I recently spent a week in Vietnam working with one of the larger food and beverage chains. Visiting many concepts and malls in both Hanoi and Ho Chi Minh City as well as a secondary city, I came away with the feeling that the Vietnam market is at the early stage of its growth potential and there are many areas of opportunity in our industry. Here are some impressions from the trip.
1. The market is at least 10 years behind China in terms of development, but KFC, Lotteria and Pizza Hut have already established a significant presence.
2. There are many local entrepreneurs in the space doing a good job and developing quickly.
3. Japanese food is most popular behind the local cuisine but there is good opportunity for Western cuisine given the historical roots with France.
4. Starbucks may have a tough time like it did in Australia. The local coffee culture is very unique and the flavor patterns very different. It will be interesting to see if the local population can be won over to the US style of coffee drinking.
5. There is opportunity in many secondary cities but the concept must be very affordable. No different than China some years ago.
6. Malls, hyper-markets and Cinema Complexes are growing after some consolidation from the economic downturn.
7. There is a real shortage of experienced partners to develop an overseas franchise brand, and most deals to date have failed to meet expectations. I am not optimistic in the short term with a master franchising model, again much like China.
8. Like in any emerging market, localization is key to economic success.
GDP growth has slowed considerably in the past few years but F&B is growing rapidly and we are in the early stages of a long term food service growth story. It makes sense to make the trip to Vietnam now and start to do your homework!