Growth Prospects for Malaysian Palm Oil in Vietnam’s Food Service Sector

Vietnam’s Foodservice Sector

Vietnam is an extremely attractive market for the foodservice sector, with a population of more than 93 million people that is growing in size and purchasing power. The Vietnamese foodservice market is divided into full-service restaurants, cafés and bars, street kiosks, fast food, and eateries that deliver to customers’ homes. In 2020, the foodservice market in Vietnam was valued at USD 24.62 billion which is equivalent to a 0.7% share of the global foodservice market.

Due to the COVID-19 crisis, Vietnam’s food service sector dropped by 2.8% in 2020 from USD 25.3 billion in 2019. However, the sector is expected to strongly rebound in 2021 with the resumption of economic activities and is also likely to continue its growth over the next few years. The rapid growth of the fast-food sector in Vietnam has resulted in the expansion of more fast-food chains and increase in the franchising and sub-franchising of the popular fast-food chains. KFC is one of the brand that has the largest quick-service restaurant (QSR) chains in the country.

Source: Statista

Vietnam has witnessed consistent economic growth, which is one of the primary drivers for attracting the multinational fast-food chains to be established in the country and therefore boosting the sector forward. Due to increasing western influence, which gave rise to fast food culture in the country, multinational fast-food restaurants have seen a large-scale expansion in the Vietnamese quick-service restaurant business in recent years, which is expected to continue in the coming years.

The growth of quick-service restaurants and increased out-of-home consumption are mainly due to the working-class population’s demand for affordable grab-and-go meals. The growth in this sector is also attributed to the increasing number of the millennial population who seeking budget-friendly dining options to enjoy meals with their companions. Additionally, the expanding tourism industry is a major growth driver for the food service industry in Vietnam.

The foreign fast-food chains are experiencing stiff competition from the local players due to the high number of consumers who prefer the local taste and lower prices. However, few foreign brands, such as Jollibee, Lotteria, and KFC, which were early market entries, are performing far better than new entrants like McDonald’s, Burger King, or Subway. Several players are increasing their revenues by venturing into the expanding home delivery and online foodservice channels, particularly during the COVID-19 outbreak.

Outlook for Palm Oil Import in the Vietnam

Palm oil is mainly being used in the household, foodservice sector, and food processing industries. The strong growth in Vietnam’s food service sector and food processing will spur the demand for palm oil in the country. Vietnam palm oil import for the past ten years has increased steadily at the average rate of 6.5%. The rise in palm oil imports correlated with the growth of the foodservice industry. 

Source: Agriculture and Agri-Food Canada, Oil World & MPOC Intelligence

However, in 2020 while palm oil imports increased, the foodservice sector experienced a decline. Palm oil imports rose in 2020 as the use of palm oil in the food processing sector increased. According to the USDA report, the surge in palm oil import in 2020 was also owing to a shortage of fish fats, which are utilized in commercial compound animal feed rations.

Ho Chi Minh City and 18 southern provinces went into lockdown from mid of July 2021 until the end of September 2021 to control the COVID-19 outbreak. Widespread closure of restaurants and hotels due to COVID-19 has reduced the palm oil consumption in the foodservice sector this year. The lockdown has made the consumers shift to more home cooking, which makes soybean oil and rice bran oil use is on the rise. It is estimated that palm oil imports in Vietnam this year will drop by 5% to 7% due to closure of foodservice sector.

However, the situation will not be prolonged as the foodservice sector in Vietnam is predicted to recover in the near future. Vietnamese government’s ongoing vaccination program and their strict COVID-19 control measurement have gradually ignited the country’s economic activities. This positive sign will spur the foodservice sector and may lead to positive growth in palm oil import into the country as Vietnam is heavily reliant on imports.

It is forecasted that Vietnam’s foodservice market will grow at 8.65% CAGR in the next five years to USD 37.3 billion in 2026. While palm oil import in Vietnam is expected will grow at 5.71% CAGR to 1.37 million MT in 2026.

Source: Mordor Intelligence, Oil World & MPOC Intelligence

Prepared by: Rina Mariati Gustam and Muhammad Kharibi

*Disclaimer: This document has been prepared based on information from sources believed to be reliable but we do not make any representations as to its accuracy. This document is for information only and opinion expressed may be subject to change without notice and we will not accept any responsibility and shall not be held responsible for any loss or damage arising from or in respect of any use or misuse or reliance on the contents. We reserve our right to delete or edit any information on this site at any time at our absolute discretion without giving any prior notice.


  1. Statista
  2. MPOB
  3. USDA, Vietnam Oilseed Product Annual 2021
  4. Mordor Intelligence
Share this post: