The Flourishing Food and Beverage Sector: A Look into Recent Developments
The food and beverage (F&B) industry, particularly in Vietnam, is witnessing remarkable growth, driven by strategic investments and an ever-increasing demand. Recent developments highlight how companies are expanding their production capabilities while also engaging in significant deal-making activities.
Investment Surge in Coffee Production
In mid-March, Trung Nguyen Legend, a prominent player in the coffee sector, celebrated a significant milestone by breaking ground on a new coffee factory in Buon Ma Thuot city, located in the Central Highlands of Dak Lak province. This ambitious venture, valued at over $78 million, marks Trung Nguyen’s fifth factory in Vietnam. The factory aims to enhance the processing and exporting capabilities of robusta coffee, which is critically important for Vietnam—known as the largest coffee-growing region in the country.
Vanusia Nogueira, the executive director of the International Coffee Organisation, emphasized the project’s broader significance. She noted that it embodies a harmonious blend of global visions and indigenous traditions. By investing in local production, Trung Nguyen not only focuses on boosting economic development but also sets an exemplary model for sustainable practices that benefit farmers and communities globally.
HiteJinro’s Strategic Expansion
In another significant development, South Korean beverage giant HiteJinro commenced construction on its soju plant in the Green I-Park Industrial Complex in Thai Binh province. Set to be completed by 2026, this facility will have an annual production capacity of up to five million cases, aiming to cater to both the domestic and international markets.
HiteJinro’s CEO, Kim In-Kyu, articulated the strategic importance of this plant as a gateway to expanding their global market presence, particularly in Southeast Asia. It represents a crucial step as the company seeks to solidify its position as a comprehensive global liquor company, with Vietnam being the starting point for its soju exports.
Suntory’s Commitment to Growth
Suntory Beverage & Food, which is part of the larger Suntory Group, is also ramping up its activities in the Asia-Pacific region, particularly in Vietnam and Thailand. The company is in the process of constructing a new factory in Vietnam while simultaneously expanding production capabilities in Thailand with the addition of two new production lines.
Last year, Suntory PepsiCo Vietnam initiated a substantial investment of $300 million for a state-of-the-art beverage plant in Long An province. This facility is expected to have an annual capacity of 800 million liters, making it one of the largest and most advanced plants in the Asia-Pacific.
The Market Outlook
Recent reports indicate that the F&B market in Vietnam is poised for substantial growth. According to a 2024 market report from iPOS.vn and Nestlé Professional, Vietnam’s F&B sector is expected to achieve a growth rate of 9.6% by 2025. The total number of F&B establishments is projected to exceed 323,000 by the end of 2024, marking a 1.8% increase from the previous year. Despite certain consumption challenges, the market reported revenues soaring to $27 billion in 2024, reflecting a notable 16.6% rise compared to 2023.
A Climate of Acquisitions
In addition to expanding production capacities, companies in the F&B sector are active in deal-making to enhance their market presence. Notably, Vietnamese restaurant group Golden Gate is reportedly in the process of acquiring The Coffee House from local retail group Seedcom. This move comes in the wake of The Coffee House’s disappointing performance, during which over 30 outlets were closed. Golden Gate, meanwhile, has emerged as a leader in value sales within the sector, bolstered by its ownership of popular brands like Kichi Kichi, Gogi House, and Manwah.
In another notable transaction, private equity firm Excelsior Capital Vietnam Partners has invested in local restaurant operator Aladdin, whose rapid growth is characterized by successful chains like Bo To Quan Moc and Long Wang Hotpot. Nguyen Thai Binh, co-founder of Hoc Vien Concepts, commented that many investment funds are now focusing on acquiring established F&B chains to mitigate risks and optimize cash flow. This strategy allows investors to capitalize on existing operations rather than starting from scratch.
As the food and beverage sector in Vietnam continues to thrive, this dynamic environment underscores a potent mix of innovation, strategic planning, and market adaptability.