Arisaig Partners

Back on the Ground: Grocery Shopping in Vietnam

Arisaig has been investing in grocery retailers in emerging markets for over 20 years, at various points backing these businesses in markets as wide-ranging and diverse as China, India, Mexico and South East Asia. Although the COVID pandemic is receding into memory, it is clear that this episode has changed the way consumers shop for their groceries in developed markets. For instance, US consumers are now doing a smaller number of shopping trips and visiting fewer stores. The indications are that these habits will endure beyond the pandemic[1].

What does this mean in emerging markets where grocery retailing through chained stores is still at a very early stage? This was the question in our minds as the team headed off to Vietnam in April 2022 for a deep dive on the potential for this market.

Arisaig’s so-called ‘Research Excellence Process’ requires us to take a 360-degree view of companies which enter our research funnel. This involves speaking to multiple stakeholders within each company’s ecosystem, such as suppliers, distributors, competitors, former employees and most importantly the end customers. The objective is to build a picture of the long-term opportunities for a business, the culture of management, and the durability of its competitive advantages. We can’t do all of this from behind a desk and whilst mindful of our net zero carbon commitments, we like to get out into market as much as possible. Our 12-member strong research team is the engine room of this effort. Almost all of them have direct experience (either lived there or speak the local language) of emerging markets, enabling us to get a genuine on-the-ground perspective.

When travel restrictions relaxed, Vietnam was the first overseas market we visited. Partner and Co-CEO Gordon Yeo made the trip from Singapore along with David Goh, our Research Director for China and ASEAN, where they spent three days focused on the largest formal grocery players in this otherwise informal sector. As long-term investors, our focus was not who would bounce back for the next quarter but on how consumer behaviour has changed and what does this mean for the long-term potential in this market of 100 million people.

Few sectors offer a scale of opportunity comparable with that of grocery retailing in emerging markets. Countries such as Vietnam and India have less than 10% penetration of modern, chained retail compared to more than 85% in developed markets such as the United States. Formalisation is driven primarily by changes in consumer behaviour, making the growth of modern retail a structural trend which is fairly agnostic to shorter term macro factors. The experience of retailers in the developed world has shown that leaders in this space, once they perfect their model, can scale up at a rapid pace and occupy significant share of the market. The top five players in United States for instance have c.50% market share, compared with less than 5% for the leading players in emerging markets such as Vietnam and India. We have found through two decades of experience that identifying the consolidators in these markets can reward investors handsomely over the long-term.

Source: Euromonitor, Statista, Arisaig analysis

A key player in grocery retailing in Vietnam is Mobile World Group (MWG). As the name suggests, this business has its history in mobile phone retailing. This combined with white goods and appliances (a natural extension for electronics retailers) still accounts for 75% of sales[2]. MWG’s growth outlook for mobile phone retail has been eroded by eCommerce, despite having built a decent omnichannel offering. In contrast, the outlook for offline white goods and electronics retail remains solid, given Vietnamese consumers’ preference for buying these items offline, and the logistical difficulty in shipping items in a country where motorbikes are the main way of transporting goods through narrow, traffic-clogged streets (this is a massive contrast with China, where has become the market leader for these categories). MWG also provides services such as quality guarantees, installation, and service that online competitors cannot match. Furthermore, for that part of this market that does move online, MWG is able to offer delivery of electronic items within 2-4 hours in the major cities, something which online players like Shopee cannot hope to emulate.

The real excitement for MWG, however, is in the grocery retail arm, Bach Hoa Xanh (BHX). By way of context, 92% of the grocery market is still informal[3]. This is comparable with India in terms of market development. Moreover, the quality of formal competition in Vietnam is low, with MWG’s direct competitors mainly comprising state-owned cooperatives. MWG has been highly aggressive in building out its store network, doubling store numbers to c.2,000 over the course of the pandemic[4]. The large, experienced store acquisition team which MWG used for its other retail concepts has proven to be a huge advantage when it came to securing locations for the grocery business. Since the start of the pandemic, MWG grocery has grown 2.6x vs 1.2x for the wider market[2]. It is only really present in the southern half of the country, with barely any stores yet in the north. We believe the grocery business could comprise the majority of group sales in about five years.

Our market visits revealed a few things. First, MWG’s grocery stores tend to be located in true ‘white space’ areas with very few chained rivals present, and with wet markets and small independent stores being the main competition. As the photos below illustrate, it’s quite easy to see why, across all emerging markets, there is an inexorable migration of customers from informal to chained retail. Efficient modern retail chains can offer comparable or lower prices, no haggling, greater assortment, cleaner stores and more dependable availability.

