The future of the domestic confectionery market is positive, reported the Business Monitor International (BMI). — Photo tinmoi

HA NOI (Biz Hub) — The future of the domestic confectionery market is positive, reported the Business Monitor International (BMI).

According to the BMI Vietnam Food and Drink report for the second quarter 2014, the local confectionery revenue is expected to gain a year-on-year increase of 10.65 per cent to VND27.27 trillion (US$1.3 billion) for this year.

A year-on-year surge between 9.3 per cent and 10.6 per cent has been forecast for the revenue from 2015 to 2018. That would bring in between VND30.15 trillion ($1.4 billion) and VND39.88 trillion ($1.9 billion).

"The long-term outlook for the Vietnamese confectionery market is positive," said BMI.

Factors such as rising purchasing power, favourable demographics, growing health awareness and continued investments in the sector will support confectionery demand, especially with regard to chocolates, it said.

It said local chocolate revenues are expected to gain a year-on-year increase of 11.88 per cent to VND4.54 trillion ($215.2 million) for this year.

The revenue is forecast to have a year-on-year surge of 12 to 13 per cent for each year from 2015 to 2018, which is VND5 to 7.3 trillion ($237-346 million).

More personal wealth is likely to translate into a greater discretionary appetite for premium confectionery products. As an increasing number of domestic confectioners expand their upmarket product ranges, it is likely to bolster value sales growth over the coming years.

The BMI said 51.9 per cent of the Vietnamese population is estimated to be younger than 30, and the maturing of this demographic group means that there are dynamic opportunities in the mass market. Moreover, this demographic group is generally more receptive to Western cultures and will give an impetus to confectionery products.

Health awareness is prompting shifts of consumption habits towards functional and healthy confectionery products.

Capitalising on the growing trend, domestic confectioners such as Tan Tan Food & Foodstuff and Vina Mit are expanding their functional product offerings.

Regarding investments in the local confectionery sector, BMI said sustained competition levels in the Vietnamese confectionery sector have ensured that dynamism in the market is unlikely to cool off any time soon.

Nabati Indonesia, a leading Indonesian biscuit producer, recently announced plans to start distribution of its biscuit products in Viet Nam - a testament to the attractiveness of the sector. Meanwhile, domestic confectioners such as Kinh Do are expected to continue to invest in broadening their product ranges and expanding their distribution channels.

"Investment in Viet Nam's ingredients sector chimes with our favourable outlook for the country's food and drink market," the BMI said.

Belgian ingredients firm Puratos, which manufactures products for the baking and confectionery sector, announced in autumn 2012 that it will team up with fellow Belgian firm Grand-Place Holding, which produces chocolate ingredients, to set up a joint venture in Viet Nam.

The two firms will hold a respective 70 -30 stake in the new venture and will invest $10 million in the operation over the next five years.

As of now, domestic confectionery firms hold 70 per cent of the local market shares. These include Kinh Do, Hai Ha and Bibica along with North Kinh Do, Huu Nghi, Pham Nguyen, Duc Phat and other small private producers. Meanwhile, imported confectionery products have accounted for 30 per cent of the local market. — VNS