Browse the complete Report on: Vietnam Defence and Security Report Q3 2010
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Deputy Minister of Defence Lieutenant General Nguyen Chi Vinh said in December 2009 that, as part of its modernisation drive, Vietnam’s military is considering many possible purchasing sources. In December, Vietnam ordered from Russia six diesel-electric Kilo-class Project 636 submarines (at US$2bn in total) and 12 Su-30 fighter jets. This is in addition to an earlier contract for another 12 Su-30MK2 fighter aircraft, signed in January 2009. Also, Vietnam’s Ministry of Defence signed a contract this year with Viking Air of Canada to purchase six DHC-6 Twin Otter Series 400 aircraft for Vietnam’s navy. Further, Vietnam’s Defence Minister Phung Quang Thanh announced on December 17 2009, while visiting France, that Vietnam wishes to purchase helicopters and army transport aircraft from France, as part of its modernisation drive for the military.
The government announced in December 2009 that it plans the ‘rapid development’ of its domestic, stateowned defence industries to supply the armed forces with the most modern military equipment. No further details have been revealed. Although the ‘rapid development’ effort is part of Vietnam’s aim to become a fully industrialised nation by 2020, the announcement is unlikely to affect procurement policy for many years.
Vietnam is experiencing a slowing economy. The 5.8% y-o-y GDP growth rate in Q110, as estimated by the General Statistics Office, is down from the stimulus-driven strong growth rates of H209. Exports are sluggish (-1.6% y-o-y in Q110) and domestic demand is likely to suffer from higher lending rates and double-digit inflation. The service sector, which grew 6.6% y-o-y in Q110, continues to be the main contributor to growth. We forecast a real GDP growth rate of 4.4% y-o-y for 2010, which is considerably lower than the government's 6.5% growth target.
Politically, we expect public resentment towards China to remain a concern for the government leading up to the Communist Party of Vietnam's National Congress in January 2011. With China increasingly using its expanding naval muscle to assert its claims in the South China Sea, the government has sought the means to counter Beijing without causing an escalation in tensions, which could potentially lead to an armed confrontation. Vietnam is trying to ‘internationalise’ the issue of the disputed islands in the South China Sea, while it holds the chairmanship of ASEAN in 2010. However, this is unlikely to quell nationalistic sentiment. Further, we believe the potential for Vietnam to mould a unified ASEAN stance against the Chinese claims for sovereignty over large parts of the South China Sea is limited, given that Brunei, Malaysia and the Philippines are the only other member countries with claims on the disputed islands. Moreover, China’s increasing importance as an economic partner means that many ASEAN nations are unwilling to confront Beijing politically on the issue.

