FMCG market takes on new portfolios

FMCG market takes on new portfolios

Fast-moving consumer goods remains resilient amid the economic uncertainty, giving hope to investors to ramp up their expansion plans.

Vietnamese coffee chains have the potential to expand their influence further afield, Le Toan

Unilever Vietnam plans to inject an additional $109 million to expand its existing factory in the Northwest Cu Chi Industrial Park in Ho Chi Minh City, bringing investment to nearly $120 million. With the investment, Unilever Vietnam will develop a production line for liquid sorbitol with a designed capacity of around 14,000 tonnes per year, according to its report to authorities last month.

Sorbitol is an essential ingredient used in popular toothpaste brands. Previously, the supply was largely imported from overseas. With the new production line, Unilever aims to achieve complete self-sufficiency in sorbitol supply for its internal manufacturing.

The expansion will cover an 11.1 hectare site within Unilever’s factory at the Northwest Cu Chi Industrial Park. According to the plan, the company will renovate the factory and build technical infrastructure for the new production line from April to December. Equipment installation is scheduled from October through February next year, with trial operations set for February and operation beginning in April.

Localising sorbitol production boosts the company’s flexibility, mitigates risks from global supply chain fluctuations, streamlines costs, and strengthens raw material quality.

Highlands Coffee is mulling over its initial public offering (IPO) plan following the opening of its Highlands Cai Mep Roastery in Ho Chi Minh City in April. The new roastery, combined with an upstream strategy, will allow Highlands Coffee to efficiently scale the production of fine robusta.

The chain’s CFO Tim Seltzer said, “We are in a position to not only benefit from but also actually drive as an influencer in the growth of Vietnamese coffee globally. We need to move at the speed of that opportunity. We need to invest upstream in robusta supply to continue to grow and remain the market leader in Vietnam and to move outside of the country.”

The intention is to list Highlands Coffee in the next 18-24 months and to select a listing venue that best supports its growth ambitions and core values, he added.

Likewise, Nestlé announced an additional investment of approximately $75 million to expand and upgrade its Nestlé Tri An factory with cutting-edge technologies in April. With the latest capital injection, total investment in the Tri An factory for 2024–2025 will surpass $175 million. This expansion raises Nestlé Vietnam’s cumulative investment in the country to over $900 million.

As one of Nestlé’s most advanced processing plants globally, the Tri An factory supplies coffee products to over 29 countries and territories. It is also the only Nestlé factory worldwide that manufactures the company’s full coffee portfolio and stands as the largest producer of decaffeinated products for Nestlé globally.

The fast-moving consumer goods (FMCG) market has witnessed other investments, like HiteJinro’s $100 million soju plant in northern Hung Yen province, and Trung Nguyen Legend’s $78.3 million coffee factory in Buon Ma Thuot, in the Central Highlands province of Dak Lak.

Jane Ha, head of marketing at Worldpanel by Numerator Vietnam, said the trend of local and foreign FMCG producers ramping up their manufacturing capabilities is a clear reflection of the country’s robust economic growth and its increasingly attractive investment landscape.

“The surge in foreign direct investment, including greenfield investments as well as other exciting merger and acquisition movements in the FMCG industry, demonstrates Vietnam’s favourable investment policies and unwavering commitment to driving industrial development by attracting foreign capital,” Ha said. “These initiatives happening across the country are opening more opportunities, creating more jobs, and improving the lives of the local people, which in turn is contributing to the development of the local and national economies.”

Ralf Matthaes, managing director of IFM Research, said some companies in Vietnam are expanding operations, largely due to three core reasons. “Firstly, at present the cost of labour pools, land, and construction has dropped, making it more cost-effective to invest at present,” Matthaes said. “Additionally, Vietnam’s developing middle class and the wealthier consumer classes desire for premiumisation, are generating future opportunities, especially in personal care, beauty care, and food and beverage (F&B) industries.”

Finally, many of these companies are not only eyeing Vietnam’s growth but also the global export market as tariff uncertainty is forcing firms to seek new revenue streams and markets, as Vietnam is still much cheaper for manufacturers to operate in compared to most of Asia, he added.

According to IFM Research, FMCG growth is largely driven by F&B consumption in Vietnam. With the present stagnation of the real estate market, the uncertainty that had caused by the US tariff situation, and consumer inability to save money, FMCG growth will be minimal in 2025, it added. Once inflation is taken out, actual growth will be below 4 per cent in total, but F&B growth could reach up to 10 per cent by the year’s end.

VIR