The Potential of Wine E-Commerce in Vietnam
Online sales of wine and spirits have been legalized in Vietnam since February 2020, with more transparent regulations of promotion, payments, and customer’s age. With the new laws in place, especially aided by the COVID-19’s push, online sales of wine in Vietnam is expected to grow significantly in the coming years.
The wine market in Vietnam can be categorized into non-grape wine, still grape wine, sparkling grape wine and fortified wine. Non-grape wine (mostly local products) is the most consumed in terms of volume, accounting for 69% of the total consumed wine, but still grape wine (red wine, rose wine, and white wine) accounts for the highest value of the market (61% market share) due to its higher price. Over the past years, the wine market in Vietnam maintained a growth rate of more than 10% per annum. Wine has become more popular among the middle and high-income consumers, especially due to the country’s increasing wealth and disposable income. In addition, the growing influence of the Western culture also accelerates the consumption of wine in Vietnam as it is considered the representation of social status.
In 2020, under the impact of COVID-19 that reduced gatherings that restricted wine/alcohol drinking, the overall consumption of wine is expected to drop by 18.9% from 2019, but then to recover quickly during the years to come.
More than 70% of the wine sold in Vietnam has been through hotel, restaurant and catering services. However, it is expected to drop by 33% in 2020 due to the COVID-19 induced restrictions, including social distancing as well as travel restrictions.
On the other hand, nearly 30% of the wine sold in Vietnam is through retailers. In contrast to hotel, restaurants and catering, sales by retailers are expected to grow by 15% in 2020, especially through online platforms. Besides the fundamental requirements for wine businesses, online wine sellers must prevent minors from accessing information and purchasing alcoholic beverages through e-commerce sites.
In conclusion, due to the COVID-19 pandemic that has limited public gatherings, customers are changing their behavior and getting accustomed to purchasing alcoholic drinks online. On the market, major e-commerce platforms in Vietnam have joined the wine online retail scene and complied with the new regulations. With the green light from the government for e-commerce of wine in Vietnam, the market is transforming itself into a digital-focused industry, gradually taking over parts of physical retail.