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Browse the complete Report on: Vietnam Information Technology Report Q3 2010
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Market Overview
The Vietnamese IT market is estimated to grow at a compound annual growth rate (CAGR) of 9% over the 2010-2014 period. Consumer retail spending recorded growth in 2009 despite the economic slowdown, in part due to tariff reductions and aggressive price cutting. Government and business IT spending took a hit, but is expected to pick up in 2010.
The overall Vietnam IT market outlook for 2010 is one of a broad recovery that gathers pace in the second half of the year. PC sales were slower than expected during the Lunar New Year peak shopping season in Q110, partly because steep price discounting in 2009 had weakened the attraction to consumers of traditional seasonal discounts.
The addressable domestic market for IT products and services is projected by to reach US$2.9bn by 2014. An ambitious IT plan for 2010-2020 should shape many segments of the Vietnamese IT market, while Vietnam’s improving information and communication technology (ICT) infrastructure will also drive growth. Vietnam’s gradual integration into global trade networks such as the Association of Southeast Asian Nations (ASEAN) and the WTO has helped to bring down prices and increase opportunities for importers.
Industry Developments
The government’s Strategy for IT Development covers the 2010-2020 period and focuses on four major areas: enhancing IT application, developing the local IT industry, developing ICT infrastructure and developing IT human resources. A number of specific IT plans have been developed including one to modernise IT in government agencies, which was approved in March 2009. In an April 2010 cabinet meeting, Prime Minister Nguyen Tan Dung ordered all members of his cabinet to use computers while working.
In January 2010, the Vietnam Post and Telecoms Group (VNPT) in Ho Chi Minh City launched a local version of the Computers for Education programme, which will provide teachers and students in the city with low-priced laptops and DSL broadband connections. The discounts will be available through VNPT’s 30 retail outlets and 200 agents in the city. In August 2009, the Ministry of Education and Training launched a national programme to supply 1mn affordable computers to Vietnamese schools by 2011.
Import taxes on electronic products and components were lowered from January 2009, in accordance with the government’s commitments under the ASEAN free trade area (AFTA), which Vietnam entered in 2006. As of January 2009, duty on complete build unit electronic products from ASEAN countries was reduced to 0-5%. Eligible products must have an ASEAN content of at least 40%. Meanwhile, the ChinaVietnam ASEAN free trade agreement offers both opportunities and challenges to vendors, especially given the growing presence of low-cost Chinese vendors in the Vietnamese market.
Competitive Landscape
Multinational brands dominate the Vietnamese PC market, with HP the top-selling PC brand in 2009, ahead of Acer. HP’s sales have been boosted by government and education sector projects, as well as by its strategy to target the consumer segment. Other multinational PC vendors including Dell, Toshiba and Asus have enjoyed strong recent growth in the booming market.
Vietnamese software producers have a greater presence in their domestic market. Local products accounted for around 75% of market value in 2008 while foreign vendors have around 25%. Local companies have a particularly strong position in the government and small and medium-sized enterprise (SME) segments, while larger Vietnamese corporations are more likely to consider more expensive software from multinationals.
Vietnam has around 10,000 firms currently licensed to provide IT services, but only one-third are actually operating. The Ministry of Information and Communications is currently developing a draft decree to map out policies to help the IT industry grow and this is due by the end of the year. The decree will stipulate procedures and operational requirements for firms providing IT services.
Computer Sales
BMI projects that sales in Vietnam’s computer hardware market will be worth around US$1.3bn in 2010, up from an estimated US$1.2bn in 2009. The main growth driver will be affordable notebooks, with various models of the smaller form factor netbooks selling well in 2009.
PC penetration in Vietnam was around 9.6% in 2007, according to World Bank figures, and in 2010 is estimated by BMI at around 15%. Notebooks are owned by an estimated 7% of the Vietnamese population. This points to significant growth potential for the local PC market, with the most potential being in rural areas. Currently Hanoi and Ho Chi Minh City are thought to account for in the region of 85% of notebook sales.
Software
In 2010, Vietnamese software sales are projected by BMI to grow to US$178mn, despite the uncertain economic conditions, and software CAGR for 2010-2014 should be in the region of 12%. Software spending comprises around 10% of total Vietnamese IT spending.
The market is expected to reach a value of around US$312mn by 2014, with steady growth in demand for licensed software from government, enterprise and household segments. However, some vendors and distributors saw a slowdown in 2009 due to global economic headwinds. Vietnam’s software market is developing, despite the problem of software piracy, which still accounts for around 85% of software, compared with 76% in neighbor Thailand.
Services
Vietnamese IT services spending is forecast to reach around US$343mn in 2010, up from US$297mn in 2009. The economic crisis had an impact in 2009, with projects being put on hold. However, sectoral CAGR is projected at 11% over the forecast period, as the market approaches US$588mn by 2014. IT services now accounts for around 18% of total Vietnam IT spending. Over the past few years, the size of IT services deals has increased in key IT spending verticals. Growing demand for digital infrastructure projects in segments such as banking, telecoms, energy and government has attracted global IT services providers to invest more in Vietnam.
E-Readiness Vietnam’s fixed-line infrastructure is unreliable and offers poor coverage. However, Vietnam has an exceptionally high penetration rate in the mobile market, reaching 126% at the end of 2009, and registering around 110.8mn subscribers. This has been aided by mobile network operators reducing tariffs to encourage growth of their respective subscriber bases, as well as increased investment in the expansion of infrastructure to areas outside major towns and cities. Demand for mobile broadband has also been accelerated by the changing lifestyles of consumers, who use the service for accessing the internet for work and leisure.




