GROUP-5_CN16MPP2_TUTORED-PROJECT-REPORT

TURORED PROJECT REPORT MARKET STUDY OF CONFECTIONERY INDUSTRY IN VIETNAM LICENSE PROFESSIONNELLE DISTRIBUTION/ PROFESSIONAL DEGREE IN DISTRIBUTION TEAM NAME VU Thi Linh Chi PHAM Hai Dang NGUYEN Thuy Huyen NGUYEN Thi Nga Nga VU Thi Phuong Thao 2022 Masster’s Degree: Mrs VU Phuong Anh INTRODUCTION In recent years, along with the development of the economy and the increase in population size with a young structure, confectionery is one of the industries with high and stable growth rate in Vietnam Currently, the economy is developing at a fast pace, the appearance of more and more companies, this appearance means that the competition is getting fiercer This requires businesses to constantly innovate, develop products, create outstanding and different features in each product to both meet the needs of consumers and bring profits to the company That is why the confectionery industry in Vietnam has a high and stable growth rate But only some activities are stable and developed What are the advantages and disadvantages of confectionery businesses, and how has the revenue changed over the years? To clarify the above, our team chose the topic "analysis of the confectionery industry in Vietnam" to see the opportunities and challenges faced by businesses in this industry Table of Contents INTRODUCTION ACKNOWLEDGEMENTS I ANALYSIS OF THE ENVIRONMENT OF THE CONFECTIONERY INDUSTRY Macro-environment 1.1 Political and legal 1.2 Economic 1.3 Culture - Society 1.4 Technological 1.5 Enviromental Micro- environment 2.1 Bargaining power of supplier ( High Pressure ) 2.2 Threat of new entrants (High Pressure ) 2.3 The customer factor ( Medium Pressure ) 2.4 Substitute Products ( Medium pressure ) 2.5 Threat of Rivalry (Medium pressure ) 10 II Market research 11 3.0 Analysis of the demand for the confectionery industry in Vietnam 11 3.1 Evolution of the demand (trend in expenditure) 11 3.2 Evolution of the consumer’s segments: 12 3.3 Characteristic of buyer and analysis of their buying behavior 14 4.0 ANALYSIS OF THE OFFER 20 4.1 Analysis of the main actors 20 4.2 Identification of the strategies developed: Distribution and territorial setting-up, Promotion Strategies 21 4.3 Analysis of merchandising 26 4.4 Analysis of the offer policy: Politics of assortment 30 4.5 Analysis of the pricing policy 32 4.6 Main results of main actors (evolution last years) 34 4.7 Evolution of retail formats ( in 2020-2021) 36 4.8 Identification of the main strengths and weakness of Bibica, Kinh Do, Hai Ha 38 CONCLUSION 39 REFERENCES 40 ACKNOWLEDGEMENTS First of all, with the most sincere and deepest affection, allow us to express our deep gratitude to the individuals, and the two universities that have facilitated and supported me throughout my studies and study this topic During the time since they started studying at the school until now, they have received a lot of attention and help from teachers and friends In particular, I would like to thank Ms Vu Phuong Anh who enthusiastically guided and supported us professionally and closely monitored us during the project We not forget to remember Ms Bui Viet Thu - Homeroom teacher who encouraged, helped and guided us in time until the project was completed We would like to express our heartfelt gratitude to Mrs Caroline Mallet, our internal project guides, for their assistance and ideas during this project effort We are grateful to have received consistent support, encouragement and advice form all Rouen Normandy University Teaching Staff This is one of the key factors for the success of this project Many people, especially our classmates and team members itself, have made valuable comment suggestions on this proposal which gave us an inspiration improve our project We thank all the people for their help directly and indirectly to complete our project Once again, I would like to thank the lecturers and friends who directly helped, cared and guided me to successfully complete this project in the past time Our first step into reality still has many limitations and surprises, so it is inevitable that there will be shortcomings We look forward to receiving valuable comments from lecturers to improve your knowledge in this field more complete and at the same time have more conditions to improve our knowledge I ANALYSIS OF THE ENVIRONMENT OF THE CONFECTIONERY INDUSTRY Macro-environment 1.1 Political and legal Whether the business has the opportunity to grow or not depends on the political and legal situation of that country Politics is an important factor in business development In Vietnam, politics and law are relatively stable and there are market opening policies, which has helped domestic businesses develop, including the confectionery industry, to have the opportunity to exchange glasses economy, business development, market expansion abroad 1.2 Economic - The economy is a factor that directly affects the business activities of enterprises Vietnam's GDP in 2021 will increase by about 2.58%, of which the first quarter will increase by 4.72%; The second quarter increased by 6.73%, the third quarter decreased by 6.02% and the fourth quarter increased by 5.22% The GDP growth rate of 2021 is higher than that of 2020 but lower than the GDP growth rate of the years 2011-2019 due to the impact of the Covid-19 pandemic and social distancing This seriously affects businesses, including the confectionery industry - Inflation in 2021 will increase by 0.67% compared to the same period last year, so the price of raw materials will