Left to right: Modern, prominent store front; clean and welcoming layout; staff in gloves washing fish hygienically; transparent pricing (no haggling)
BHX is the only modern trade format located within a 200m traditional shopping alley in this residential area (20km from Ho Chi Minh City District 1)
This is its competition: traditional retail. Left to right: vegetable seller, a mom-and-pop grocery store, and a pharmacy

Second, MWG hasn’t tried to replicate a developed market retail playbook. Its stores are highly localised, essentially bringing the sort of things Vietnamese shoppers are used to in a wet market environment – fresh vegetables, live fish etc – into a clean, formal setting.

Third, the incredible store roll out over the past two years has created some variability in store quality for MWG. Some stores we visited were messy and with numerous out of stock items; whilst others were in great shape.

Pre-Revamp: Empty shelf spaces with bad fill rate as management doubled the SKUs per store to 5,000 during COVID
Post-Revamp: wider walk aisles, cleaner and brighter stores, and better stocked shelves

Valued at a Price to Earnings ratio of 15x, with Return on Capital Employed (ROCE) of 25% as of June 2022, reasonably visible sales and earnings growth over the next five years, and competition quite weak, the main risk for MWG is execution. Or put another way, the risk that operational mishaps mean the company does not hit our forecasts for earnings. As the saying goes, “retail is detail”. Retailers that can scale fast whilst getting the details consistently right will reap huge rewards in an emerging market context, but few are able to do this. Clearly MWG has stumbled here with its grocery arm, in no small part the result of 5x store expansion over the past three years, explaining the variability in store quality we observed.

We discussed this in some depth with the company’s Founder, Chairman Tai, who told us that MWG plans to freeze its grocery store expansion to focus on fixing the customer shopping experience, quality of store staff and backend operations. On the latter point, he mentioned issues such as the lack of a standardised planogram for each store and manual demand forecasting. Further, the Chairman revealed at the AGM that their plan is to reduce SKUs from 5,000 to a core essential range of 3,000-4,000 to meet daily needs.

He has taken direct charge of the grocery operation and will be overseeing the transformation before handing it over to one of his “lieutenants” to lead. So far, they have noticed that after the revamp, stores on average saw their same store sales grow by 15-20%. Our visits to the stores did reveal that a lot of work is going on to fix this issue, and we were impressed with the results at the newly renovated stores.

Under the Chairman’s leadership, MWG has a proven track record of exceptional execution in its core mobile phones and electronics businesses. Moreover, with 37% of the company owned by founders and employees[5], this is almost certainly the best-incentivised public company in Vietnam. And it is becoming even more so: each year, employees are awarded options equivalent to 3% of total shares outstanding. Thus, MWG’s people are well aligned with other shareholders in their desire to grow the business sustainably.

Despite being a public equity investor, Arisaig does not have the mindset of trading in stocks; instead we invest in businesses and their people, with the mindset of holding these enterprises for decades as they capture the long-term opportunity of emerging markets. It is research trips like this – where we validate the investment thesis and get insights into the success of management execution – that underpin this mindset.

From left: David Goh, Chairman Tai, Gordon


This material is being furnished for general informational and/or promotional purposes to professional investors only. The views expressed are those of Arisaig Partners and should not be considered as advice or a recommendation to buy, sell or hold a particular investment. They reflect opinion and should not be taken as statements of fact, nor should any reliance be placed on them when making investment decisions. This material does not constitute independent research and is not subject to the protections afforded to independent research.

The statements and views expressed herein are subject to change and may not express current views. Arisaig Partners makes no representation or warranty, express or implied, regarding the accuracy of the assumptions, future financial performance or events. Emerging markets are generally more sensitive to economic and political conditions than developed markets and may be more volatile and less liquid than other investments.

All information is sourced from Arisaig Partners and is current unless otherwise stated. Issued by Arisaig Partners (Asia) Pte. Ltd. Not for public use or distribution. Arisaig Partners (Asia) Pte. Ltd is licensed and regulated by the Monetary Authority of Singapore.



Terms of Use

These terms and conditions (the “Terms of Use”) set out the terms on which you may make use of this website, and they apply to every page of this website (collectively, the “Site”), whether or not these terms and conditions appear on each individual page. This page contains legal and regulatory notices relevant to the information contained on the Site. By accessing the Site you agree to be bound by the following terms and conditions.

Arisaig Partners (Asia) Pte Ltd (company registration number 199607401H) (“AP Asia”, “us”, “we” or “our”), a member of the Arisaig Group (together the “Arisaig Group”, and each entity within the Arisaig Group, an “Arisaig Group Entity”), reserves the right, at our discretion, to change, modify, add or remove portions of these terms at any time. Therefore, we suggest that you review these pages periodically for changes. By using the Site after we have posted changes to these terms and conditions of use, you are agreeing to be bound by these terms as amended. If you do not agree to these Terms of Use, you should not use this website.