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Browse the complete Report on: Vietnam Autos Report Q4 2010
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Vietnam's new vehicle market is characterised by fluctuating tariffs, which often make it hard to identify sustainable sales patterns. After there was evidence of tariff changes kicking in as sales for Q110 were down by 2%, despite an 80% increase in passenger car sales, total sales had returned to positive growth of 5% by the end of H110, although passenger car growth was lower at 29%. The MPV/SUV segment is still impacted by the higher special consumption tax with sales down 10%, while commercial vehicle sales were up just 2% y-o-y. While we believe that consumers appear to be adjusting to the new tax, as shown in the improvement during Q210, we have lowered our forecast for sales of domestically-produced vehicles to growth of 7.8%. This allows for some further growth in Q310, although from there on we believe the results of Q409, which were inflated by tax cuts, will be difficult to replicate.
Looking ahead, with vehicle imports set to surge when tariffs are removed under the ASEAN Free Trade Agreement (AFTA) in 2018, Vietnam's Ministry of Industry and Trade (MOIT) is looking to make the domestic industry competitive in the meantime. BMI sees an underdeveloped supplier segment as a major area for concern, which will be addressed through higher import tariffs on parts that can be made domestically. Higher rates will also be applied to vehicles imported as completely built units. In order to facilitate the sector's development, MOIT has proposed that investment projects for the auto industry should be given preference. However, BMI believes that there is a vicious circle in the Vietnamese industry in that carmakers are reluctant to invest in production without a well developed supplier base and suppliers will want to see growth potential in vehicle assembly before investing.
Fluctuating tariffs are still a factor in Vietnam's 12th position out of 14 markets in BMI's Business Environment Ratings for the autos sector in Asia Pacific. The highest score is for market risk, which stands at 85.0. Its country risk score has also risen from 49.8 to 51.5, taking its total score for risks to realisation of returns up to 68.2. Vietnam is still a country we would expect to see climb the ratings in the future, particularly if its vehicle tariff policy becomes more consistent.
Only four of the top 10 locally producing carmakers posted positive growth in H110, although the competitive landscape remained largely the same. Toyota Motor retained its lead with growth of 29%, down slightly from the 34% growth of Q110. Visuco again achieved the best growth of the top 10 manufacturers with a 72% rise in sales, up from 37% in Q110. Mekong, representing Fiat, Ssangyong and PMC, registered the worst sales with a 65% decline. We would expect to see Nissan Motor claim a greater share in future after beginning domestic production of its Grand Livina MPV to become more competitive.
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Browse the complete Report on : Vietnam Oil and Gas Report Q4 2010

