Tuesday, September 16, 2014

The Rise of Big Mac in Vietnam

For those who are craving for McDonald’s Big Mac and French Fries in Vietnam, those cravings can now be satisfied with the franchise’s inaugural opening in Ho Chi Minh City, also affectionately known as Saigon by the locals. 

The man behind the brand’s introduction into the Vietnamese market is none other than Henry Nguyen. To watchers of Vietnamese politics, he is instantly recognizable as the son-in-law of Vietnam’s powerful Prime Minister Nguyen Tan Dung.

The new entrant joins the likes of other Western and Asian fast food conglomerates, namely, KFC, Burger King, Pizza Hut, Lotteria and Jollibean jostling for a share of the fast-growing Vietnamese consumer market. This is a reflection of the country’s rapidly changing landscape - there was no access to American products 4 decades ago when the US-backed government fell to the communist troop. Due to the liberalisation of its economy in the 1990s, Vietnam saw an influx of western brands in its food fast industry that was once limited to low cost traditional fast food. 

The international chain has already served over 400,000 customers and 61,980 Big Macs in its first month of operations. A stellar performance by any measure, in a sector which is projected to grow at an average 15% this year. With such promising statistics in the midst of fierce competition, it is no wonder that McDonald has plans to open 100 branches across the nation. Some also see this wave as a sign of Vietnam’s rising affluence which is demonstrated by an average economic growth rate of 7% over the last 10 years – one of the fastest in Asia.

The American fast food company reported in July 2014 that profits fell more than expected in the wake of weak U.S and Europe sales while Asia-Pacific, Middle East and Africa increased by 1.1%. In our opinion, expanding its foothold in rapidly developing consumer markets with a growing middle class, is perhaps the best way forward for well-established and mature brands such as McDonald to increase its margins. Vietnam, so far, seems poised to be a big success story.

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