VietNamNet Bridge – The sweets market proves to be very
lucrative in the eyes of investors, which explains why more than 100 bakery
brands have been existing there. However, there are many spikes and thorns on
the market.
Retail premises – biggest challenge
Kao Sieu Luc, the owner of a
bakery brand, affirmed that the retail premises rent would be a big item of
expenditure for all bakery brands, simply because advantageous position is
considered the most important factor in distribution. On average, a bakery has
to spend from tens to hundreds of millions of dong a month on premises
However, even if they have money
to pay, it would still be very difficult to have stable premises.
In general, billions of dong are
spent to advertise a bakery address, according to Nguyen Xuan Qua, Director of
Bao Ngoc Akito Sweets Company. Meanwhile, the huge sum of money would be in
vain if the bakery has to leave the retail premises when the landlords refuse
to extend the land leasing contracts.
Ly Quy Trung, the owner of Breadtalk
chain, reportedly spent six billion dong on the bakery shop on Cao Thang Street
in HCM City, saying that it would take at least two years to recover the
investment capital. This means that the producers need to lease retail premises
for two years at least to be able to make profit.
Difference – the key to success
Givral, which is believed to be
one of the brands available on the Vietnamese market very early, in 1950s, has
been succeeding with the strategy focusing on making nutritious products.
Especially, in 2011, the brand
launched into the market a new product, called the “trump card” of the
manufacturer in the competition with other rivals. One of the materials used to
make the product is Salba nut, very rich in vitamin and essential minerals
which are lacking in the Vietnamese meals.
In 2010, Nam Young Huyn, General
Director of CJ Vietnam, which manages Tour les Jours brand, stated that the
company would set up 200 shops throughout the country by 2012. However, it has
had 19 shops only to date, while hoping to increase the number of shops to 30
by the end of the year.
After a period operation, Tour
les Jours realized that bread is the most favorite product by Vietnamese
consumers. Therefore, the producer has decided to make more bread, with bread
output now accounting for 55 percent of total products, while the figure is
less than 30 percent in South Korea.
There are quite a lot of ways
bakeries have been following to scramble for customers. Lovebread attracts
customers because it takes full advantage of the space in supermarkets to sell
cakes and introducing the production process at the same time. Meanwhile, Thu
Huong Bakery gives coupons to clients and commits to deliver goods.
Domestic bakeries on the upper hand
Vietnam is believed to be a
potential processed food market, because it has all the four necessary factors
allowing to create differentiated business models, attractive and easily to
develop through the mode of franchising.
According to the Phu Hung
Securities Company, about 100 bakery brands have existed in the market, while
domestic ones now hold 75-80 percent of the market share.
Kinh Do Bakery is now the leader
in the market with 36 shops located in Hanoi and HCM City.
However, Nguyen Xuan Truong,
Deputy General Director of Golden Gate, said foreign brands, with powerful
financial capability, technology and experiences, are always big rivals.
“Our greatest advantage is
understanding the taste of Vietnamese consumers. Therefore, we need to do
everything we can now to get ready to new circumstances, when foreign bakery
chains flock to Vietnam,” he said.
Doanh Nhan
Business & Investment Opportunities
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