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The latest Vietnam Oil & Gas Report from BMI forecasts that the country will account for 1.52% of Asia Pacific regional oil demand by 2014, while providing 4.19% of supply. Regional oil use of 21.42mn barrels per day (b/d) in 2001 is set to reach a forecast 27.15mn b/d in 2010, then to rise to around 30.21mn b/d by 2014. Regional oil production was around 8.35mn b/d in 2001 and is forecast to average an estimated 8.82mn b/d in 2010. It is set to increase only slightly to 8.89mn b/d by 2014. Oil imports are growing rapidly, because demand growth is outstripping the pace of supply expansion. In 2001 the region was importing an average of 13.07mn b/d. This total will rise to a projected 18.32mn b/d in 2010 and is forecast to reach 21.32mn b/d by 2014. The principal importers will be China, Japan, India and South Korea. By 2014 the only net exporter will be Malaysia.
In terms of natural gas, in 2010 the region will consume an estimated 496bn cubic metres (bcm) and demand of 625bcm is targeted for 2014. Production of a forecast 415bcm in 2010 should reach 522bcm in 2014, which implies net imports rising from around 81bcm to 104bcm. This is thanks to many Asian gas producers being major exporters. Vietnam’s estimated share of gas consumption in 2010 is 1.84%, while its share of production is put at 2.20%. By 2014, its share of gas consumption is forecast to be 2.56%, with the country accounting for 4.60% of supply.
We continue to predict a 2010 OPEC basket oil price level of US$83.00/bbl. This equates to Brent at just under US$85.00, WTI at almost US$87.60, Urals averaging US$83.60 and Dubai at US$83.55. The 2011 OPEC assumption is US$85.00/bbl, rising to an average of around US$90.00 in 2012 and beyond. For the whole of 2010, we are currently assuming an average global jet fuel price of US$95.50/bbl, compared with around US$70.66 in 2009. The 2010 average global gasoil price, calculated by BMI, is US$92.67/bbl, against US$68.96 in 2009. The 2010 average naphtha price is estimated at US$83.09 – compared with US$59.30/bbl in 2009. For global unleaded gasoline, BMI is now forecasting an average US$95.66/bbl in 2010, up from around US$70.17/bbl in 2009.
Vietnamese real GDP growth in 2010 is assumed by BMI to be 4.4%, followed by a forecast average annual 5.9% increase during 2010 to 2014. Exploration success has been on the rise in Vietnam, with a growing number of international oil companies (IOCs) teaming up with PetroVietnam and finding and developing hydrocarbon resources – particularly gas. We are assuming oil and gas liquids production peaking at 400,000b/d in 2010, before easing back to 372,000b/d by 2014. Beyond 2009, consumption is forecast to increase by around 5-7% per annum to 2014, implying demand of 460,000b/d by the end of the forecast period. Gas production is forecast to increase from the estimated 2010 figure of 9.1bcm to 24.0bcm by 2014 – providing a basis for exports.
Between 2010 and 2019, we are forecasting a decline in Vietnamese oil production of 18.75%, with crude volumes peaking at 400,000b/d in 2010, before slipping to 325,000b/d by 2019. Oil consumption between 2010 and 2019 is set to increase by 68.13%, with growth beyond 2009 ranging from 5.0% to 7.0% per annum and the country using 625,000 b/d by 2019. Gas production is expected to rise from an estimated 9.1bcm in 2010 to 34.0bcm in 2019. With 184% demand growth, we see potential for exports later in the period. Details of BMI’s 10-year forecasts which provide regional and country-specific projections, can be found at the end of this report.
Vietnam takes fourth place, behind China, in BMI’s composite Business Environment (BE) league table, which reflects largely its strong upstream position. The country now holds third place, behind India, in BMI’s updated upstream Business Environment Ratings, with its ranking reflecting a reasonable resource position, better-than-average growth outlook, attractive licensing terms and an IOC-friendly competitive environment. There is a comfortable seven-point gap between Vietnam and fourth-placed Papua New Guinea (PNG), which should keep it safe from any near-term challenges. Vietnam ranks 12th, just behind Hong Kong and Pakistan, in BMI’s downstream Business Environment Ratings, reflecting its modest (but growing) refining capacity, above-average oil and gas demand growth outlook,
and low level of retail site intensity.


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In terms of natural gas, in 2010 the region will consume an estimated 496bn cubic metres (bcm) and demand of 625bcm is targeted for 2014. Production of a forecast 415bcm in 2010 should reach 522bcm in 2014, which implies net imports rising from around 81bcm to 104bcm. This is thanks to many Asian gas producers being major exporters. Vietnam’s estimated share of gas consumption in 2010 is 1.84%, while its share of production is put at 2.20%. By 2014, its share of gas consumption is forecast to be 2.56%, with the country accounting for 4.60% of supply.

