Covid-19 has changed Vietnamese lives. Vietnam retail sales trend announced by the General statistics of Vietnam in 2020 January – July is -1%, huge decrease from the average growth of 12% in the last 3 years. Many restaurants have closed down due to the reductions of the revenues especially impacted by the lockdown and the several service restrictions.

Covid-19 also has financially impacted Vietnamese lives. In the survey conducted by Kadence Vietnam, 78% mentioned that they were financially impacted by the Covid-19. They hesitated to eat out to save the cost and instead increased the opportunities to eat at home. The restaurants that had lost the sales opportunities had to rely on online sales as the way to minimize their financial losses.

Here, I would like to pick up 3 outstanding food & beverage trend that are found in Vietnam.

Rise of Online Food Delivery Services

The biggest trend that has changed Vietnamese consumers’ lives in food & beverage is the rise of online food delivery services . Since a couple of years ago, the ride hauling brands such as Grab, Gojek, as well as the food delivery platform players like Now had initiated the services of online food delivery services.

Covid-19 has increased these popularities. During the lockdown, Vietnamese had to rely on online food delivery services now that the restaurants nearby were all closed down. These platforms made the most of these opportunities to strengthen their services. They spend their funds to run the strong promotions to win the market competitions. Vietnamese consumers, who are very keen on the pricing, could enjoy online delivery services even at the lower pricing than the buying at the restaurants, thanks to that.

These online popularities have given the new opportunities at the local restaurants. The shop location is less important in the online food delivery industry and the restaurants who work closely with these platforms make the good revenues, by concentrating on online services only while minimizing the cost of the fixed costs like real estates. Grab or their competitors also started the concept of Ghost kitchen, to accommodate the kitchen facilities of multiple restaurants into the central locations to provide the delivery services more efficiently.

Having all said, it is also true that none of these online food delivery brands make the profit yet. All the companies invest in the promotions with the aim to winning the competitions. These promotion-heavy situations have given the benefits to Vietnamese consumers and the online became the standard among them.

Now smaller companies have fallen off from the competitions after they ran out of the promotion budgets and faced the difficulties of retaining customers. The big players in the market like Grab and Gojek use food delivery services to attract the members, while they started to offer the other services like financing to make profit.

Channel shift from the local market to the mini supermarket

The second trend is the increasing popularity of mini superamarket. The local market (wet market) has been the most popular channel among Vietnamese mom to purchase fresh groceries. There are more than 10,000 local markets in Vietnam while the number of supermarket is less than 400. The local market is everywhere and Vietnamese feel the products at the local market is more fresh than the modern trade. They also enjoy the communication with the familiar shop owners and occasionally receive discounts.

The trend seems to have changes in a last few years rapidly, due to the expansions of mini supermarket. Mini supermarket is the store type that has the size of convenience stores but focus on the grocery products mainly. The biggest brand in the market is “Bach hoa Xanh”, that was founded in 2016 by Mobile World JSC, the modern trade giant that runs the biggest mobile phone chain “The Gioi Di Dong” and home appliance chain “Dien may XANH”. Within no more than 4 years after the foundation, the number of Back hoa Xanh stores reached more than 1600 and became one of the popular channel to purchase groceries products.

Covid-19 has accelerated the popularity of mini supermarket as well. These stores have the good hygiene control upon store entrie while some have the negative feelings about the local market because of too much traffic and the concerns over the hygiene.

Mini supermarket has the sophisticated logistic systems and good merchandisings. Even after the lock down, mini supermarkets keep attracting the local residents as the good alternative for the local market.

Higher attention to the organic foods

The other trend in Vietnam is the increasing popularity of the organic foods. The biggest concern among Vietnamese for the food is the quality, as the domestic and Chinese food products have caused several quality issues in the past. We even have the special detergents to be used to take out the chemicals from the vegetables.

The organic foods became popular among those who had such food quality concerns. There are quite a number of organic products stores and online stores. These stores are popular among middle-high class people in urban areas, who are willing to spend more money for the foods that are safe-to-eat.

The market is growing but still niche due to the cost barriers. It is common that the organic products cost twice as high. In our survey, 86% of the respondents expect that the cost gap that they could accept organic foods is less than 20%.

The further success of the organic food relies on the better cost management at the supplier side and the wider understanding / recognitions of the products.

Conclusions

Despite of the Covid-19 impact, Vietnam is one of the countries with the strongest economic forecast among South East Asia. The government has set an aggressive target of becoming an economic and financial hub in Asia by 2045 with GDP per capita increasing to 40,000 USD. The economic growth is going to be linked more variety of demands among Vietnamese consumers and more opportunities for the brands to do better business in the market.