Vietnam's snack culture, trends and insights

Simon Crowther, Associate Director, Marketing Head, Vietnam at Mondelēz International

BRIEF INTRODUCTION

Simon Crowther is the Head of the Marketing at Mondelez Kinh Do Vietnam and looks after the international snacking powerhouse’s expansive portfolio of brands including international brands Oreo, Cadbury Milk Chocolate as well as local household brands such as Cosy and Solite. Having spent the last 6 years living across Southeast Asia, Simon recently moved to Vietnam in September 2020 with his wife and 2 children.

VIETNAM’S SNACK MARKET

What makes Vietnam unique from other Southeast Asian countries? 

First, from a country perspective, like many Southeast Asian countries, Vietnam has a young and rapidly growing population that is quickly modernising. People are becoming increasingly affluent, wealthy and moving to more urban economic centers. Furthermore, what’s interesting about Vietnam is that it’s got a different economic base which is more manufacturing-focused making it a very strong foundation and attractive for large companies, like the one that I work at, to invest in.

In terms of snacking, there’s a couple of interesting things in Vietnam. First and foremost, when we talk about snacking, we look at anything that you consume outside of a main meal, so it can be a bag of potato chips, it could be fruit, it could be a banh mi snack.

• The culture of snacking daily is developed a lot more with local street vendors around fruits, breads (banh mi) etc.

• Snacking in Vietnam is a lot linked to gifting. When it comes to traditional snacking categories such as biscuits, a lot of the category tends to be linked to gifting, so mooncake seasons or mid autumn festival or Tet would be your big gifting occasions. That's when a lot of people enter the category and tend to consume and share the products.

• The idea of consumer packaged goods and traditional snacking in Vietnam is still very much in its nascency. As compared to its Southeast Asian counterparts such as Malaysia and Singapore, where the habit is a lot ingrainted in people, whereas in Vietnam it is just building.

So there are some quite interesting things that Vietnam offers from a market and country perspective, but also in the snacking landscape as well.

So in other Southeast Asian countries such as Malaysia and Singapore, we also have a strong street snack culture but at the same time we also eat a lot of packaged snacks. Why do you think that there is this discrepancy in Vietnam?

Well, a lot of it is due to habit. But I think what's interesting in Vietnam as well is if you look at it versus other markets in terms of consumer trends or consumer habits is Vietnam is a very healthy market. We have some proprietary software and insight into the demand space where we look at the types of occasions and the types of snacks that Vietnamese consumers eat depending on their emotional and functional needs and Vietnam stands out in that respect in two areas - one is bread and one is fruit. So these two types of snacks are very prevalent in Vietnamese snacking behaviour, much more so than other markets in Southeast Asia. So that role in Vietnam is played by more healthy snacks, like bread and fruit. And you'll see it everyday in street vendors, banh mi storms etc. You'll see it everywhere you go.

What are some factors that are important to Vietnamese consumers when they purchase snacks? 

I think what we tend to see in Vietnam is that the palettes are quite different depending on what region you live in. So you could almost have a North, South, central view on things. And even in our organization, we would have product brands where we would have a huge over-index in the North versus the South, because the palettes are quite different. So consumers tend to look for something that they can relate to i.e. more traditional snack meals. For example, if you're in the North, the palettes will lean more towards something a bit more spicy while in the South, they’re a bit more sweet. So consumers are looking for something that caters to that palette and how they get it can be through a variety of things such as coffee, a fruit or a biscuit.

What are some of the most popular snacks in Vietnam? 

Yes, but by far, fruit and bread are by far the largest snacks that are consumed in Vietnam, they're consumed in the highest volume and also in the widest array of occasions. So what I mean by that is fruit could be, a post-breakfast snack in the office but also an early afternoon snack. It plays on so many different occasions in the day. Likewise bread, bánh mì could be a breakfast item, a mid morning or middle afternoon snack, with high prevalence across all of the day. Additionally, there’s definitely a role in biscuits and noodles (top five) as well but fruits and breads are by far and away the biggest. 

THE IMPACT OF COVID ON THE SNACKING INDUSTRY

So let’s talk a little bit more about the black swan event that happened last year - were there any new trends that arose? Can you shed more light on the 3 key trends that you’re seeing in Vietnam?

