HOW TO ENTER CONFECTIONERY MARKET IN VIETNAM FOR SME’S
Nibble your way into confectionery market in Vietnam with VIEC
The battle for Vietnamese confectionery market share
More than six years ago, the Vietnamese confectionery market was shaken by the news of the category-leading snacks business in Vietnam—Kinh Do, acquired by the global giant Mondelez International. The owner of world-renowned cookie brands like Oreo or Ritz snatched the sweets manufacturing division of Kinh Do Group in a deal worth US$370 million, marking the start of Mondelez’s effort to speed up its growth strategy in the Asia Pacific region.
At that time, some analysts commented that the race in the sweets and snacks market was about to end with Mondelez Kinh Do Vietnam being in the market’s pole position.
However, Mondelez Kinh Do’s Hemant Rupani believes that making money in the market isn’t as simple as it sounds for his company. During a press conference, the managing director of Mondelez Kinh Do Vietnam said that in other markets like India and Australia, leading international brands may hold up to 50 percent of the pack’s market share. Meanwhile, in Vietnam, famous brands struggle to maintain their 20-30 percent market share because it is jam-packed with numerous brands, which stirs up fierce competition.
However, the fact is that, even in such an intense battlefield, the market is still a potential promised land for brands who want to take a piece of the pie.
Brief Information of the Vietnamese market:
- In a recent interview, Julius Flores, URC Vietnam’s MD, believes that food and drinks are two dominant growth motivators of the fast-moving consumer goods sector (FMCG)
- Vietnamese consumers have long acquired a taste for high-quality confectionery, both domestically produced or imported products. Especially in 2020, the demand for imported sugar and sugar confectionery products witnessed a drastic spike, reaching US$911 million from a previous US$378 million, a record-breaking 140.8% year-over-year. Of the above value, 7.25% (US$66 million ) is for sugar confectionery like cookies or candies. Importing cookies and candies from abroad is a booming market for the year’s time, but it is even more active during special holiday streaks and traditional festivals in Vietnam like the Lunar new year.
- The 2021 revenue in the Confectionery & Snacks segment is expected to amount to US$14,308 million. The market is expected to grow annually by 6.61% (CAGR 2021-2026).
- In the Confectionery & Snacks segment, volume is forecasted to amount to 2,573.4 million kg by 2026, bolstered by volume growth of 2.3% in 2022. The average volume per person in the Confectionery & Snacks segment is expected to amount to 20.9kg in 2021, generating an estimated revenue per capita of US$145.74 in 2021.
Then what chances are there for small or medium-sized confectionery factories to get into this huge potential market?
Opportunities to export for small and medium-sized foreign confectioners in Vietnam
The good news is that this is not a clash of giants only.
In the past few years, VIEC has been helping foreign confectionery producers export cookie products to Vietnam. To enter this market is not easy, as we have to take on huge competitors from leading exporters from China, South Korea, or Thailand. But it is not a pie floating in the sky, either.
For every project, we meticulously studied the Vietnamese market and obtained valuable insights that led us to the decision that there are still somewhat “blue oceans” in the Vietnamese market. For example, the middle to high-end customer segment mainly remained unfazed by the brands’ foray. This niche presents much less competition and more room for brands to tap in and offer their products and services to a vast group of customers.
As we sought new partners and factories in the EU and the USA, we have found many that meet the requirements on price, quality, design, and a great story that can appeal to Vietnamese consumers successfully. Thus, from 2018 onwards, VIEC has partnered with several confectionery factories in Europe and the US and helped find their clients and retailers in Vietnam.
Now a VIEC’s stock-in-trade, our cookie products can be found in many convenient stores running across Vietnamese geography, reaching an estimated 20 containers of trade per year. With a clientele ranging from General-trade—traditional retail channels (or so-called GT) to Modern-trade—modern retail channels (or so-called MT) in Vietnam, we have been able to not only rack our products up the shelves but also our reputation up the clients’ minds.
Interested in exporting your confectionery products to Vietnam? Think BIGGER with VIEC
- Overcome challenges: Entering a new marketplace is always a challenge that not only many small and medium-sized confectionery manufacturers will face. However, unlike big corporations provided with ample resources, SMEs will probably need to be more considerate with their resources. This significantly impedes their advancement. And this is what we are addressing for you at VIEC, as we are committed to helping you, as a manufacturer, overcome statural challenges when entering the Vietnamese market.
- Simplified communication: We take the sting out of your communication efforts by helping you handle any inquiries both to you and from you. VIEC will act as your direct connection to your clients and operate on both parties’ behalf. We address any issue within your products’ movement from the factories to end-users.
- Additional long-term value for you: By connecting you to retailers directly without importers and exporters, we remove added markup on your product’s selling price, thus making your products more accessible to a wider audience.
- Guaranteed output: With our extensive network of distribution partners, we help set up your distribution system in Vietnam and guarantee a steady outflux for your product in the Vietnamese market.
- Future opportunities: With the European Union–Vietnam Free Trade Agreement—EVFTA starts taking effect, EU manufacturers are open to even more opportunities. Exporting to not only Vietnam, but also its neighboring countries is getting easier. Moreover, Vietnam can offer an alternative landing ground and outlet for your products in the whole of Southeast Asia and adjacent regions, making the operations more cost-efficient for you.
More growth prospects are waiting for you if you dare to think bigger and to take them on. And this is what VIEC can help you realize. Just “Think bigger with VIEC!”