389 Food Retail Sector in Vietnam

7/30/2019 389 Food Retail Sector in Vietnam

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Pham Quang Dieu (MARD; Institute of Agriculture

Economics; [email protected]

Tran Van Cong (MARD; International CooperationDepartment; [email protected])

FOOD RETAIL SECTOR INVIETNAM



• Changing from planning to market system

• Changing from state dominance towardmulti-players (state; private; foreign…)

• Opening to the world market.• Increasing trend of industrialization and

urbanization.

• Income and consumption increase (200USD/year in the early 90s to 500

USD/year in 2004).

MACRO ECONOMICENVIRONMENT



Vietnam and other countries in theregion – early phase of

development

0 1000 2000 3000 4000 5000

Vietnam

Thailand

Indonesia

Malaysia

China

Philippin

Lao

1981 1991 2002



Vietnam and other countries in theregion – the challenge of

industrialization (1981-1991-2002)

Vietnam

Thailand

Indonesia

Malaysia

Philippin

China

Lao

0

10

20

30

40

50

60

70

80

90

100

0 10 20 30 40 50 60Agricultural share in GDP (%)

A g r i c u l t u r a l l a b o r s h a r e

i n l a b o r f o r c e ( %



• Strong growth of the agriculturalsector

• From self-sufficiency tocommercialization (crop sale in totalcrop output: 1993-40%; 1998-54%;

2002-61%); available to supply tocities and for export.

• The free-up in domestic trade and

improvement of marketing system.

• The restructuring process andemergence of new actors in

processing industries.

0

2

4

6

8

10

12

14

16

1 9 9 0

1 9 9 2

1 9 9 4

1 9 9 6

1 9 9 8

2 0 0 0

2 0 0 2

Agriculture

Industry

Service

AGRICULTURAL GROWTH ANDTHE FOOD RETAIL SECTOR

10000

15000

20000

25000

30000

35000

40000

1 9 8 5

1 9 8 7

1 9 8 9

1 9 9 1

1 9 9 3

1 9 9 5

1 9 9 7

1 9 9 9

2 0 0 1

Paddy production (1000 tons)

Economic growth rate (%)



• Increasing number of stake-holders in foodretail sector (from state dominance to multi-

players.– SOEs and cooperative are less

competitive and being in the adjustment

process.– New actors:

• The private sector is on the rise (the

case of Trung Nguyen coffee; Futuregeneration tea). Trade mark andsetting up domestic selling network

• The entering of foreign corps (Metro)

• Standardization process: quality; price

Characteristics of food retailsector



• Traditional versus modern food retail

– 9000 traditional markets; 160 supermarkets; 32 trade centers.– Small and large scale

– Technological use (PC; storing; refrigerator system…)

– Price and quality differences

– Management model: family versus company

– Safeness problems. The quality control in farming activities

and sale (in HCM city 80% processed food in traditionalmarket is unsafe)




• The increasing trend of modern food retail sector

(Supermarket HCM city 45; Hanoi 25)

• Increasing from raw material toward processed products

• Diversified business and restaurants (drink and food)• Innovation in food retailing: institution and technology

• The emergence of organic products (tea; vegetable)

• Rising demand for modern market place (equipment,

storing, facilities)




Who supply to food retailling- thevalue chain

Supermarket

Traditionalmarket

Food shop

Metro

Vender

Import agency

wholesale

Farmer

Cooperative

Processingcompanies

Import



– Increasing income and changing demand pattern

(booming effect of market renovation), use less riceand more meat, vegetable, fruit.

– Urbanization process, the rising of middle class,

consumers increasingly depended on market for theirfood needs.

– More using canned products and packaged foods.

– Women increasingly join the labor force, have lesstime to prepare meals from scratch.

– Value driven versus price driven

– Western style on the rise, import increase

Demand pattern and the foodretail sector



• The changing of food retail sector

– Traditional versus modern – State versus private and foreign

• Shaping agriculture growth pattern- domesticversus export: the importance of domestic market

• Quality control

• Urban planning and market development• How to make the poor farmers get benefit in the

food retail innovation process (resource; access;association…)

Future prospect and policyimplications



THANK YOU FOR YOUR

ATTENTION



Consumer preference of vegetablepurchase outlets in Ho Chi Minh

city (Malica study)

Officialretail

market

Unofficialretail

market

Venders Supermarket

Metro

1. Next

home2. Fresh

3. Cheap

price4. Many

types

1. Next

home2. Cheap

price

3. Fresh4. Can

buy

smallquantity

1. Next

home2. Cheap

price

3. Fresh4. Seller

friendly

1. Safe

2. Fresh3. Many

kinds

4. Nexthome

1. Safe

2. Fresh3. Cheap

4. Many

kinds



0

200

400

600

800

1000

1200

1400

1600

Hanoi HoChiMinh Vietnam

poorest

2

3

4

richest

The rising of middle class

0100

200

300

400

500

600

700

800

900

1000

Hanoi HoChiMinh Vietnam

poores

2

3

4

richest

Income per capita (USD/year) in 2002 Expenditure per capita (USD/year) in 2002



The rising of middle class

Income per capita (USD/year) in 1998- 2002

0

200

400

600

800

1000

1200

poorest 2 3 4 richest

1998

2002



0

10

20

30

40

50

60

Rural Urban

%

0

2

4

6

8

10

12

U S D / m

o n t h Food Exp

share (%)

Food expUSD/month

Urbanization and food expenditure



Urbanization and food expenditure

0

2

4

6

8

10

12

1998 2002

Rural

Urban

Budget share for eating out of household 1998-2002 (%)



Expenditure elasticity – theincreasing pattern toward non-

basic food expenditure

-1.5 -1 -0.5 0 0.5 1 1.5

Rice

maize

fruit

vegetable

meat

fish

beverage

Rural

Urban



Food import (million USD)

0

100

200

300

400

500

600

700

800

900

1000

1995 2000 2001 2002

389 Food Retail Sector in Vietnam

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