We continue to predict a 2010 OPEC basket oil price level of US$83.00/bbl. This equates to Brent at just under US$85.00, WTI at almost US$87.60, Urals averaging US$83.60 and Dubai at US$83.55. The 2011 OPEC assumption is US$85.00/bbl, rising to an average of around US$90.00 in 2012 and beyond. For the whole of 2010, we are currently assuming an average global jet fuel price of US$95.50/bbl, compared with around US$70.66 in 2009. The 2010 average global gasoil price, calculated by BMI, is US$92.67/bbl, against US$68.96 in 2009. The 2010 average naphtha price is estimated at US$83.09 – compared with US$59.30/bbl in 2009. For global unleaded gasoline, BMI is now forecasting an average US$95.66/bbl in 2010, up from around US$70.17/bbl in 2009.

Vietnamese real GDP growth in 2010 is assumed by BMI to be 4.4%, followed by a forecast average annual 5.9% increase during 2010 to 2014. Exploration success has been on the rise in Vietnam, with a growing number of international oil companies (IOCs) teaming up with PetroVietnam and finding and developing hydrocarbon resources – particularly gas. We are assuming oil and gas liquids production peaking at 400,000b/d in 2010, before easing back to 372,000b/d by 2014. Beyond 2009, consumption is forecast to increase by around 5-7% per annum to 2014, implying demand of 460,000b/d by the end of the forecast period. Gas production is forecast to increase from the estimated 2010 figure of 9.1bcm to 24.0bcm by 2014 – providing a basis for exports.

Between 2010 and 2019, we are forecasting a decline in Vietnamese oil production of 18.75%, with crude volumes peaking at 400,000b/d in 2010, before slipping to 325,000b/d by 2019. Oil consumption between 2010 and 2019 is set to increase by 68.13%, with growth beyond 2009 ranging from 5.0% to 7.0% per annum and the country using 625,000 b/d by 2019. Gas production is expected to rise from an estimated 9.1bcm in 2010 to 34.0bcm in 2019. With 184% demand growth, we see potential for exports later in the period. Details of BMI’s 10-year forecasts which provide regional and country-specific projections, can be found at the end of this report.

Vietnam takes fourth place, behind China, in BMI’s composite Business Environment (BE) league table, which reflects largely its strong upstream position. The country now holds third place, behind India, in BMI’s updated upstream Business Environment Ratings, with its ranking reflecting a reasonable resource position, better-than-average growth outlook, attractive licensing terms and an IOC-friendly competitive environment. There is a comfortable seven-point gap between Vietnam and fourth-placed Papua New Guinea (PNG), which should keep it safe from any near-term challenges. Vietnam ranks 12th, just behind Hong Kong and Pakistan, in BMI’s downstream Business Environment Ratings, reflecting its modest (but growing) refining capacity, above-average oil and gas demand growth outlook, and low level of retail site intensity.

ReportsandReports comprises an online library of 10,000 reports, in-depth market research studies of over 5000 micro markets, and 25 industry specific websites. Our client list boasts almost all well-known publishers of such reports across the globe. We as a third-party reseller of market research reports employ a number of marketing tools, such as press releases, email-marketing and effective search-engine optimization techniques to drive revenues for our clients. We also provide 24/7 online and offline support service to our customers.

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Suite 727, Dallas, TX 75231

Tel: +1-888-989-8004

Browse the complete Report on : Vietnam Consumer Electronics Report Q4 2010


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Vietnam’s consumer electronics devices market, defined as the addressable computing devices, mobile handsets and video, audio and gaming products, is projected to be worth around US$4.5bn in 2010. This is expected to increase to US$6.7bn by 2014, driven by growing affordability of key products. In Q110 Vietnamese retail demand for some consumer electronics products grew less than expected despite aggressive retail promotions, but sales are expected to pick up in the second half of the year. Sales in the 2010 Lunar New Year shopping season suffered in part due to previous aggressive price cutting, which blunted the impact of seasonal promotions. In 2010, the China-ASEAN Free Trade Agreement offers both opportunities and challenges to vendors and will further the penetration of low-cost Chinese brands.
The electronics devices market is forecast to increase at an overall compound annual growth rate (CAGR) of 10% through 2014. The vast and relatively underpenetrated rural market presents a significant growth opportunity as the government rolls out measures to boost rural incomes.


