Vietnam’s can manufacturing market set for growth

Rows of lager beer Bia Saigon Chill in cans in a Vietnamese store. Image: David Bokuchava - stock.adobe.com

By Michael Tatarski, in Ho Chi Minh City, Vietnam; and Keith Nuthall 

 

Major emerging markets such as Vietnam are regarded by the west as sourcing hubs for products and packaging, but this Southeast Asian country of 100 million people is now a major metal packaging market. According to recent forecasting from India-based market researcher, Mordor Intelligence, the Vietnamese metal packaging market is expected to expand at a compound annual growth rate (CAGR) of 3.07% from 2024 through 2029, growing from US$2.11 billion to $2.45 billion. India, US and UK-based management  consultant,  IMARC,  meanwhile, predicts annual average growth of sales in Vietnam’s metal packaging of 2.61% from 2024 through 2032.

According to Mordor, this growth is largely attributed to rising demand for metal cans for beverages including beer and carbonated drinks. Such demand is driven by several factors, including deepening urbanisation and concurrent demand for convenience food, along with an expanding middle class and a young population, both segments that purchase substantial amounts of canned drinks.

It added: “The competitive landscape of the metal can packaging market is intense, with key players like Canpac Vietnam Co, Showa Aluminum Can Corporation [now called Altemira Co Ltd], and Ball Corporation vying for market share.”

Major can makers

Ball operates a joint venture making aluminium beverage packaging in Vietnam – TBC-Ball Beverage Can Vietnam, in Binh Duong Province, just north of the country’s key commercial centre Ho Chi Minh City. Ball is working with TBC (Thai Beverage Can) to run the eight-hectare US$50 million investment plant, making more than 850 million cans, mostly for contract customers in Vietnam, with some exports to neighbouring countries.

Another foreign operator, Malaysia-based Canpac Vietnam, has also opened a major plant in Binh Duong Province, making aerosol cans for industrial clients, and along with canned air-fresheners, and food cans for domestic sale and export to Australia, Cambodia, Taiwan, Indonesia and the Philippines, for example.

Japan-based Altemira Co runs three can making plants in Vietnam under the Hanacans label, in Bac Ninh Province (northern Vietnam); Quang Nam Province (central Vietnam); and Ba Ria-Vung Tau Province (southern Vietnam), making can ends and bodies, employing 580 people nationwide. Crown also has a strong presence in the country, with five beverage can plants: in Vung Tau, Da Nang, Dong Nai, Hanoi and Ho Chi Minh City.

However, it is worth noting that Vietnam has seen a sharp decline in beer sales recently in part due to a zero-tolerance crackdown on drunk driving. Beer sales fell by 11% nationally in 2023, and in June, Heineken shuttered a factory (in Quang Nam Province, central Vietnam), one of six it operates in the country, amid sluggish sales. The company still operates high-speed canning lines at its Vung Tau brewery, however, which Heineken has said is set to become “powered 100% by renewable energy (thermal energy and electricity).”

The Dutch brewer’s sustainability investment reflects how market intelligence firms do not expect this beer sales decline to have a long-term impact, even if it continues, especially as demand rises for energy drinks and other canned products.

Metal’s popularity increases

To quote Mordor Intelligence: “The beverage metal cans market is experiencing significant demand due to the expanding beverage industry in Vietnam, supported by economic development, favourable demographics, and rising middle-class income. The country’s beverage production is on the rise, with a notable increase in the consumption of carbonated drinks, tea, energy drinks, and fruit juices.”

IMARC added regarding the can packaging sector: “This preference is particularly evident in the food and beverage industry, where canned goods remain a staple choice for packaging. The durability of metal cans ensures that products remain fresh and uncontaminated, contributing to their widespread adoption.”

Its researchers stressed Vietnam’s growing middle-class population, with increasing disposable income being inclined towards premium and branded products. The International Monetary Fund (IMF) is predicting a 6% growth in Vietnamese GDP this year, as it increases its average income (at purchasing power parity) to $15,200 (World Bank 2023 figures).

With such increasing wealth, metal packaging “offers an attractive packaging solution for premium products due to its visual appeal and the opportunity for branding and product differentiation,” stressed IMARC, causing an “uptick in the use of metal packaging across various consumer goods sectors.” Enhanced can shaping and sealing technologies within Vietnam manufacturers, “have not only increased production efficiency but also reduced manufacturing costs.”

A supermarket manager in Ho Chi Minh City told CanTech International: “Canned drinks are generally more popular than canned food since the most common ingredients for Vietnamese cuisine aren’t the types to be canned, plus there’s a big emphasis on fresh food in this cuisine, even for cooking at home.”

