The market Analysis

1) Actual and potential market size:

The population of the city is over 3 million. The city received US$902.6 million worth of
investment in the first half of the year 2018, 141% higher than last year. Due to the
province’s ability to attract investments, many skilled local and foreign workers live in
Bien Hoa. As a part of the southern key economic zone, the city has been growing steadily
at 12-15% a year, with its industrial and services sectors growing strongly, and having a
high average income. Bien Hoa is the central of Industry in South Viet Nam. There are
about 20 industrial parks such as Bien Hoa I Industrial Park, Amata Industrial Park and
Nhon Trach I Industrial Park.

The city is also the economic and administrative hub of Dong Nai province and situated
close to HCM City’s eastern part near its major industrial parks. This has added value to
land prices and attracted many people to live in Bien Hoa, especially with construction of
Long Thanh International Airport slated to begin at the end of 2019. In addition, the
southeastern province of Dong Nai plans to earmark over VND55 trillion for infrastructure
development during the 2018-2020 period. Of this, investment for transport infrastructure
accounts for some VND35 trillion, connecting the province with other localities in the key
southern economic zone in the coming period, local media reported. With the ongoing
construction and development of multiple projects connecting various modes of transport,
the provincial Party Committee expects the socioeconomic development of Dong Nai to
receive a much-needed boost.

According to those pieces of information, it can be seen that Bien hoa, Dong nai province
is valuable enough and suitable market. Because of large industrial parks, closed location
with HCM city, large population, and high average income, it can be concluded that it
would also be potential enough in the future for food service industry

2) Trends

The food and beverage industry was valued at about $21.4 billion in 2016 and is
expected to continue growing at CAGR of 13% until 2019. Both industries offer a
myriad of opportunities for foreign investors.

By July 2017, there were 1,000 Japanese restaurants open in Vietnam. More than half
 of the Japanese restaurants within Ho Chi Minh city (Vietnamnews, 2017). To serve
this increasing demand, Japanese food companies are setting up more local businesses
to process and preserve products, especially in the southern region- Ho Chi Minh City,
Ba Ria- Vung Tau and Dong Nai (Vietnam Economics News, 2017).

The Vietnam’s recent rise to middle income level (GDP per capita reached over $2,200
in 2017 and is forecasted to reach over €2,500 in 2020) has enabled Vietnamese people
to spend more on travel, high-end hotels and resorts, and restaurants.

3) Customers

Increasing living standards drives and changes consumption behavior from Vietnamese.
Food is a key community activity for the Vietnamese – e.g. family parties, staff outings.
Eating out is a common habit for Vietnamese citizens in urban areas. F&B is still by
far the largest spending category and typically, consumers in the South are generally
more open and willing to try new things than those is the North. Besides, people in
Vietnam, particularly in the bigger cities, tend to eat out a lot. Places to eat, from the
food cart on the sidewalk to fine dining restaurants, abound. According to a study by
Decision Lab, Vietnamese youths born between 1994 and 2002, defined as Generation
Z, spend an average of VND892,443 (US$40) a month eating away from home. The
market research group polled 6,000 respondents from the age bracket in Hanoi, Da
Nang and Saigon.

In terms of concepts, Asian restaurant such as Vietnamese, Thai, Japanese, and Korean
clearly dominate the market with the share of 53%. On the other hand, only 7% of
restaurants are Western – American, French, Italian, etc. Yet, remarkably, it is 2.5 times
more expensive to eat out in the Western concept than in the Asian one. Location has
been highlighted as the main criteria for choosing a restaurant due to the growing urban
population and traffic. About 63 percent of the surveyed population highlights location,
followed by cleanliness, and food quality at 34 percent each as the top three criteria for
choosing a restaurant.

International operators have flooded into the market in recent years, changing the
landscape of the F&B industry, and offering Vietnamese consumers even greater choice
and an expanded diversity of dietary options.
4) Customer segments

12SABU’s core target segment is between 20 – 39 years old with average income from
15 million to 50 million. Dong Nai is located in Region I, so that minimum wage per
month is 4,180,000 according to Decree 157/2018/ND-CP from 01-01-2019 to 31-12-
2019. Dong Nai has a population of over 3 million inhabitants of which 1.124.678
people are in labor age which fits 12SABU’s core target segment. In addition, dong
Nai has 13 universities, colleges, and technical secondary schools, and 53 vocational
training schools which can be seen that it would be potential place.

5) Distribution channel

According to A.T. Kearney, Vietnam ranked 6th in the Global Retail Development
Index in 2017, raising the country’s profile to one of the most potential retail markets
for investment. By December 2017, there were 800 supermarkets, 150 shopping
malls, 9,000 traditional markets and approx.2.2 million retailers in Vietnam.
Convenience stores and mini-marts are the fastest growing segments (ASEAN Today,
2017).

There is an increasing trend of importing farm products from Japan. Though prices
of Japanese products are higher than those from other Asian countries such as Korea
and Thailand, Vietnamese consumers are willing to buy them for the high quality and
specific tastes. (Vietnam Economic News, 2017)

Work begins on VND200 billion fruit and veg processing plant in Son La. Nafoods
Tay Bac JSC broke ground on a fruit and vegetable processing plant in Moc Chau
district, northern Son La province on December 19. The plant will be built on a 2ha
plot in the Bo Mun Industrial Zone, Moc Chau District with an investment of
VND200 billion over two phases of construction. It is expected to come into
operation in September 2018. Equipped with modern facilities, the plant will have a
daily processing capacity of 120 tons of passion fruit and vegetables. This production
increase will lay the foundation for Son La passion fruit and other farm produce to
gain a firm foothold in the domestic market and spread to demanding markets like
the EU and America. After two years of cultivation, Nafoods Northwest Company
has established nearly 700ha of passion fruit crops and is expected to raise the size
to 5,000ha by 2021. According to Nguyen Van Anh, CEO of Nafoods Northwest
Company, the achievements of being certified by Global G.A.P and completing the
export of their first 3 tons of passion fruit to France and Switzerland are considered
a passport for the fruit to conquer the world’s most demanding markets. This is a big
event not only for Son La province but also for Vietnam’s agriculture on a grand
scale, said Mr Van Anh.
 Reference
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