The food and beverage market is forecast to grow by over 18 per cent this year to VNĐ720 trillion (US$31 billion).

A recent report by iPOS.vn said that, after an impressive rebound in 2022, the F&B industry is poised to achieve “sustainable growth”.

It predicted the market to top VNĐ938 trillion ($40 billion) by 2026.

It expected big players to push strongly this year to gain market share but smaller ones to exercise caution since the economic difficulties would continue in 2023.

New brands like Phê La and Katinat Saigon Kafe would enter, it said.

It forecast some business models to struggle in 2023, including food delivery because sellers would have to reduce their prices to be competitive.

The model developed strongly when the COVID-19 pandemic hit.

A representative of Golden Trust, a company in food and beverage sector, told Việt Nam News that he expected "stable development", but brands should ensure quality in all aspects from infrastructure to services.

A report from Momentum Works said Southeast Asia’s food delivery spending grew by a modest 5 per cent to $16.3 billion in 2022 after a two-year COVID-driven boom.

For the first time in three years growth was driven by the smallest markets, the Philippines, Malaysia and Việt Nam.

Food delivery players in the region, including in Việt Nam, exited unprofitable businesses and markets, it said.

“Major players pivoted away from cost-intensive business models such as dark stores for groceries and dark kitchens for food delivery. This trend is expected to continue into 2023…”

Việt Nam has around 338,600 restaurants and coffee shops, with HCM City accounting for nearly 49 per cent followed by Hà Nội.

The food and beverage market was worth around VNĐ610 trillion ($26 billion) last year.

Of the 3,000 restaurants and coffee shops that took part in a survey done by iPOS.vn for its report, over 46 per cent said they do not have online service. But 83 per cent of them have started to digitise and adopt technology.

Đỗ Duy Thanh, F&B director of Horeca Business School, was quoted by markettimes.vn as saying that when an economy faces difficulties, investors flock back to industries that have high demand, and F&B is an example.

He expected that many new high-end restaurants to open this year.

The slump in the property market would cause people owning properties in good locations to invest in F&B hoping that would attract customers and thus push up the price of their property, he said.

According to the survey, Vietnamese consumers are ready to pay VNĐ40,000-VNĐ70,000 for a beverage, and VNĐ500,000 on special occasions.

Over 77 per cent of consumers said they would continue to spend at this rate or more in 2023.