increase, causing production costs to also increase This directly affects the profitability of the business - Vietnam's per capita income in 2021 will reach about 4.2 million VND/person/month, down 73,000 VND compared to 2020, due to the prolonged Covid pandemic Therefore, the unemployment rate increases, the economy is also affected The decrease in per capita income leads to a decrease in household income, causing consumers to choose and reconsider their priority consumption criteria, so they will have to spend more carefully and economically Therefore, consumption habits will shift to thrifty and reasonable consumption The first priority items are food and medical care Confectionery is not in the priority items, so the consumption and output of confectionery will decrease sharply, affecting the revenue of businesses However, the Covid pandemic has also brought confectionery businesses many new opportunities and challenges Changing shopping habits makes businesses have to change their business models to match the current situation Enterprises need to have new strategies for production, consumption and distribution 1.3 Culture - Society - In the past, Vietnamese consumers were very fond of imported confectionery However, starting in 2018, consumers gradually turned to prefer confectionery products produced by Vietnamese companies Their desire when buying confectionery is that the price is cheaper than imported confectionery but good quality products, diverse and eye-catching packaging and designs - The demand for confectionery in Vietnam is very large, confectionery is mostly used daily, can be given as gifts, given on special occasions and is suitable for all ages Especially on special occasions such as holidays, Lunar New Year, Mid-Autumn Festival, parties such as birthdays, weddings, picnics, etc., the demand for confectionery is increasing Confectionery is really an indispensable product for such special occasions, it is difficult to change Therefore, on such special occasions, the great demand for confectionery is an opportunity for businesses to boost production, trade promotion and marketing to bring their businesses more money profit - Depending on the customs and habits, the taste of each person is different, so it is possible that this type of confectionery is suitable for one person's taste but not for another In Vietnam, famous confectionery products of clear origin are always favored by consumers 1.4 Technological - The pressure on production technology is really severe for confectionery enterprises in Vietnam Production technology is an important factor determining the quality of the product The development of technology has had a strong impact on businesses to use advanced production methods, Modern technical processes, advanced equipment and new useful materials to produce higher quality confectionery products Moreover, technology and technological development can be applied to perform non-core production tasks of enterprises, resulting in improved productivity and higher business efficiency Therefore, the dependence of production technology on the technology environment is very high In the past, confectionery production technology was quite traditional and rudimentary At every stage of the machine, there is human intervention However, in recent years, the confectionery industry has also invested in improving and renewing confectionery production lines, using modern machines without human intervention This improves the quality of the cake and increases the yield Many businesses have been using the French and Italian Cracker production lines, the German Caramel production lines, and the German and Dutch candy cooking technology The use and fast processing of information has helped the confectionery industry respond quickly to environmental changes and achieve high efficiency - Nowadays, with 4.0 technology, the sales and communication technology environment has changed This opens up opportunities for businesses to switch and diversify sales methods and sales channels Businesses can sell on online channels through electronic trading platforms However, this also puts great pressure on the confectionery industry to be able to develop digital technology Specifically, businesses are required to change to a new form of business, grasp the importance of the digital technology transformation model, equip equipment and technology to serve the digital transformation, train capable and knowledgeable workforce of digital technology,… 1.5 Enviromental - The main input materials of confectionery are flour, sugar, eggs and milk Because the climate in Vietnam is not suitable for growing wheat flour, all flour must be imported from abroad In Vietnam, there is a tropical monsoon climate and an average temperature of over 20 degrees Celsius, which is the right condition for growing sugarcane Not only that, with high temperature, high humidity, and a lot of rain have created favorable conditions for the development of dairy cows and poultry, creating an abundant supply of raw materials: sugar, eggs and milk - Hot and humid climate creates favorable conditions for many types of bacteria, fungi and molds to multiply, leading to damaged and unusable products This causes difficulties in the production and preservation of products Micro- environment 2.1 Bargaining power of supplier ( High Pressure ) The main raw materials of the confectionery industry include flour, sugar, the rest are milk, eggs and other materials Enterprises have quite a number of domestic and foreign suppliers