How does NIQ evaluate the current alcoholic beverage market in Vietnam, and who are the major players dominating the sector?

Beverages contribute nearly half of the total value sales in the fast-moving consumer goods (FMCG) sector in Vietnam, and this category maintains a strong position with long-term growth.

Le Minh Trang, associate director of the Retail Measurement Service at NielsenIQ (NIQ) Vietnam

Among them, beer is considered the key category, accounting for the largest value percentage share, representing over 21 per cent of revenue among eight FMCG categories in Vietnam, which include beer, non-alcoholic beverages, tobacco, dairy, staple food, impulse food, home care, and personal care products.

The beer sector has rebounded strongly, achieving double-digit growth following the pandemic period, with the reopening of restaurants and eateries. However, in 2023, the sector saw a long-term decline in consumption due to government control measures, economic pressures, and reduced demand across all regions.

In the past 12 months, the beer sector has decreased by 6 per cent compared to the same period last year, especially in major cities. Nevertheless, Vietnam remains a promising market in the region due to its demographic advantage, consumer habits, and competitive product prices.

NIQ’s retail data indicates that there are currently over 180 beer producers in Vietnam. However, over 90 per cent of value sales and volume sales in the sector is attributed to the top four leading producers, which include both domestic and foreign-invested beer manufacturers.

Given the potential yet unstable market environment, what trends are expected to have a significant impact on the future of the alcoholic beverage sector?

From NIQ’s retail data, we observe a shift in consumer behaviour adapting to new circumstances. This change is evident in four factors: sales channels, products, packaging, and price segments. Modern sales channels such as supermarkets, minimarts, and convenience stores are becoming increasingly important for the beer sector and are also promising channels for manufacturers.

According to NIQ’s consumer behaviour report for Q2, reducing unnecessary expenses, including dining out, and increasing home cooking are common practices adopted by half of consumers in Hanoi and Ho Chi Minh City. This change has directly impacted the revenue of restaurant chains and eateries since the start of 2023. Over the past 12 months, nationwide revenue from beer in the restaurant chains and eateries has decreased by 6 per cent, with a decline of 11 per cent in the six major cities.

Economic pressures, combined with changing consumer habits, have also made canned packaging, which already had a leading position, increasingly popular. NIQ has recorded a 4 per cent increase in the contribution of canned packaging to revenue over the past three years since 2022.

Our report also indicates that health is one of the top three concerns for Vietnamese consumers, similar to other Asia-Pacific markets such as China, Hong Kong, and Japan. This mindset has directly influenced consumer habits and product choices across most sectors, including beer.

NIQ notes a nearly 35 per cent increase in the volume of low-alcohol beer products over the past 12 months compared to the previous year, particularly in the six major cities and modern sales channels in Vietnam. Finally, our retail data shows that most consumers are opting for the affordable beer segment. However, a segment of consumers still prefers premium beer for a better experience.

What are your predictions about changes in consumer behaviour towards alcoholic beverages?

Current drink-driving rules, which increased fines for drivers using alcoholic beverages in traffic, has impacted the revenue of restaurants and eateries distributing beer, and its effects are expected to persist. Consumers will reduce their frequency of drinking beer outside, affecting the premium segment.

NIQ Vietnam’s retail data also shows a decline in beer volume and consumption since Q1 2023, with a recovery only beginning in early Q2 of this year.

The polarisation of consumer preferences regarding product price segments has been evident in the beer sector over the past two years, with growth in both the mainstream and premium segments. While the mainstream segment has developed strongly due to economic factors, the premium segment is driven by a segment of consumers willing to pay more for new experiences.

Under the impact of increased special consumption tax, according to NIQ’s long-term data, the budget segment is likely to maintain its position as the main segment, contributing about 55-60 per cent of the sector’s volume, while the contribution of the premium segment will need more time to be observed.

Nevertheless, this segmentation in consumer behaviour also presents many growth opportunities for businesses with products in the respective segments.