Vietnam, with a population of approximately 96.5 million, is becoming an increasingly important wine market. The average consumption of alcoholic beverages by Vietnamese is 1.3 L per capita per month.
Wine is not traditionally consumed by Vietnamese, beer is the most popular alcoholic drink.
consumed in Vietnam. However, wine consumption is becoming increasingly popular. Still wines account for 80% of total wine sales, of which nearly 70% are red wines. Bordeaux is the favourite appellation of the Vietnamese, accounting for 71% of imported French wines; Languedoc is the 2nd favourite appellation, accounting for 15%.
According to one of PWS's clients, there are three current challenges for French wine:
- The first is the impact of Covid: many restaurants were closed, because if there was a case of Covid, the whole district had to close for 5 to 6 months. While the wine market was down, wine imports tended to fall (60.8% in value, and 40% in volume).
- The 2nd challenge is to find new trends for the wine market, which requires a lot of effort for the formation of the wine market.
- The 3rd challenge is that: Although there is a free trade agreement between Vietnam and the European Union (EVFTA, effective August 2020), this has allowed an immediate decrease in import taxes for wine; but in a second phase, the tax on special consumption including wine will increase up to 150% within 10 years (estimates our client). The result is therefore contradictory: the price of French wine will become more expensive.
Even with its many challenges, the Vietnamese market is showing trends that favour French wine exports: According to BusinessFrance, Vietnam's affluent middle class currently represents 13% of the population and is growing in importance with an estimated 26% by 2026. It has become "elegant" and "trendy" to drink imported alcohol. This Western-style chic and health concerns are driving some consumers to switch from drinking beer and hard liquor to wine, which is becoming increasingly popular in the market, according to the #BusinessFrance study.
We can see that Vietnam is a dynamic market with potential, so PWS decided to accompany this market more closely in 2022.