Return of on-premise consumption to boost Vietnam hot drink sales by 9.1% in 2027
The hot drinks market will reach $4.3b by that year.
The resurgence of social gatherings, celebrations, and tourism activities is bolstering the on-premise consumption of hot drinks in Vietnam, according to a report by GlobalData
Additionally, new product launches and marketing campaigns by leading companies and the expansion of hotel, restaurant, and café (HoReCa) chains are accelerating the recovery of the country’s hot drinks sector. As a result, Vietnam’s hot drinks market will expand to VND106.5 trillion ($4.3b) by 2027, registering a compound annual growth rate (CAGR) of 9.1% over 2022 to 2027.
Other drinks category will register the fastest value CAGR of 9.7% from 2022 to 2027, followed closely by hot coffee with a projected CAGR of 9.6%.
“The easing of the Zero COVID-19 policy, and the improving economic conditions unleashed pent-up consumer demand for out-of-home dining occasions, social gatherings, and celebrations in 2022. Moreover, café operators, such as Starbucks, Phuc Long Coffee & Tea Co, Viet Thai International, The Coffee House, and Chuk Coffee & Tea introduced novel menu offerings. As a result, on-premise consumption of hot tea and hot coffee rebounded in Vietnam in 2022,” Tim Hill, Key Account Director at GlobalData Singapore said.
The report also said that as Vietnam is one of the leading global producers of tea and coffee, particularly the Robusta coffee bean variety, the market is flush with cheap products. Despite spiralling inflation posing a concern for the hot drinks sector in 2022, the rising global consumption of affordable instant coffee and expresso blends spurred demand for economical Robusta coffee beans.
However, as adverse weather undermined coffee harvests in Vietnam, Brazil, and Colombia, Vietnam’s Robusta coffee stockpiles shrank, sending prices soaring. Manufacturers and food service operators struggled to absorb rising product/menu prices in 2022.
“As consumers revert to full-time onsite education and work, and foreign tourist arrivals rebound, on-premise sales of hot drinks will increase steadily in 2023. Moreover, café operators, including Starbucks, Phuc Long Coffee & Tea, and Trung Nguyen, are gearing up to launch new outlets. New value-added products, such as bubble tea, and marketing promotions will stimulate the sector’s value sales,” Hill said.