Vietnam's F&B sector to see modest recovery in 2025: broker

Vietnam's food and beverage (F&B) sector has seen growth since Q2/2024 - the first signs of recovery, and the sector is expected to see modest recovery in 2025 due to consumer caution, according to leading broker SSI Securities.

Consumers will continue to focus on prices and prioritize products that offer good values. Several recent surveys show consumer confidence is improving, but less than half of households expect their finances to get better over the next 12 months, SSI said in a report.

"As consumers tighten up spending, demand for essential goods will recover slowly. Meanwhile, we see e-commerce continuing to grow strongly as consumers get used to discounts and home delivery programs. The wave of cheap imports from e-commerce also increases competitive pressure," it noted.

The average price of food and beverage stocks on the Ho Chi Minh Stock Exchange (HoSE) has jumped by 23% in 2024, mainly thanks to Masan Consumer Corp (MCH, up 182%) and Quang Ngai Sugar JSC (QNS, up 21%).

Leading diary corporation Vinamilk (VNM) inched down 0.6%, Sabeco (SAB) decreased 3.4%), and Masan Group (MSN) went up 9%, while the HoSE's benchmark VN-Index rose 12.7%, according to SSI data.

Consumers are increasingly tightening their spending, delaying purchases, and only spending on necessities. However, they still appear to be comfortable with some non-essential spending on travel, home care and personal care.

This is clearly reflected in the Jan-Sept results of listed companies, in which VNM and SAB recorded revenue growth of 3.5% and 4.6% year-on-year, respectively, and profit after tax growth of 11% and 6%, the broker noted.

VNM achieved this result thanks to reduced raw material costs, while SAB cut marketing costs. MCH recorded outstanding results with revenue and after-tax profit growth of 11% and 14% respectively, largely thanks to its portfolio of essentials, new products, convenience and health care products.

SSI said it favors companies with strong brands, which will benefit from increased value through continuous product innovation that meets consumer demand (MCH) and the transition from near-premium products to traditional products (SAB).

MCH has been able to protect its market share, while SAB has recorded market share expansion in 2023-2024. For VNM, protecting domestic market share is a challenge. Many domestic and foreign companies are actively cutting VNM's market share (TH with UHT milk, Vitadairy with formula milk, and IDP with drinking yogurt).

"In the global market, it takes time for VNM to maintain double-digit export growth due to economic fluctuations. Therefore, we maintain a neutral stance on this stock," the broker added.

Agriculture, food and beverage, energy and tourism are four industries in Vietnam with solid potential for green and sustainable growth, according to Tran Tue Tri, senior advisor with Vietnam Brand Purpose.

Speaking at The Makeover 2024, themed “Foster Green Dynamics” organized by Talentnet in Ho Chi Minh City in October, she noted that considerable efforts were already being exerted to green the agriculture sector, based on environmental protection needs and demand in foreign markets. The second area with green potential was F&B, given the wide variety of Vietnamese cuisine.