So I think that the thing about COVID is it didn't really create new trends but instead accelerated existing trends and existing dynamics and so it did the same for the snacking industry. So some trends that we see -

• Health and wellbeing. I've already talked about Vietnamese approach to food and snacks being quite healthy, fruit and bread being the examples used. That’s absolutely accelerated with COVID as well. So, consumers are looking for a lot more in the products from, in terms of fortification (the process of adding micronutrients for example vitamins to food) so calcium, vitamins, nutrients, for example, all they're looking for some of the nasties to be taken out, so no preservatives, no artificial ingredients, for example. Those things were always around, but they've become much more important in the past year or so. Essentially there’s this health and well-being space that’s important.

• The advent of "‘Swavory’ i.e. a mix of sweet and savoury flavours. In the past, consumers’ snacking habits traditionally would be “I want something sweet, I want something indulgent. I'll reach out for a sweet biscuit. I’ll have an Oreo, I'll have a cake" Or you'd say “I'm hungry, I want something that is going to fill me but isn't going to leave me feeling too guilty or whatever” and you’ll grab something savory like a savory bread or potato chip, for example. Following what we mentioned about bread and cake being big in Vietnam, currently there’s a trend at the moment of sweet cakes with savory inclusions, which is a sweet cake base but with a chicken or pork floss inside. So traditionally, a snack could maybe be a bread with some pork floss on top of it and you’ll see these a lot in street vendors nationwide. However, recently there's a couple of manufacturers that have debuted packaged goods featuring a sweet cake with a savoury floss filling in the market and while it sounds unusual, it really plays on this mix of the two kinds of sweet and savoury coming together and that's something that we've seen a lot.

• Convenience. Not a surprise, right? People are living busy lives and there's a huge move to urban centers. Naturally, when people do that, they get busier, earn more money, snack more and need more convenience in their lives so it's a common trait of any developing economy.

Where did this advent of ‘Swavoury’ come from?

I don't know really but we’ve seen it in some of the other Southeast Asian markets such as Singapore and Malaysia. If you think about a savoury cracker with sugar on top, that would be an example that resonates more with Singapore and Malaysia. So we have seen it more and more and it’s not unique to Vietnam. So it's a continuation of a trend we've seen in other Southeast Asian countries but localized according to the local trends of each. Certainly, the combination and I guess the juxtaposition of such a different range of ingredients together is unusual.

I had read online that there was a global shift towards higher volume snacking as well as more indulgent snacking during the pandemic as people were more stressed during lockdown. Did you see that here in Vietnam?

Honestly no we didn’t and I would say our portfolio anyway in Vietnam is geared more towards the healthier snacking side. Instead we saw that the parts of our portfolio that grew the most were the healthier parts of our portfolio. For example AFC, our crackers brand, grew strongly during the pandemic and we found that people tended to turn to trusted brands but also brands that were able to give them that nutrition that they were searching for so we didn’t really see a spike in the indulgent parts of the portfolio.

MONDELEZ INTERNATIONAL’S ACQUISITION OF KINH DO, VIETNAM’S LEADING SNACKS BUSINESS

In 2015, Mondelez International announced an acquisition stake of 100% in Kinh Do, Vietnam's leading snacks business. The combination brings together Kinh Do's well-loved local snacks, including Kinh Do mooncakes and biscuits, Cosy biscuits, Solite soft cakes and AFC crackers, with Mondelez International's iconic global brands, such as Oreo cookies, Ritz crackers and Cadbury Dairy chocolate.

Happy 6 years of Mondelez successfully entering the Vietnam market. Can you share with us some key achievements and milestones?

Yeah, absolutely. As you mentioned, we really wanted to get a foothold in Vietnam and were fortunate enough to acquire Kinh Do, a family business which over 28 years ago was set up as a bakery in Ho Chi Minh City and steadily diversified into packaged goods, packaged breads, mooncakes, and then packaged biscuits and so on. So we’re fortunate enough to acquire that business 6 years ago and for us, we had a very clear agenda when we came into the market and I think we've managed to deliver on those three key areas -

• Get the quality of our products right straight from the start. When we came into the business, a lot of our time and money was spent on manufacturing and so something that we're very proud of is the investment we've made in our manufacturing facilities in Vietnam. We've got two factories, one in the South and one in the North. As an international business, we have, I would say, high standards of quality of expectations on our products, high standards of safety for our employees, frankly. So we spent a lot of time in the first couple of years, post-acquisition, investing in our factories to bring the quality standards up and also the safety standards. So it was something that we spent a lot of time on, and that was really, you know, that was a foundation of doing business.

