Company Trend Analysis - Au Bon Pain Taps Into Baked Goods Demand In CLMV - OCT 2017

BMI View : The Cambodia, Laos, Myanmar and Vietnam (CLMV) markets are projected to boast strong growth in consumer spending, following an increase in disposable income. This growth in disposable income has led to rising baked goods sales that will attract international bakery and coffee chains, such as Au Bon Pain, to enter the CLMV market.

US Bakery chain, Au Bon Pain, is set to expand into the CLMV market, via its Thai franchise owner, Mudman Public Company Limited. Mudman won rights from the ABP Corporation, owner of Au Bon Pain in the US, to open branches in the CLMV market. The company's move seeks to tap into the growing purchasing power and stable economies of the region, with hopes of setting up its first shop either in Cambodia or Vietnam by the end of 2017 or 2018.

BMI forecasts strong growth in consumer spending in the CLMV markets, with Cambodia, Vietnam, Laos offering an average growth of 6% or above per annum in real terms between 2017-2021. This growth and economic stability is set to attract more international brands and retailers, like Au Bon Pain, that will be able to capitalize on the higher purchasing power of consumers.

Rising Baked Goods Sales in CLMV Markets
Baked Goods Sales (USDmn)
e/f = BMI estimate/forecast. Source: BMI/National Statistics

Within our consumer spending forecasts, it is specifically the baked goods segment, which is projected to grow strongly. Cambodia, Myanmar and Laos will see an increase in baked goods sales of 7.3%, 5.6% and around 4% respectively over our forecast period of 2017 to 2021. The growth in terms of actual value is forecasted to be worth USD 262mn in 2021 for Myanmar and USD 88mn for Cambodia. Au Bon Pain will therefore benefit from this projected demand for baked goods and also an increasing awareness of popular international brands among young adults in the region.

The growth of coffee shops and cafes appeal to the time-starved millennial looking for fast and convenient food and drink choices. Cambodia, Laos and Vietnam present themselves as strong markets due to their large young adult population that is forecast to form a third of the population by 2021. We project 35.4% and 32.1% of the population to be made up of young adults aged 20-39 years by 2021 in Cambodia and Vietnam respectively. Moreover, the middle income segment in these markets, which offers a level of disposable income required for discretionary spending in shops such as bakeries and cafes, is projected to expand over 2017-2021. The percentage of total households in Cambodia which have a household net income of USD10,000-25,000 are projected by BMI to increase from 2.6% in 2017 to 6.7% in 2021. Over the same period Vietnam are forecast to increase from 4.6% to 10.0%.