ASEAN, or the Association of South-East Asian Nations, is home to one of the largest economies in the world! With a population of over 665 million people, or 8.5% of the global population, and an emphasis on promoting free trade, the region offers enormous potential for exporters seeking to expand their horizons. Vietnam, Thailand and the Philippines are particular countries of interest to Australian exporters, and we’ll explore some of the unique opportunities they offer over the coming weeks–starting with Vietnam!
1. Emerging Strong From the COVID-19 Pandemic
Swift government action during the emergence of the COVID-19 pandemic has enabled Vietnam to maintain a strong growth trajectory. Most recently, in 2022, the country posted a GDP growth rate of 5.1% and 7.7% in Q1 and Q2, respectively, driven by pent-up demand and the return of tourism flows. This is good news for exporters, with Vietnamese consumers’ relatively strong spending potential offering an opportunity to recover sales lost over the past two years.
2.A Top Nation in Food & Beverage Sales
Looking at the big picture, Vietnam’s food & beverage sector is one to watch! It’s been estimated that the sector makes up anywhere from 20 to 48% of household expenditure, indicating the importance of the sector to the national economy. Just three years ago, the nation was ranked as the 10th most attractive food & beverage market in Asia and one of the top attractive markets globally. The market is also expected to stay strong into the future, with Vietnam ranked among the top three nations in Asia for food & beverage development, driven by increasing mobility, affluence and urbanisation.
3.A Young and Globally-Oriented Consumer Base
Vietnam has what is considered a golden population structure, with a median age of just over 30 and a quarter of the population aged 16-30. This younger consumer base, made up primarily of millennials and generation Z, offers strong export potential, given their desire to eat outside of the home and their demand to experiment with international products. However, food & beverage manufacturers must keep in mind the strong ethical consumer mindset among these generations, which means a focus on ethical and sustainable sourcing is key to capture consumers.
4.Health & Wellness Trends Mirror Global Patterns
It’s no secret that COVID-19 has fundamentally changed the way consumers approach health and wellness. The pandemic has seen many re-evaluate their lifestyle choices, and for many, this begins with their diet. As a result, many consumers have turned to healthy and better-for-you foods, functional beverages and supplements. And they’re willing to pay more to get their hands on these products. In particular, demand for gluten-free and keto diet-friendly foods, healthier snacks and organic foods is seeing an upwards trend. Buzzwords also include functional benefits such as ‘immune-boosting ‘and ‘gut health’, from prebiotics to probiotics and even postbiotics. These trends are only expected to accelerate into the future alongside rising disposable incomes and a growing middle-class population.
5.Brand Values Integral to Consumer Decision-Making
We’ve already seen how a younger and more health-conscious consumer base is driving demand for more sustainable and organic products. For brands, this means emphasising those values that align with those of consumers and disseminating these within their marketing messages. This translates into a focus on transparency in production and product benefits. Origin is also important. Brands are encouraged to focus on authentic, real origin stories to stand out to consumers, win their trust and justify their premium price points.
6.Reliance on Imports in Key Australian Industries
Australian exporters are in luck, because some of Australia’s most important food & beverage industries are exactly what Vietnam needs! Dairy and meat are two key industries where domestic supply is unable to keep up with demand, and as staple foods, this creates significant opportunities for Australian businesses. Alcohol also remains a key growth space, with Vietnam being one of the largest Southeast Asian markets for beer (accounting for 94% of the nation’s alcohol consumption), and housing growing demand for wine.
7.An Increasingly Westernised Food & Beverage Market
As globalisation continues to influence and reshape cultures and preferences around the world, Vietnam is no different. Vietnam, as a French colony, has always been a large consumer of dairy products. Milk consumption is expected to continue rising alongside growing incomes, while the growth of meat consumption also reflects more westernised dietary choices. Along this same vein, cheese and baked goods such as bread, cookies and cakes, are also becoming more and more appealing to Vietnam’s consumer base.
8.Premiumisation Trends Boosted By Rising Disposable Incomes
As we’ve seen, Vietnam’s economy has already proven resilient against the shock of COVID-19. Even prior to the pandemic, growth has been rapid, with Vietnam recording annual GDP growth of around 7% in the two years prior. In fact, over the past 20 years, growth has occurred at a rate of 1.7 times faster than the global average.
And there are no signs of slowing down, with Vietnam estimated to have one of the fastest growing global economies. Beyond this, household sizes are also expected to fall alongside declining birth rates, slightly increasing household wealth. So, what does this mean? Well, consumers will have more money in their pockets to spend, increasing the budget for food & beverage products, particularly in the premium space where imported, sustainable and organic options dominate.
We hope you’ve found these insights on the Indonesian market helpful. As always, if you’ve got any questions or want to discuss export opportunities for your company, feel free to drop us a line at Export Connect – we’d love to hear from you.