Anticipating trends in Vietnam’s FnB industry in 2024

Highlights of the FnB industry

Although the economy in 2023 faced many difficulties, according to Euromonitor, the value of Vietnam's FnB market in 2023 was estimated to increase by 18% compared to 2022, reaching a revenue milestone of approximately VND 720.3 trillion. Furthermore, after a strong recovery and growth, the FnB industry will continue to develop at a stable pace and is projected to reach a value of VND 938.305 trillion by 2026.

The economic downturn has affected consumer purchasing power, leading to a 3.9% decrease in revenue for FnB businesses from 2022 to 2023. Notably, the proportion of businesses reporting a decrease in profit (41.7%) was significantly higher than those reporting a decrease in revenue (33.3%), indicating challenges in profit optimization.

A highlight in 2023 was the decrease in input material prices compared to the previous year, contributing to improving the profit margin of businesses.

Consumer habits

Starting from the outbreak of the pandemic, consumers are paying more attention to their health, being cautious in their food and beverage choices, and prioritizing the use of organic, clean, and healthy foods instead of opting for fast food, fried foods, or snacking habits as before. This change in consumer behavior has led to the emergence of trends in "clean eating, clean drinking," and many food trends originate from this trend.

In the year of 2023, it was easy to see many "hot trends" in food and beverage emerging from this "clean eating, clean drinking" trend, such as diet cakes, keto milk tea, healthy mooncakes, or sugar-free sweets. This trend poses a challenge for brand leaders, requiring brands to be quick to meet customer demand, and also an opportunity for those who want to enter the FnB industry. By leveraging the peak of the healthy eating trend, newcomers to the industry can successfully attract consumer attention and quickly profit from their business activities. By 2024, the "clean eating, clean drinking" trend promises to continue to attract attention.

In recent years, the Gen Z generation has been gradually dominating the market. According to Hudson Riehle, Senior Vice President of the National Restaurant Association, "The Gen Z generation is the future of the FnB industry." In fact, young customers are increasingly proactive in their purchasing decisions, creating their own playground, and many of them are trend-creators in the FnB field.

In addition, the Gen Z customer group not only "plays" but also "spends." With curiosity and a desire for new experiences, Gen Z customers are always looking for novelty, creativity, and are willing to spend money to get these experiences. Therefore, understanding the preferences and consumption trends of Gen Z customers is the goal of many FnB brands today. Some suggestions to satisfy Gen Z customers include increasing presence on social media platforms, collaborating with food influencers for their marketing strategies, providing online ordering services, and applying technology to service experiences.

Digital transformation in FnB business

FnB business is considered one of the fastest-growing digital transformation industries in Vietnam. Firstly, most current businesses have changed their sales methods, shifting from offline, on-premises sales to online and omnichannel sales. Secondly, online marketing is also a trend that will continue to develop strongly in the Vietnamese FnB market. It is clear when looking at restaurants, cafes, or even budget eateries investing in fan pages, creating websites, even designing their own apps to build brand image and utility systems for their business operations.

According to a statistic in 2022, 82.8% of FnB businesses have undergone digital transformation, with the majority using point-of-sale management software. If this trend can be leveraged effectively, it will undoubtedly help retain customers effectively, and business operations will have a competitive advantage in the FnB market, thereby creating conditions for exponential growth.

FnB opportunities for foreign investors

In recent years, the Vietnamese market has been an attractive "pie" for many foreign investors aiming to participate in, especially under the form of franchise. According to statistics from the Ministry of Industry and Trade, over the past 10 years, more than 50% of franchise deals signed in Vietnam belong to the FnB sector. The modernization of user behavior and readiness to spend more money has positioned Vietnam as one of the top 3 countries in Asia for FnB business.

In addition, with digital transformation for dining experiences, the demand for high-quality products is increasing, along with an understanding of new trends and thinking in FnB business is also prominent, attracting the attention of foreign investors to the Vietnamese market. Conversely, Vietnamese FnB brands are also becoming more cautious about their production processes and operational activities, from selecting input materials, processing lines, packaging, to upgrading service quality. This shows that Vietnamese brands are taking steps to consolidate and maintain their position not only against foreign competitors but also to compete with domestic rivals.

With its potential and rapid development, the FnB industry is leading in many trends, but at the same time, it also faces many challenges.

Compiled by VBI