How has the post-COVID-19 recovery affected Vietnam’s F&B industry?
Labor supply. Vietnam’s F&B industry is facing labor shortages and rising costs but is nearing a full recovery after the pandemic.
Revenue in key segments
According to the country’s General Statistics Office, revenue generated in the catering and accommodation services sector reached VND 124.4 trillion in the first quarter of 2022. The figure represents a year-on-year increase though it is 1.79 percent lower than in the first quarter of 2019.
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According to e-wallet player Payoo, sales in Vietnam’s F&B industry were up 50 percent year-on-year in the first quarter of 2022. The group said that the number of transactions had risen by 24 percent, indicating sector recovery. A Payoo spokesperson told VN Express that revenues were likely to increase further in Q2 as the pandemic eases and people become more comfortable eating out.
Securities brokerage VNDirect has reinforced this sentiment. The group suggested that the F&B industry could grow between 10-12 percent in 2022. The resumption of dine-in services and the recovery of domestic demand were cited as key drivers. F&B spending is also likely to increase as tourists return to Vietnam.
Vietnam also has a fast-growing middle-class population and sizeable youth demographic. In a 2018 report, PwC projected that Vietnam’s middle-class population could reach 44 million by 2020 – more than a third of the total population. This middle class is further expected to grow, spreading out geographically and becoming more diverse. And, by 2030, the size of Vietnam’s middle class is forecast to hit 95 million
Growing disposable incomes
Vietnam’s growing middle-class population reflects the country’s compound annual GDP growth rate of five percent over the past 20 years, which is 1.7 times faster than the global average
As of 2020, the average household now has a disposable income of US$4,890, while the per capita disposable income is estimated at US$1,910.
Despite the setback of the pandemic, Fitch Solutions still expects the country’s disposable incomes to continue on this growth trajectory in the medium term (2020-2024).
Over the next five years, Fitch Solutions forecast household disposable incomes to grow by a CAGR of 9.0 percent in local currency terms (7.9 percent in US dollar terms), taking household disposable incomes to a value of US$6,800 by 2024.