Computers

Computers accounted for around 35% of Vietnam’s consumer electronics spending in 2009. Despite a relatively weak performance in the first quarter of the year, BMI forecasts Vietnamese domestic market computer hardware sales (including notebooks and accessories) of US$1.5bn in 2010, up from US$1.3bn in 2009. Computer hardware CAGR for the 2010-2014 period will be around 14%, with notebooks accounting for above 30% of shipments currently.


AV Devices

AV devices accounted for around 25% of Vietnamese consumer electronics spending in 2009. Vietnam’s domestic audio, video and gaming device market is forecast at US$1.1bn in 2010. The market is expected to grow at a CAGR of 15% between 2010 and 2014 up to a value of US$1.8bn at the end of the forecast period. The government’s plan for digital TV broadcasting migration by 2020 will encourage replacement TV purchases.


Mobile Handsets

Vietnamese mobile handset sales accounted for around 40% of Vietnamese consumer electronics spending in 2009. Total Vietnamese market handset sales are expected to grow at a CAGR of 12% to 23.5mn units in 2014, as mobile subscriber penetration soars towards 292%. The inaugural Vietnamese 3G mobile services launch by VinaPhone will provide a boost, but the market remains dominated by low-priced handsets.


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ReportsandReports comprises an online library of 10,000 reports, in-depth market research studies of over 5000 micro markets, and 25 industry specific websites. Our client list boasts almost all well-known publishers of such reports across the globe. We as a third-party reseller of market research reports employ a number of marketing tools, such as press releases, email-marketing and effective search-engine optimization techniques to drive revenues for our clients. We also provide 24/7 online and offline support service to our customers.


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Browse the complete Report on - Vietnam Food and Drink Report Q4 2010

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The Vietnamese economy appears to be solidly on the road to recovery, with BMI now forecasting real GDP growth of 6.0%, in light of faster-than-expected growth in H110, although we continue to warn of the risks of overheating. Vietnam's real GDP growth in Q210 came in at 6.4% y-o-y, and while a breakdown of growth by expenditure is unavailable, we believe that private consumption is booming and is set to bolster domestic demand in H210 as confidence continues to improve. The country’s food and drink sector is certain to benefit from this positive outlook. In particular, the MGR sector is forecast to experience strong growth as it continues to attract considerable attention from international retailers, despite the challenges involved in doing business in Vietnam. Given that it has one of the highest MGR growth forecasts in the Asia Pacific region, it is not hard to see why.


Headline Industry Data

• 2010 food consumption growth = +11.2%; forecast to 2014 = +64.9%
• 2010 alcoholic drink sales = +5.7%; forecast to 2014 = +36.6%
• 2010 beer volume sales = +2.9%; forecast to 2014 = +31.7%
• 2010 mass grocery retail sales = +12.3%; forecast to 2014 = +71%

Key Company Trends
Expansions in the Dairy Sector – In May, Dutch dairy cooperative Royal FrieslandCampina announced
plans to invest US$12mn in the expansion of production capacity at a factory in Vietnam in order to meet the growing demand for dairy products with its Dutch Lady, YoMost and Friso brands. The factory in Binh Duong is scheduled to be fully operational by the end of 2012. Vietnamese dairy consumption growth will remain solid over our forecast period, as strong economic growth will filter through to rising disposable incomes. This will push up demand for non-essential food products.
Confectionery Consolidation – Also in May, Vietnamese confectioner Kinh Do Corp announced plans to acquire two smaller local players. Kinh Do Corp will take 100% ownership of North Kinh Do Food Joint Stock Company in a deal worth VND726bn (US$38.3mn), while it will also acquire the 72% interest it does not already hold in Ki Do Joint Stock Company for around VND239bn (US$12.6mn) - both estimates based on the company's last closing share price of VND53,000. Kinh Do's expansion plans are timely as we expect an increase in sector competition along with strong growth forecasts. Kinh Do's acquisition-led enlargement should significantly improve its competitiveness, giving it access to a larger product pipeline, a wider distribution network and improved economies of scale in terms of procurement and manufacturing.


