Newsletter 2022/1

⚡Focus topic: Shake-Up in Vietnamese LEH

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In the Vietnamese food retail sector, there have been some significant developments in recent weeks that will have a lasting impact on this sector.

According to Deloitte , there were 300 supermarkets and 2,400 convenience stores (CVs) in Vietnam in 2019. By far the most important player in this market is the Masan Group, which operated 70 supermarkets and 1,700 CVs under the "WinMart" brand in the previous year. Masan is a locally invested conglomerate that only developed its retail arm in 2019 through the acquisition of Vingroup's retail operation. Other major Vietnamese players are Saigon Co.Op, Intimex and Hapro. Foreign companies have repeatedly entered the market in recent years. However, European players Metro, Big C and Auchan have since left Vietnam. Asian players such as Aeon (Japan), Lotte (Korea) and MM Mega Market (Thailand) are currently active in Vietnamese food retail.

All competitors are pursuing aggressive growth strategies. The local market is said to have a lot of potential. Although Vietnam has a population similar to Japan (100 to 125 million), the number of food retail outlets here is only around 5% of the Japanese figure. In contrast to the mature Japanese market, the Southeast Asian country is in the midst of a transition from "traditional" retail via wet markets and mom-and-pop shops to "modern" retail via supermarkets and CVs._cc781905-5cde-3194-bb3b- 136bad5cf58d_

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The Masan Group, which owns the Winmarts mentioned above, managed to make the biggest "splash" in the past few weeks. In November 2021 , the company announced that Korean SK Group was investing $340 million in e-commerce platform Crown X. Masan was able to attract other major investors to the project beforehand, including Alibaba. This new funding should give further impetus to this project and Vietnamese online trade. In January 2022, the announcement followed that "Winmart+" is now also starting franchising.  This brand has so far grown through the establishment of its own outlets operated by the brand owner. The first two convenience stores under the "Winmart+" brand have now been put into operation as a franchising operation. The owner of the brand, the Masan Group, announced on this occasion that it would operate 30,000 outlets (2/3 of them franchises) in 2025, which would represent a tenfold increase in current market coverage.

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Although the Masan Group is well on the way to becoming a dominant market player in food retail both online and offline, new players are still entering the market. Two large real estate developers, Novaland and BRG, announced in March that they would enter the food retail sector. It is noteworthy that companies of this type, previously outside the industry, are involved in this market. Because the land acquisition for large-scale supermarkets, especially in the inner-city area, is considered difficult, these real estate developers can in a certain way fully exploit their core competencies. Novaland opened three outlets in Ho Chi Minh City on March 18 . 300 stores are set to open in 2022, with the number rising to 2,000 by 2025.  BRG is cooperating with the Japanese retailer Sumitomo to expand its "Fujimart" brand. The current three stores in Hanoi are set to expand to 50 outlets nationwide by 2028.

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For German exporters, these developments mean that the market for high quality food in Vietnam will continue to grow thanks to the expanding modern food retail trade. However, market concentration is increasing. The Masan Group, which is already dominant today, will probably become even more dominant in the coming years, which will make access to mass retail more difficult. Nevertheless: Smaller and medium-sized supermarket chains, some of which are aimed at wealthier groups of buyers, can be a potential sales market in "brick-and-mortar" food retail. ​

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