Only flour is a raw material that our country cannot produce (80% imported from abroad), so the price is easily fluctuated by world prices and exchange rates Other ingredients such as sugar, nuts, flavorings, etc can be actively sourcing in Vietnam But, As mentioned in the macro environment section, climate factors directly affect the supply of domestic materials for confectionery production At those times, domestic suppliers can completely exert pressure by increasing prices or reducing product quality, failing to deliver on time, directly affecting the quality of ingredients Thereby making the profits of confectionery businesses decrease, due to increased production costs or reduced ability to meet customer needs 2.2 Threat of new entrants (High Pressure ) Vietnam has joined ASEAN ( Association of South East Asian Nations) and the WTO ( World Trade Organization ), which is a favorable condition for the economic development in general and the confectionery industry in particular But those are also big challenges for all Vietnamese businesses, especially the pressure from potential competitors that have changed the industry's competitiveness Because the confectionery industry has simple technical requirements, the investment capital is relatively small compared to some other industries, and the profits are quick However, to be able to appear on the market, future competitors still have to overcome certain barriers to entry such as: Access to distribution channels, technological and technical know-how, demand capital, product differentiation and brand specificity, etc => Therefore, in order to adhere the confectionery industry in Vietnam is not easy 2.3 The customer factor ( Medium Pressure ) - Individual customers: According to BMI (Business Monitor International) Currently, the average confectionery consumption of Vietnamese people is about 2kg/person per year, still quite low compared to the average in the world, however due to the population Vietnam's population is young, so consumption is also expected to increase in the near future On the other hand, in recent years, customers' living habits and consumption needs have changed a lot compared to the previous period Instead of eating full, people pay more attention to foods with nutritional value, healthy natural origin, not harmful to health And confectionery is no exception, the trend of buying "eat clean" confectionery is popular in Vietnam This invisibly creates great pressure for Vietnamese confectionery businesses Instead of just producing traditional confectionery like before, they launched new low-sugar, preservative-free, low-calorie products for customers who want to eat clean - Institutional customers: are important consumer objects that need attention Usually, organizations buy confectionery products as gifts for partners and employees This gift represents the whole organization and business Therefore, institutional customers demand high-class products from packaging to quality This is one of the main reasons why foreign companies and imported confectionery products are more popular 2.4 Substitute Products ( Medium pressure ) Although Vietnamese culture considers confectionery as an essential food But confectionery is actually just one of the consumers' choices for a nosh, it's not the main dish (very seldom used as a main dish) Therefore, there are many substitute products such as rice, noodles, fruit, ice cream, tea, milk and dairy products, jelly These products are also very diverse in the market 2.5 Threat of Rivalry (Medium pressure ) Currently, with a population of 98 million people, Vietnam has become a potential market for confectionery consumption not only for domestic enterprises but also for foreign companies It is estimated that there are about 30 domestic enterprises, hundreds of small production facilities and a number of foreign confectionery importers participating in the market Domestic enterprises with a series of big names such as Kinh Do, Bibica, Hai Ha, Huu Nghi, Orion Vietnam are estimated to account for 75-80% of the market the rest of the imported confectionery accounts for only 20%-25% Domestic enterprises are increasingly asserting their important position in the market with the diversity in products (for many different customers), quite good quality, suitable to the taste of Vietnamese people Meanwhile, small production facilities are gradually shrinking in terms of production scale due to low capital, outdated technology, lack of assurance of food quality, hygiene and safety • Competition of domestic business with imported goods: 20 years ago, most of the confectionery circulating in our country's market were imported from China, Thailand and Malaysia However, in the past 17, 18 years, domestic confectionery brands have begun to develop and assert their names in both domestic and export markets thanks to their good quality and more stable prices than imported goods The advantages of domestic enterprises are due to: - Firstly, most domestic products are priced 10% - 20% lower than imported confectionery products (officially) by 10% - 20% - Secondly: In terms of quality, domestic products are now not inferior to imported products, even more delicious, thanks to modern equipment imported from Japan and Europe, using modern equipment Using butter and milk materials imported from New Zealand, Denmark, the Netherlands At the same time, businesses apply most of international standards such as HACCP, ISO 9001-2021 in the production process, so they have met the market export market 10