1. About the Site

The Site,, is a website operated by AP Asia. AP Asia is registered in Singapore and has its registered office at 6 Lorong Telok #02-01, Singapore 049019. AP Asia is licensed by the Monetary Authority of Singapore (the “MAS”) pursuant to the Securities and Futures Act (Cap. 289) of Singapore.

When using this Site, you are responsible for complying with all applicable local, national and international laws and regulations, including those related to data privacy, international communications and exportation of technical or personal data. It may be illegal to download the information contained on the Site in certain jurisdictions and we disclaim all responsibility if you download any information from the Site in breach of any law or regulation of the jurisdiction in which you reside or, if different, in which you download such information.

2. Investment Information

The information contained on this Site is provided for general information and, is not an offer to sell, or a solicitation of any offer to buy, any security, investment, or financial service or product.

Opinions expressed on this Site are our opinions only and reflect our views only at the time at which such opinions were expressed. Our opinions reflect our views at such time regarding market conditions and other factors, may depend upon assumptions or projections that may not prove to be correct, and are subject to change.

Nothing contained on the Site is intended to constitute investment, legal, tax or accounting advice. You should consult with your own professional advisors for advice on any investment, legal, tax, or accounting issues relating to matters discussed on this Site.

The information contained on this Site is subject to change without notice. For example, the terms of any security, investment, or financial product or service may be changed without notice.

The distribution of the information contained on the Site in certain jurisdictions may be restricted by law and persons who access it are required to inform themselves and to comply with such restrictions. In addition, this Site and its contents have not been prepared for and are not intended for access by the public in the United States. It is your responsibility to be aware of, to obtain all relevant regulatory approvals, licences, verifications and/or registrations under, and to observe all applicable laws and regulations of any relevant jurisdiction in connection with your entrance to this Site.

Decisions based on information contained on this Site are your sole responsibility. In exchange for using this Site, the visitor agrees to indemnify and hold the Arisaig Group and its officers, directors, employees, affiliates, agents, licensors and suppliers harmless against any and all claims, losses, liability, costs and expenses (including but not limited to lawyers’ fees) arising from your use of this Site, from the visitor’s violation of these Terms of Use or from any decisions that the visitor makes based on such information.

3. Risk Factors

Our investment and financial products and services involve substantial risks. You should carefully consider these risks before investing in or purchasing any financial product or service. In particular, you should carefully review and consider all risk disclosures that are provided for any investment or financial products and services. You should evaluate these risks with your professional advisers.

Our services and products, including investment funds managed or sponsored by an Arisaig Group Entity (the “Arisaig Funds“), are available only to those persons who are financially sophisticated, are capable of evaluating the risks and merits of investing in any such products, can bear the economic risk of an investment in such products for an indefinite period, and can afford the loss of their entire investment. The funds referred to in this Site are not authorised or recognisedby the MAS for sale to the public in Singapore.

By making available information on the Site, Arisaig does not represent that any investment vehicle is available or suitable for any particular user. All persons and entities accessing the Site do so on their own initiative and are responsible for compliance with applicable local laws and regulations.

4. Compliance with Certain Restrictions Relating to the Arisaig Funds

The Arisaig Group Entities and the Arisaig Funds may be subject to restrictions under the law of jurisdictions in which any Arisaig Group Entity seeks to provide offering materials, subscription documents and other documents relating to an Arisaig Fund, to make offers to sell shares of an Arisaig Fund, or to solicit offers to buy shares of an Arisaig Fund. As a result, the information on this Site is not intended to be available to any person in any jurisdiction where access to or use of such information would be contrary to law or regulation or which would subject any Arisaig Group Entity or any Arisaig Fund to any registration requirement within such jurisdiction (such persons, “Prohibited Persons“).

The information on this Site is intended to be available only to persons other than Prohibited Persons. Prohibited Persons should not access, act upon or rely on any such information.

EEA: A number of the Arisaig Funds are non-EU AIFs, as defined in Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers (“AIFMD”). The relevant Arisaig Group Entity which is the Alternative Investment Fund Manager (“AIFM”) of such Arisaig Funds is established outside the EU and, as such, is a non-EU AIFM for the purposes of AIFMD.

The content of this Site may only be made available in each member state of the European Economic Area (“EEA Member State”) to the extent that the relevant Arisaig Fund is permitted to be marketed to a professional investor as defined by AIFMD (“Professional Investor”) in the relevant EEA Member State in accordance with AIFMD or may otherwise be lawfully distributed to a Professional Investor in the relevant EEA Member State at the initiative of the investor. Persons who are not Professional Investors should not rely or act on the contents of this site.

