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The Vietnam Dietary Supplement Market

Vietnam’s market for dietary supplements is experiencing significant growth as the nation’s interest in health-related and personal care items continues to rise. This article by GMA presents an overview of the health supplement market, covering factors that propel its expansion, obstacles it faces, and the options and prerequisites for potential investors looking to enter the market.

1. An Overview of Vietnam’s Dietary Supplement Market

The dietary supplement market in Vietnam is projected to experience a compound annual growth rate (CAGR) of 11.41% between 2021 and 2027. This growth is attributed to the increasing purchasing power of the Vietnamese population, allowing them to invest significantly in premium dietary supplements as they strive to adopt a healthy lifestyle. The country’s population faces challenges in meeting their daily nutritional needs, prompting a surge in demand for such products.

Share of people who take dietary supplements or nutraceuticals in Vietnam in 2022

2. Heightened Consciousness About Health & A Rise In Personal Disposable Income

Vietnam is witnessing rapid growth in its middle-income and wealthy classes, making it one of the fastest-growing segments in Southeast Asia. According to the World Bank, Vietnam’s GDP per capita reached US$2,785 in 2020. The government has set ambitious targets to achieve a GDP growth rate of up to 6.5 percent by 2022.

With a current population of approximately 97 million, including over 8 million individuals aged 65 and above, there has been a notable surge in the demand for dietary supplements in recent years. This is driven by the increasing awareness among the local population regarding health risks and the importance of preventive measures through the use of dietary products.

3. Self-medication – Why Do Consumers Purchase Medicines Without Prescriptions?

In Vietnam, self-medication is a very common problem. In rural areas, the self-medication rates range from 40 to 60 percent, and in urban areas up to 76 percent. The lax administration of over-the-counter medications and the rising cost of healthcare are two factors that encourage this practice.

Individuals are paying 43 percent of the cost of medical treatment and examinations. This is quite high when compared with other countries. The reason for this is that the health insurance funds do not cover the entire range of services and needs in health care, while the financial coverage is still limited.

4. International Brands Enjoy Higher Levels Of Trust Compared To Domestic Ones

Imported products hold greater popularity due to higher levels of trust compared to local brands. Foreign brands primarily target mid-to-high-end consumers, while local brands focus on the mass market.

Moreover, foreign companies are more actively involved in non-herbal or traditional dietary supplements, whereas local players dominate the herbal/traditional/curing segment. Approximately 40 percent of the total market consists of imported goods, indicating a willingness among locals to try foreign brands.

Herbal dietary supplements are particularly favored in Vietnam, expected to make up over 70 percent of the total market by 2021. The health supplement industry is set to continue its dominance in herbal supplements.

The high demand for herbal supplements in the personal care and beauty sector is a driving force in Vietnam’s health supplement market. The perception that traditional or herbal products are safer and have fewer side effects contributes to their popularity.

Among herbal supplements, ginseng stands out as the most popular in Vietnam. Its rapid growth can be attributed to its immune-boosting properties, which hold particular significance in the context of the ongoing pandemic.

5. Domestic Players Hold A Dominant Position

Source: Euromonitor International (2020)

The top five health supplement companies in Vietnam are Herbalife, Trafaco JSC, Amway Vietnam Ltd, Nu Skin Vietnam Co Ltd, and Hau Giang Pharmaceutical JSC. However, these leading corporations collectively own less than 5 percent of the market, indicating intense competition within the Vietnamese supplement sector. As of 2021, the market comprises 3,108 establishments offering a vast array of 11,127 products.

More than 70 percent of the health supplements consumed in Vietnam are domestically produced, while approximately 20 percent are imported from renowned markets like the US, Germany, Canada, South Korea, Japan, and others.

Although domestic products currently hold a 70 percent market share, certain prominent foreign brands like Cheing Kwan Jang, Pharmaton, and IMC have made significant investments to expand their presence in the market. These brands boast technological advantages, superior product quality, rigorous inspections, and strict manufacturing processes, positioning them as formidable competitors likely to assert dominance in the near future.

It’s noteworthy that, according to Decree No. 15/2018/ND-CP, all functional food production establishments are required to adhere to Good Manufacturing Practices (GMP) to ensure products meet quality standards. By 2020, over 200 factories had met or surpassed GMP requirements.

6. Opportunities & Challenges for Foreign Companies Selling Dietary Supplements in Vietnam

  • Pros:

The demand for health supplements among adults over 18 has been boosted by the internet and media promoting health-related information.

The Vietnam Association of Functional Foods (VAFF), representing Vietnamese businesses, organizations, and entrepreneurs, has entered into cooperative agreements with several Vietnamese agencies, including the Food Safety Department of the Ministry of Health and the Department of Competition Management of the Ministry of Industry and Trade. Additionally, VAFF is an active member of the ASEAN Alliance of Health Supplement Associations and the International Alliance of Dietary/Food Supplement Associations.

These partnerships provide Vietnam with access to regional and global expertise, making it an attractive destination for investors seeking to establish their regional and global manufacturing and research and development facilities.

VAFF maintains close connections with the US, China, and Japan, engaging in the exchange and dissemination of information on health supplements. This includes updates on legal documents, new standards, and products, enabling them to stay abreast of emerging trends and ensuring the quality of the Vietnamese market.

  • Challenges

The health supplement sector is experiencing rapid growth, but the enforcement against illegal products poses a significant challenge. Both local and international businesses find themselves competing with substandard and illicit products that entice consumers with lower prices.

Platforms like Zalo, Facebook, and YouTube host numerous false claims related to health supplements. The high demand for such products often leaves consumers unaware of their origins or unable to verify the claims made about them.

Impersonating a hospital to sell drugs, scam customers on Facebook

Government regulations struggle to keep up with the proliferation of false advertising campaigns in the health supplement industry.

7. Market Entry Strategy

Foreign health supplement manufacturers can enter the Vietnamese market through two main avenues: partnering with a local distributor or establishing a trading company.

When opting for a local distributor, choosing the right partner is crucial for the success of the investment strategy and is understandably a major concern for most executives. The foremost requirement in this scenario is that the local partner must possess a business license to trade the investor’s products.

For those who establish a trading company within Vietnam, it is essential to be aware of the risks and specific requirements, considering that the health supplement industry is subject to certain conditions. The key requirements include applying for an investment registration certificate, a business registration certificate, and a license to sell functional foods.

Regardless of the approach, enterprises must fulfill procedures for product declaration and ensure their health supplements comply with labeling, health, and safety requirements. Acquiring the Certificate on Satisfaction of Standards on Food Hygiene and Safety is also necessary, and businesses must continuously adhere to health, safety, and hygiene standards throughout their operation.

10. In Conclusion

Vietnam’s dietary supplement market is thriving, driven by a health-conscious population seeking proactive wellness solutions. With diverse products ranging from traditional herbal remedies to scientifically backed formulations, the market offers significant growth potential for international brands. However, how to enter the market successfully with the least cost and risk remains a challenge for international players.

GMA specializes in digital marketing strategies for international health supplement brands that want to launch their business in Vietnam. Let us help you!

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