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

It predicted the market to top 938 trillion VND (40 billion USD) 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 Phe 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 bakery and coffee shop in HCM City. (Photo: VNA)

A representative of Golden Trust, a company in food and beverage sector, told Vietnam 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% to 16.3 billion USD 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 Vietnam.

Food delivery players in the region, including in Vietnam, 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…”

Vietnam has around 338,600 restaurants and coffee shops, with Ho Chi Minh City accounting for nearly 49% followed by Hanoi.

The food and beverage market was worth around 610 trillion VND (26 billion USD) 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% said they do not have online service. But 83% of them have started to digitise and adopt technology.

Do 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 40,000-70,000 VND for a beverage, and 500,000 VND on special occasions.

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