• Invest in our route to market. So we spent a lot of time and money investing in the technical capabilities of our sales teams and our distributors to make sure that when we had these great products, we were able to reach more stores and customers because it's only this way that you can get into the hands of consumers. And so, we took on more sales teams and we invested in technology to make sure that we are operationally efficient. That’s what we're really proud of because it’s enabled us to reach more people and is fundamental to growing your business.

• Invested in our brands. At Mondelez Kinh Do,  we've got huge brands, multi-billion dollar global brands from Cadbury Dairy Milk to Oreo but actually 80% of our revenue in Vietnam comes from local brands. It comes from Kinh Do, so it comes from Cosy or Solite or our mooncake business. And I think what we've done well particularly in the past two years or so is we've treated those local brands with the love, care and attention that they deserve because they are well-loved heritage Vietnamese brands that people have grown up but also grow our international brands such as Oreo. So I'm very proud that we've been able to grow a business here, which is a great mix of both local and global brands in a way that is true to the quality that we demand of ourselves as an organization. 

Thanks for sharing Simon and you’ve definitely achieved a lot in the last 6 years! Just wanted to jump on what you had mentioned with an added insight that I had read. A research done in Vietnam actually showed that a top inhibitor of consumer packaged goods (CPG) consumption by Vietnamese consumers is food safety and quality standards so I definitely think investing in food quality and safety standards will help not only in growing Mondelez Kinh Do’s business in the region but also help differentiate it from its competitors.

According to RedSeer Consulting, there are about 1.4 million mom and pop stores and 9,000 wet markets in Vietnam, according to various industry estimates. Roughly 88% of FMCG goods still flow through these general trade outlets to reach consumers in Vietnam, which is the highest rate among ASEAN countries. With this, can you share how Mondelez Kinh Do has been working to incorporate these mom and pop stores in its route-to-market strategy?

So 80% of our business goes through what we call general trade or traditional trade, which is your mom and pop stores and they’re the backbone of our business. I think when we acquired the business or even as recently as two or three years ago, we've doubled our total distribution points in Vietnam. Ultimately if you've got a great product and a great brand, you’ll want as many people as possible to have the opportunity to experience it. However to reach the consumer, your products have to be in these mom and pop stores and what is also important is that the retailer has the opportunity to enjoy the benefits of your brand, the profit that it makes them and the sell-through (the ratio of the quantity of goods sold by a retail outlet to the quantity distributed to it wholesale) that it makes on the shelf.

Our Managing Director here is a seasoned professional in general trade and route-to-market and he’s driven a huge amount of change and very progressive approaches. I would say the fundamentals of investing in a lot in technology and our distribution management systems which allows us to track our inventory to ensure that our inventory are at the right levels so we’re not sat on hundred days of stock but instead 10/15/20 days to ensure that our products are fresh so when they arrive at the stores and are fresh to consumer and that consumers and retailers have a great experience.

Investing in our route planning so we’re efficiently reaching more stores and doing it in a business savvy way. This is done through investing in the capabilities of our sales force and making sure they’re trained on what our product features and how they benefit both the retailer and consumer. All these things are just fundamental in sales and route to market. But doing them well and doing them efficiently is harder than it sounds and it’s something that we’ve invested a lot of time and effort into doing. It’s absolutely paying off for us and our retailers.

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THE FUTURE OF VIETNAM’S FMCG SNACKING MARKET

Fundamentally, it's going to be really exciting and the macroeconomic trends are really positive. As people become more affluent and have more disposable income, they are also more able to enjoy different things in life and one of those big things is food, whether that's in restaurants, cafes or snacks throughout the day. So in my perspective, the future is very bright for snacking in Vietnam.

I also think as more suppliers and manufacturers come into the market and invest, we're going to see a lot more innovation and exciting things coming through. Take mooncakes for example, Vietnam can be an international leader in mooncakes and health and wellbeing. I think again, if I look at a category like rice crackers in Vietnam, I’ve had a rice cracker in the United Kingdom and it was not a good experience but the rice crackers here are incredibly tasty. So there's many areas that I think with the right investment and innovation, Vietnam can be a leader in snacking in these fresh areas for example, fresh packaged cake is such a huge opportunity to diversify and innovate in that portfolio. There's loads of opportunity.

Is integrating e-commerce and digitising traditional retail channels and distribution a part of your strategy in Vietnam?