He added: “Canned drinks, on the other hand, are hugely popular, including soft drinks like Coca-Cola and Sprite, canned coffee from local brands such as Highlands and international brands, energy drinks like Red Bull and Sting, and of course beer from both domestic producers – Bia Saigon, Bia Hanoi, et cetera – and international mass-market beers, as well as some locally produced craft beer brands.”

Image: Michael Tartarski

Other common canned goods are condensed milk and coconut cream, while food ingredients such as pâté for popular ‘banh mi’ baguette sandwiches can come in a can. Supermarkets do carry international canned goods such as several types of beans and canned green vegetables, although these would not be for consumers preparing Vietnamese dishes.

The green effect

One key trend facing the can sector in this country (still a one-party nominally communist state), is moving towards sustainability in its economy. IMARC’s analysts added this has boosted the appeal of cans, given their innate recyclability and long shelf life.

Key regulatory pressure has been applied by Vietnam’s Environmental Protection Lawand Decree No. 08/2022/ND-CP, which tells importers and businesses selling consumer products domestically to obtain waste credits from designated collection units for materials. The law introduced mandatory producer responsibility for waste recycling, telling aluminium packaging makers and importers to recycle 22% of their aluminium cans and boxes over the first three years of the law’s implementation. The rate for iron, steel and other metal packaging is 20%.

A note from Hong Kong-based Asia business consultants, Dezan Shira & Associates, said that impacted companies are allowed to recycle products or packaging that they produce or import themselves; or recycle products or packaging produced or imported by other companies to hit their quotas.

The can industry has been involved in such efforts. In early 2021, Vietnam’s ministry of natural resources and environment to campaign with TBC- Ball Beverage Can Vietnam promote the use of aluminium drink cans, working with two prominent Vietnamese celebrities – footballer, Quang Hai, and Miss Universe Vietnam 2018, H’Hen Nie.

The deputy director at the ministry communications centre explained to the Vietnam Investment Review that the new policy was designed “to let businesses understand that the old ‘take- make-waste’ model is not working, thus, move toward a more circular economy with sustainable and environmentally friendly approach.”

Duringa presentation at the Vietnam International Paper and Packaging Exhibition (VPPE) 2024 in May, Nguyen Ngoc Minh Thy, vice president of the Vietnam Packaging Association (VINPAS), said: “Sustainability in packaging is a major global trend. Sustainable practices in packaging design and production need a transparent commitment in the entire supply chain. This requires applying technology solutions for packaging, continuously updating  elevant laws and  regulations, and focusing on research and development.”

Indeed, other packaging types are also being pressed to improve their recyclability, such as plastics packaging’s 22% recycling requirement under the law.

Meanwhile, Vietnam’s metal can packaging industry is facing other challenges. US-based MarkWide Research noted in an August 2024 report that volatile raw material prices, especially aluminium and steel, has been eating into Vietnam can manufacturers’ profit margins.

A key problem has been that while Vietnam has huge bauxite reserves, producing 3.3 million tonnes in 2021, according to the US Geological Survey (USGS), it has only just been developing aluminium  production  capacity.  Indeed,  the first aluminium smelter in Vietnam, Dak Nong Aluminium Smelter is now being built. Once operational – maybe later this year – its planned capacity is 450,000 tonnes/year, using alumina from the Nhan Co Aluminium Plant.

Moreover, said MarkWide Research: “Additionally, the competition from alternative packaging materials, such as plastics and paper, poses a challenge to the metal packaging market,” with cheaper materials inputs and lighter packaging, “which appeals to certain consumer segments” in Vietnam.

Meanwhile, increasing government regulations regarding the use of certain coatings and chemicals in Vietnam metal packaging can hinder market growth, increasing costs and reducing production supplies. One example is the national printing ink standard for food packaging issued by the ministry of science and technology in late 2023. This regulation bans hazardous chemicals in ink used for food packaging and labels and specifically excludes toluene, a solvent suspected of harming unborn children.

Also, in 2021, the ministry of natural resources and environment released draft ‘National Technical Regulations on Allowable Limits of Persistent Organic  Pollutants  (POPs)  in  Raw  Materials, Fuels, Materials, Products, Goods, and Equipment’ that can makers, importers and fillers need to follow. This went into effect in 2023 and covers all  businesses  that  import,  manufacture,  or trade products and materials containing POPs in Vietnam, listing allowable limits of a range of chemicals and pollutants.

Opportunities

Overall, however, the market opportunities outweigh the hurdles, as evidenced by the expected ongoing growth of this industry.

In addition to Vietnam’s rising middle class and demand for sustainability, “the rising popularity of e-commerce and online retail in Vietnam offers opportunities for metal packaging manufacturers to cater to the unique packaging requirements of this sector,” said MarkWide Research.

A further opportunity, according to MarkWide Research, is the growth of Vietnam’s pharmaceutical and personal care industries. This gives metal packaging manufacturers the chance to expand into new product offerings beyond traditional drink and food packaging.

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