Key Risks to Outlook
Rising Inflation – Falling food prices are temporarily keeping consumer price inflation in check, but we are increasingly worried that a potential pick-up in food prices in the coming months may destabilise inflation expectations and could have a negative impact on food and drink spending.
Infrastructure Upgrades Desperately Needed – The success of government initiatives to promote alternative sources of growth will be heavily dependent on Vietnam's infrastructure developments over the coming years. Despite witnessing relatively strong real GDP growth of 5.3% in 2009, chronic power shortages and congested roads are evidence that the economy faces risks of overheating, as well as operational bottlenecks for businesses. Most importantly, we are increasingly concerned that the government's failure to make infrastructure investments in time due to its growing debt could greatly limit the economy's potential for growth going forward.


About Us
ReportsandReports comprises an online library of 10,000 reports, in-depth market research studies of over 5000 micro markets, and 25 industry specific websites. Our client list boasts almost all well-known publishers of such reports across the globe. We as a third-party reseller of market research reports employ a number of marketing tools, such as press releases, email-marketing and effective search-engine optimization techniques to drive revenues for our clients. We also provide 24/7 online and offline support service to our customers.
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Contact:
Ms. Sunita
7557 Rambler road,
Suite 727, Dallas, TX 75231
Tel: +1-888-989-8004
http://reportsandreports.blogspot.com/

http://reportsandreports.proarticles.co.uk/

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Browse the complete Report on - Vietnam Food and Drink Report Q4 2010

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at http://www.reportsandreports.com/Publishers/business-monitor-international/

The Vietnamese economy appears to be solidly on the road to recovery, with BMI now forecasting real GDP growth of 6.0%, in light of faster-than-expected growth in H110, although we continue to warn of the risks of overheating. Vietnam's real GDP growth in Q210 came in at 6.4% y-o-y, and while a breakdown of growth by expenditure is unavailable, we believe that private consumption is booming and is set to bolster domestic demand in H210 as confidence continues to improve. The country’s food and drink sector is certain to benefit from this positive outlook. In particular, the MGR sector is forecast to experience strong growth as it continues to attract considerable attention from international retailers, despite the challenges involved in doing business in Vietnam. Given that it has one of the highest MGR growth forecasts in the Asia Pacific region, it is not hard to see why.


Headline Industry Data

• 2010 food consumption growth = +11.2%; forecast to 2014 = +64.9%
• 2010 alcoholic drink sales = +5.7%; forecast to 2014 = +36.6%
• 2010 beer volume sales = +2.9%; forecast to 2014 = +31.7%
• 2010 mass grocery retail sales = +12.3%; forecast to 2014 = +71%

Key Company Trends
Expansions in the Dairy Sector – In May, Dutch dairy cooperative Royal FrieslandCampina announced
plans to invest US$12mn in the expansion of production capacity at a factory in Vietnam in order to meet the growing demand for dairy products with its Dutch Lady, YoMost and Friso brands. The factory in Binh Duong is scheduled to be fully operational by the end of 2012. Vietnamese dairy consumption growth will remain solid over our forecast period, as strong economic growth will filter through to rising disposable incomes. This will push up demand for non-essential food products.
Confectionery Consolidation – Also in May, Vietnamese confectioner Kinh Do Corp announced plans to acquire two smaller local players. Kinh Do Corp will take 100% ownership of North Kinh Do Food Joint Stock Company in a deal worth VND726bn (US$38.3mn), while it will also acquire the 72% interest it does not already hold in Ki Do Joint Stock Company for around VND239bn (US$12.6mn) - both estimates based on the company's last closing share price of VND53,000. Kinh Do's expansion plans are timely as we expect an increase in sector competition along with strong growth forecasts. Kinh Do's acquisition-led enlargement should significantly improve its competitiveness, giving it access to a larger product pipeline, a wider distribution network and improved economies of scale in terms of procurement and manufacturing.


