Investors looking to profit from the 7% annual growth that Vietnam has averaged over the last decade should consider Unilever ( UL , quote ), the Procter & Gamble Company ( PG , quote ) and the Market Vectors Vietnam ETF ( VNM , quote ).
While VNM is down 30% over the last year, retail sales in Vietnam have been expanding. Management consultant A.T. Kearney predicts Vietnam will have a market size of $113 billion in 2012 , almost double what it was in 2009.
However, A.T. Kearney also says poor distribution infrastructure and expensive retail space are barriers to entry for foreign retailers. The Nielsen market research firm agrees, saying rural residents make up about 70 percent of Vietnam's population but account for just 30 percent of retail sales.
While operations can be difficult, these numbers are a major growth opportunity for Unilever and Procter & Gamble. The two companies have been expanding throughout Vietnam, offering products ranging from baby forrmula to cosmetics. Unilever's Vietnam sales have been growing at an average of 18.5 percent a year over the past decade, with sales in Vietnam hitting $700 million in 2010.
Buyout firm Kolhberg Kravis Roberts (KKR , quote ) is also interested in Vietnam, and paid $159 million in 2011 for a 10 percent stake in Masan Consumer, the country's largest producer of fish sauce.
With almost 90 million people, Vietnam represents a tremendous new consumer base. Companies such as Unilever, Procter & Gamble, and KKR are poised to enjoy the profits from getting in early and staying late.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
