Vietnam's food and beverage sector faces rising costs, shifting from price competition to value-based growth

Costs for ingredients have risen sharply and production costs have climbed, yet the food and beverage sector has maintained double-digit growth in the early months of 2026. Behind this positive picture, however, firms are facing mounting pressure to “hold prices” while accepting shrinking profit margins. This is accelerating a structural shift from price-based competition to value-based competition.

FI Vietnam 2026 highlights ingredient and processing pressures

The observations were presented at a press conference on April 9, 2026 introducing FI Vietnam 2026, an international exhibition specializing in ingredients, flavors, and processing additives for food and beverages in Vietnam. The event will run from May 13–15, 2026 in Ho Chi Minh City, organized by the Ho Chi Minh City Food and Beverage Association (FFA) in cooperation with the Vietnamese Association of Food Science and Technology (VAFoST) and associated units.

Input costs up, purchasing power not fully recovered

In reality, input costs for the food and beverage sector have risen significantly, at times by 50–60%, including ingredients, energy, and logistics. Meanwhile, purchasing power has not fully recovered, making it difficult for enterprises to raise selling prices accordingly.

To maintain market share, many companies have been forced to hold prices or adjust them only to the minimum, resulting in eroded profits. Numerous units have had to optimize operations, cut costs, or restructure products to adapt in the short term.

Cause and development: limits of “race on price”

Cost pressure is also pushing a change in the growth model. If the competitive advantage previously relied mainly on low costs and high output, that approach is now showing its limits. Enterprises have less room to compete on price and are being driven to find new, more sustainable paths.

Dependence on imported inputs remains a bottleneck

Mr. Trịnh Bá Cường, Secretary General of FFA, said the industry’s long-standing bottleneck is dependence on imported raw materials. While Vietnam has clear advantages in land, farming, and aquaculture, he noted that the country has not invested sufficiently in deep processing and technology.

He added that 80% of materials are primarily inputs such as flavorings and additives, while Vietnam still controls about 60–70% of main ingredients domestically.

“In the time ahead, digitizing cultivation and farming areas will help clarify input origins, enhance traceability, and provide a foundation for enterprises to be more proactive about supply. At the same time, the industry must push deeper processing to increase the value of agricultural products and reduce dependence on imports,” he emphasized.

Data and direction: moving from output to value

The shift toward a “value race” is becoming clearer across the sector. Instead of focusing primarily on output, firms are increasingly prioritizing quality, added value, and compliance with market standards.

An important step is investing in raw material regions to secure supply, control quality, and reduce exposure to external fluctuations.

Recommended responses from VAFoST

Assoc. Prof. Dr. Hoàng Kim Anh, a Standing Committee member of VAFoST, recommended that, faced with rising raw material costs, firms should optimize product formulas, reduce the use of high-cost ingredients, and substitute with more suitable components while maintaining quality.