Key Risks to Outlook
Rising Inflation – Falling food prices are temporarily keeping consumer price inflation in check, but we are increasingly worried that a potential pick-up in food prices in the coming months may destabilise inflation expectations and could have a negative impact on food and drink spending.
Infrastructure Upgrades Desperately Needed – The success of government initiatives to promote alternative sources of growth will be heavily dependent on Vietnam's infrastructure developments over the coming years. Despite witnessing relatively strong real GDP growth of 5.3% in 2009, chronic power shortages and congested roads are evidence that the economy faces risks of overheating, as well as operational bottlenecks for businesses. Most importantly, we are increasingly concerned that the government's failure to make infrastructure investments in time due to its growing debt could greatly limit the economy's potential for growth going forward.


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BMI View: Consistent economic growth have led to double-digit consumption growth forecasts across all agricultural sectors in Vietnam. However, the industry will continue to produce surpluses in coffee and rice - but few other commodities. Indeed, with a rising population and incomes, the country will remain a net importer of all livestock and dairy goods over the forecast period. Although the Vietnamese government is investing in several sectors to increase production, most of the industry, barring rice, will remain import-dependent and vulnerable to changes in global agricultural prices.
Key Trends:
- Sugar production growth to 2014: 26% to 1.26mn tonnes. Gains will be driven by stronger domestic demand and an increase in yields. Despite this, the country will likely remain a net sugar importer, as demand is expected to outstrip supply.
- Corn Consumption growth to 2013/14: 51% to 8.1mn tonnes. Animal feed will remain the primary use for corn to 2014 and beyond (feed accounted for 73% of total demand in 2009) and consequently our demand outlook for corn is very closely linked to our Vietnamese livestock forecasts.
- Pork production growth to 2014: 31% to 2.4mn tonnes. Rising incomes will stimulate domestic meat consumption growth and production will increase to keep pace. Furthermore, the livestock industry has become a key focus of government efforts to modernise food processing.
- 2010 Real GDP Growth: 6% (up from 5.3% in 2009; predicted to average 6.3% from 2010 until 2014).
- Consumer Price Inflation: 8% y-o-y in July 2010 (up from 3% y-o-y in July 2009). Industry Developments
Vietnam's coffee sector has grown significantly over the last 20 years, with yields doubling over that time, while the area planted has expanded from 42,000 hectares to over 509,000 over that time. Out to 2013/14, we expect production growth of 23% to 22.8mn bags, as the Vietnamese government is aiming to increase replanting of coffee trees. Work on replacing trees, many of which are more than 20 years old, will improve disease resistance and thus yields in the long term. Another growth driver will be export opportunities, given that Vietnam is the world's largest exporter of robusta coffee.
Despite virtually flat production growth in recent years and even a slight decrease in 2009/10, we believes Vietnam's rice sector will experience considerable growth over our forecast period, buoyed by improvements in infrastructure, higher yields and increased domestic demand. Compared with many of its agricultural sub-sectors, Vietnamese rice is actually very competitive relative to many of its regional peers and is well positioned to ensure the country remains a net exporter. Indeed, it will continue to be one of the world's few rice exporters, the second largest in 2009/10.
Vietnamese dairy consumption has expanded significantly in the last 15 years, driven by relatively large increases in domestic consumption and rising incomes, which have fostered increased milk consumption. To 2013/14, we are forecasting 40.9% growth in Vietnamese fluid milk production to 400,000 tonnes. Dramatic increases in cattle numbers and increased public and private sector investment, in an effort to reduce the country's growing import dependency, will support the strong growth. Commercialisation will also play a key role as larger, more efficient farms begin to play a greater part in total milk production.


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ReportsandReports comprises an online library of 10,000 reports, in-depth market research studies of over 5000 micro markets, and 25 industry specific websites. Our client list boasts almost all well-known publishers of such reports across the globe. We as a third-party reseller of market research reports employ a number of marketing tools, such as press releases, email-marketing and effective search-engine optimization techniques to drive revenues for our clients. We also provide 24/7 online and offline support service to our customers.
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