Vietnam's F&B industry faces profit squeeze in 2024: report

Vietnam’s food and beverage (F&B) sector experienced a contraction in profitability due to rising cost pressures in 2024, despite an overall revenue increase of 16.6% year-on-year.

The findings were mentioned in a report released on Tuesday by iPOS, a provider of hotel and café management solutions, in collaboration with Nestlé Professional.

The report, based on a survey of 4,005 restaurants and cafés and 4,453 consumers nationwide, integrates secondary data from market research firms and in-depth interviews with nearly 100 F&B industry experts and business leaders in Vietnam.

According to the findings, by the end of 2024, the number of F&B outlets in Vietnam reached 323,010, marking a 1.8% rise compared to the previous year. Despite challenges in consumer spending, the F&B sector’s revenue is projected to reach approximately VND688.8 trillion ($27.3 billion), up 16.6% from 2023.

However, despite the overall industry growth, only 25.5% of the 4,005 surveyed F&B businesses reported stable revenue compared to 2023, with just 14.7% experiencing growth.

Facing rising raw material costs, 49.2% of F&B businesses anticipate raising prices in 2025 to offset cost pressures.

The iPOS report noted that “2024 marked a natural 'cleansing' process, where many underperforming independent outlets were forced to close due to operational cost pressures and reduced consumer purchasing power. Conversely, larger F&B chains adapted more effectively, benefiting from optimized operational strategies and financial management.”

The survey of nearly 4,500 consumers indicated that while overall spending remained steady, consumers increasingly prioritized high-quality offerings at affordable prices.

Food trends

Regarding food trends, after a dynamic 2023 filled with a surge of emerging trends, the F&B market in 2024 showed signs of slowing down. The report found that 52.8% of businesses refrained from following any particular food trend, reflecting a more cautious approach to trend investments.

However, some trends continued to gain traction, with Matcha beverages emerging as the dominant, chosen by 29.6% of businesses, thus becoming a notable focus in Vietnam’s F&B sector.

Meanwhile, once-popular strong-flavored teas, which had been a major trend in 2023, showed signs of saturation, as the preference for these beverages dropped to 21.4%.

Many businesses made substantial investments in specialty Oolong tea, Shan tuyet tea, and other traditional teas with robust flavors, emphasizing traditional tea-drinking experiences.

Despite the challenges, the F&B industry in Vietnam is projected to grow by 9.6% in 2025, with expectations for the emergence of new food trends.

In the food sector, fresh beef hotpot from Chaozhou, known for its rich flavors and tender beef, has gained significant attention. Additionally, steam-heated hotpot, a method that preserves nutrients without the use of oil, is becoming an increasingly popular choice among consumers.

In the beverage sector, Matcha continues to be a dominant force, not only in traditional formulations but also through creative variations that cater to the diverse tastes of younger consumers.