Food Empire - UOB Kay Hian 2023-09-14: Seeing What's Brewing In Vietnam Makes Us More Optimistic

• We visited Food Empire’s office and manufacturing facility in Vietnam to learn more about its market presence and production capabilities. We also witnessed its strong distribution network in both general trade and modern trade, supported by a 930-strong sales team.
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Solid and growing market presence in Vietnam powered by macro factors.

• Since 2005, Food Empire (SGX:F03) has had a factory in Bin Duong province to meet growing consumer demand. This came after being one of the first companies to introduce the instant coffee culture to Vietnam with two product lines, MacCoffee 3-in-1 Strong and Classic.
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• Food Empire’s MacCoffee brand holds the third-largest share (14%) of the Vietnam instant coffee market, behind Nescafe (22%) and G7 (20%).
• With a population of 98.2m people and second-largest volume of coffee exports globally, Food Empire has found a firm footing in the Vietnam market with its instant coffee. This is due to its key CaféPHỐ business gaining popularity as one of the best instant iced coffees in Vietnam, where 70% of coffee consumption is iced.
• Food Empire’s Vietnam sales have substantial room for growth, given that the Vietnam instant coffee market is expected to reach US$280m in 2023 and grow at a rate of 9.41% (2023-28 CAGR) per Statista, while instant coffee is gaining traction in Vietnam due to consumers’ busier lifestyles and longer working hours.
• Though 2022 revenue from Vietnam fell due to post-pandemic normalisation, we are of the view that increased promotional activities and new products in the pipeline will further strengthen Food Empire’s foothold in Vietnam and contribute to top-line growth.

Wide distribution channels and strong sales team drive growth.

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John Cheong UOB Kay Hian Research | Heidi Mo UOB Kay Hian | https://research.uobkayhian.com/ 2023-09-14 SGinvestors.io

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