The confectionery industry in Vietnam is booming in more ways than one. Whereas there is ample opportunity to manufacture confectionery in Vietnam to export to the world, Vietnam also has a fondness for sweet treats.
Local cakes and sweets are typical snacks in Vietnam, with a range of textures and flavors that make them very appealing to the whole family, especially young children.
Regional specialties, such as ‘banh chung’ (sticky rice cake), ‘banh day’ (sticky rice dumpling), ‘banh bo’ (steamed rice cake), and ‘che’ (a sweet dessert soup), are just some of the many local sweet foods.
But Vietnamese looking for a sugar fix also crave foreign confectionery. Now viewed as a prospective market for confectionery products from around the world, a growing number of businesses are entering the Vietnam market and the rising demand is allowing room for many more.
In this article, we discuss the opportunities available for firms to produce confectionery within Vietnam and cater to both the local demand and international export markets. Additionally, we examine the local competitive landscape in the confectionery industry to gain insights into the industry's current state and potential growth prospects.
Vietnam’s confectionery market in numbers
The market for confectionery in Vietnam is predicted to generate US$8.5 billion in revenue in 2023, with annual growth of 10.17 percent (CAGR 2023-2028). The intake of sugar confectionery is now the largest, followed by cakes and preserved pastries, according to Statista.
Between domestic and international businesses, there is now considerable rivalry in the Vietnamese confectionery sector. Although the import duty on candy from ASEAN nations has decreased to 0 percent, locally-made confectionery continues to dominate the market in Vietnam, accounting for over 90 percent of the country’s total confectionery sales, according to state media.
Demand for low-sugar, low-calorie confectionery
According to a report from UNICEF, obesity is increasing rapidly among Vietnamese children. The number of overweight children between 5 to 19 years old increased from 8.5 to 19 percent from 2010 to 2020. Due to this increasing obesity rate, urbanization, and lifestyle changes, as well as greater health consciousness, there is significant growth in demand for low-sugar, low-calorie candy in Vietnam.
Vietnamese consumers nowadays are becoming more interested in ecologically friendly products and services. Green consumption is also a key pillar of Vietnam’s Green Growth Strategy for the period 2011-2020 and a vision to 2050.
In this light, firms should embrace sustainable practices. They should prioritize responsible sourcing, opt for eco-friendly and ethically sourced ingredients, and also consider using recyclable packaging materials to reduce their carbon footprint. Seeking green certifications and communicating these efforts transparently to consumers may also help to build trust and loyalty.
Producing and exporting confectionery
Locally grown ingredients
Raw materials are crucial in the processing industry. In Vietnam, the agricultural industry is relatively strong. Despite facing challenges from natural disasters and adverse weather conditions, the industry continues to grow. Core ingredients in confectionery, including sugarcane and cocoa, both grow well in Vietnam
To that end, Vietnam is an excellent source of high-quality cocoa beans. In 2022, the volume of production of cocoa reached 5.75 million kilograms. Furthermore, Vietnam’s cocoa supply received the ICCO Fine Flavor Cacoa designation in 2021.
Free trade agreements
Producing confectionery in Vietnam also has many benefits with respect to exporting confectionery to other nations. Currently, Vietnam has many free trade agreements (FTAs) that have reduced trade barriers significantly for the sector. For example, Vietnamese confectionery is very competitive in the Korean market due to a tax rate that is virtually zero percent as a result of the Vietnam-Korea FTA.
Selling confectionery in Vietnam
Large and growing consumer base
Vietnam is the third most populous country in Southeast Asia (after Indonesia and the Philippines) and 15th in the world. Earlier this year, Vietnam’s population crossed the 100-million-mark with more Vietnamese at this point in time than ever before. In this light, foreign confectionery firms may find Vietnam, in sheer numbers alone, an attractive market due to its vast and expanding customer base.
Increasing average income
But not only does Vietnam have a lot of people, but they are also getting richer. Vietnam's average pay in the first half of 2023 was VND 7 million (US$296), about double what workers made on average in 2013. With rising disposable income, more people can afford to indulge in goods like confectionery—there is a new, but growing market for high-quality, gourmet products.
The confectionery market in Vietnam is quite competitive with popular domestic firms, such as Huu Nghi and Hai Ha, as well as a number of foreign companies like Mondelez and Orion.
To increase their market share, several big businesses have also bought into domestic confectionery brands. For instance, Pan Group, in the middle of last year, increased its ownership of the Bibica brand to 98.3 percent.
KIDO also purchased a 25 percent share in the Tho Phat brand of dumplings and intends to grow its ownership position in Hung Vuong Plaza to 76 percent in the near future.
Established in 1992 Kido is a well-known Vietnamese food brand. Its core business is in sweet foods like biscuits and confectionery, although it does offer a number of other products like cooking oil and instant noodles. It also claims to have a 44.5 percent share of Vietnam’s ice cream market.
Huu Nghi Food Joint Stock Company
Huu Nghi Foods operates a number of key brands in Vietnam. This includes Staff, Tipo, and Daisy. Its main products are sweet biscuits and packaged cakes. It currently operates three factories in Hanoi, Binh Duong, and Bach Ninh and boasts more than 1500 employees.
Vietnam is a promising market that is developing quickly, and as a result, it is seeing a number of new firms, both locally and internationally, expanding their confectionary product lines. There is, however, still a lot more room for firms to expand or for new firms to enter the market, but the most successful will be those that understand local demands and trends and adapt their business accordingly.
For assistance entering Vietnam’s confectionary market, contact the business advisory experts at Dezan Shira and Associates.