Hot Drinks in Vietnam

COVID-19 impact on hot drinks

The COVID-19 pandemic had a very strong negative impact on on-trade sales of hot drinks in Vietnam during 2020. However, a major shift towards the off-trade was noted over the course of the year as retail sales growth accelerated sharply.

COVID-19 country impact

The first known case of COVID-19 in Vietnam was reported on 23 January 2020. However, Vietnam quickly became notable as one of the first Asian countries to successfully contain the spread of the COVID-19 virus, with very few cases seen during the early stages of the pandemic.

Company response

One of the most important lessons learned from the COVID-19 pandemic by the leading players in hot drinks is that ensuring a consistent presence of their brands on retail shelves was a crucial factor supporting retail sales throughout the COVID-19 situation. This gave more established players with more organised distribution systems a huge advantage as the stockpiling that was seen in the country during the early stages of the COVID-19 pandemic resulted in product shortages across all categories of hot drinks in many retail outlets, notably traditional grocery retailers.

Retailing shift

The retail distribution of hot drinks was not negatively impacted by the COVID-19 situation during 2020 as no major restrictions were placed on the ability of retail outlets to operate during the year. In addition, the very well-managed response to the COVID-19 crisis meant that few major interruptions were seen to the supply chains of hot drinks companies, with the pressure on stock levels in retail outlets due to stockpiling during the early stages of the pandemic the only factor restricting the access of consumers to hot drinks during the year.

Foodservice vs retail split

The substantial shift in sales of hot drinks away from the foodservice to the retail channel over the course of 2020 was the most important trend to emerge from the COVID-19 pandemic. This wholesale, industry-level transfer from purchasing hot drinks by the cup in cafés, specialist coffee shops and restaurants to buying coffee, tea and other hot drinks in bulk packs for at-home consumption was the natural reaction of a population that was encouraged to stay home as much as possible and in particular to avoid on-trade social gatherings with friends and family.

What next for hot drinks?

Hot drinks is slated for strong recovery from the COVID-19 situation over the forecast period. 2021 is expected to see a robust recovery in on-trade volume sales, while off-trade volume sales are likely to increase only marginally as a reversal of the shift from foodservice to retail sales is expected.

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