I think e-commerce is one of those trends which was growing and becoming prevalent and COVID accelerated it 5 to 10-fold. In Vietnam, e-commerce is still a relatively small part of our business, but it's growing quickly. I think what it's made us do is take notice of the channel and while we’ve invested a lot of time and effort in our traditional trade or our modern trade customers, e-commerce is something which we have to pay more attention to, frankly.

So the conversations that I would be having at the moment would be around: do we have the right portfolio? The product that you sell in the mom and pop store or hypermarket, or supermarket is not the right portfolio for e-commerce. People tend to have higher basket spends, people tend to go online for different reasons and occasions as well as entirely different categories. They'll shop more in electrical or they'll shop in childcare and milk powder - these kinds of things. So the entire shop mission is different and therefore you need to have the right portfolio. So we're literally starting from the basics and asking ourselves questions such as “should I sell a single roll of Oreo? Or should I sell 10 in a box because that's more suited to the mission of the shopper on e-commerce”?.

The other thing about e-commerce - which is interesting is, how do you view e-commerce? So in a business, you can view it two ways. You have modern trade, traditional trade e-commerce where it’s essentially a sales platform where customers can purchase your products or you can view it as a brand platform where you're able to connect with your consumer, where you are able to advise and form creativity. We’ve made an active decision in our organisation to treat it as the latter.

From a customer’s perspective we want to understand the customer and do great things with them. By housing e-commerce in our marketing team, we’re viewing it very much as brand-building and consumer conversation so we’re not looking at it as “how can I drive volume?” but rather “can I get my brand homepage right?” and “am I investing in my media correctly to drive search optimisation to my platform?” - that’s a completely different spin on things and that’s where we are as an organisation, we’re looking at how can we build it as a brand and search platform rather than sales.

One of the global trends at the moment is plant-based foods and alternative proteins. Do you see that being a big opportunity here in Vietnam’s snacking industry?

I think it can be but I wouldn't say I've seen anything at the moment which makes me think it's on the imminent horizon. We’ve however done some interesting things in plant-based as part of our Snacks Future business, which is Mondelez’s incubator start-up where we test products based on our what we learn from our consumers. So far, we’ve got hubs in Australia, Europe and America and we’re testing some of those things so who knows, it would be something we bring to Vietnam in the future, let’s see.

Thanks for sharing about Snack Futures, Mondelez’s incubator hub. There seem to be many initiatives that Mondelez is doing and one that I would like to talk to you about is “Snacking Made Right. Was this an initiative launched as a result of Covid?

Snacking Made Right is something that our CEO, Dirk Van de Put, introduced 2-3 years ago and I think it's shown his ability to be very hot on what was going to become the trend because during COVID, Snacking Made Right became really prevalent and important and it's very simple.

Snacking made right, is literally the right snack at the right place in the right way. So making sure that the right snack is something which is healthy and nutritious that consumers see benefits in. We know it’s a movement that people want to start moving towards and we want to be on the front foot. The right way is all about being convenient so making sure we have the right pack in the right availability so if you’re in a convenience store, you want something small and convenient that you can open straight away. Similar to e-commerce, it's got to be a different type of packaging or in a different type of way.

And lastly, the right way is about doing things properly. So making sure that our ingredients are sustainably sourced and that our packaging is recyclable as part of a circular economy. We’ve set ourselves this agenda that we want to make products that people love and want to consume, that are available to them in the way that they want to purchase and done the right way in terms the way we package and distribute them.

It sounds simple, but doing that through your network is tough. But we've made some commitments and you'll see them on our website where Mondelez Kinh Do wants to be by 2025 and we're progressing towards that.

Last but not least, what exciting products can we expect to look forward to this year?

I can’t tell you anything but I’m glad you asked me this question *pulls out something from bag*.

So this is our Oreo Chocolate Pie and is a well-loved Vietnamese snack that many locals have grown up with, and we’ve reimagined the chocolate pie in Vietnam as an Oreo. So what you have in your hands is two slabs of moist chocolate cakes coated with Cadbury Dairy Milk chocolate with a lovely soft chewy marshmallow filling in the middle. This is fresh into the market and you’ll see it in more stores nationwide in April alongside our advertising for it.

We’re really proud of this product and it’s a perfect example of us investing in Vietnam, where we've got our global Oreo brand tailored to fit the characteristics, culture and palette of the local market. We’ve also built a manufacturing line in our factory to make this product so it’s unique to Vietnam, inspired by Vietnam and only made in Vietnam and we really hope people love it.

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