United States: The content of this Site is not directed at or intended for persons, individuals or entities that are US persons as defined by Regulation S of the United States Securities Act of 1933 (the “Securities Act“), as amended (“US Persons“) and no securities or services are being offered in the United States or to US Persons.

Neither AP Asia nor Arisaig Partners (Mauritius) Ltd holds itself out as an investment adviser in the United States and does not offer its services to the general public in the United States. The content of this Site is only intended for the account of a US Person who is a qualified purchaser as defined in the United States Investment Company Act of 1940, as amended (a “Qualified Purchaser“) and an accredited investor as defined under the Securities Act (an “Accredited Investor“).

Switzerland: The Arisaig Funds have not been registered with the Swiss Financial Market Supervisory Authority and the shares in such Arisaig Funds cannot be distributed in Switzerland to non-qualified investors. Any distribution of the shares in Switzerland may only be made to qualified investors as defined in the Swiss Federal Act on Collective Investment Schemes (“CISA“) and its implementing ordinance (“Qualified Investors”). The content of this Site may only be made available in Switzerland to Qualified Investors.

5. Your use of the Site

By using this website, you have indicated that you accept these Terms of Use, and that you agree to abide by them, and that you are not a Prohibited Person. If you do not agree to these terms and conditions, please refrain from using this website.

Except as otherwise stated in these Terms of Use or as expressly authorized by Arisaig Group in writing, you must NOT use this website (or permit or procure others to use it) as follows:

  1. for any unlawful, improper or illegal purpose or activity;
  2. to communicate or receive information that is obscene, indecent, pornographic, sadistic, cruel, or racist in content, of a sexually explicit or graphic nature, which promotes or incites discrimination, hatred or racism or which might be legally actionable for any reason;
  3. in a manner intended to threaten, harass, or intimidate;
  4. to violate any Arisaig Group entity’s or any third party’s copyright, trademark, proprietary or other intellectual property rights;
  5. to damage Arisaig Group entity’s name or reputation or that of an Arisaig Group entity’s affiliated company or any third parties;
  6. to penetrate Arisaig Group entity’s security measures or other entities’ systems (“hacking”);
  7. to introduce viruses, worms, harmful code and/or Trojan horses onto the internet or into this website or any other entity’s systems and it is your responsibility to ensure that whatever you download or select for your use from this website is free from such items;
  8. to use this Site in any manner that could create impression of affiliation, sponsorship, or endorsement of Arisaig Group;
  9. to post or transmit information that is defamatory, fraudulent or deceptive; and/or
  10. to transmit confidential or proprietary information, except solely at your own risk.

6. Our Liability for Your Use of the Site

Access to the Site is permitted on a temporary basis and we reserve the right to withdraw, restrict or amend the terms of access to the Site without notice. We do not accept any liability if, for any reason, the Site is unavailable at any time or for any period.

Although we seek to assure that the information on this Site is accurate and complete at the time of publication, this Site may contain errors or inaccuracies and no representation or warranty (including implied warranties of merchantability and fitness for a particular purpose), expressed or implied, is made (or accepted) as to its accuracy, completeness, reliability or fitness for any purpose by Arisaig Group or any affiliates or third party providers. The information on this Site is provided “as is”. Under no circumstances, including negligence, will Arisaig Group or any of its affiliates or third party providers be liable for any direct, indirect, incidental, special or consequential loss or damages of any kind arising out of or in connection with access to, reliance on or use of the information on this Site. This paragraph does not limit rights available to you under the laws of your jurisdiction and other rights that may not be waived by contract.

All content on this Site is presented only as of the date published or indicated, and may be superseded by subsequent market events or for other reasons. In addition, you are responsible for setting the cache settings on your browser to ensure you are receiving the most recent data.

This Site may include forward looking statements, including projections of future economic and financial conditions. We do not make any representation, warranty, guaranty or other assurance that any of these forward looking statements will prove to be accurate.

This Site may contain or be linked to other third-party websites as a convenience for visitors. Arisaig Group has no control over such other websites, the contents therein or the products/services offered. Arisaig Group makes no representations or guarantees as to the accuracy, subject matter, timeliness or quality of information on any linked sites and assumes no liability for the content or presentation of such linked sites. Arisaig Group has not and will not review or update information on any linked sites and cautions that any use made of such information is at your own risk.

The internet is not a completely reliable transmission medium and neither we nor any of our affiliates accept any liability for any data transmission errors such as data loss or damage or alteration of any kind or for the security or confidentiality of information transmitted across the internet to or from us or any of our affiliates. Any such transmission of information is entirely at your own risk.

Nothing in these terms of and conditions shall exclude or restrict any duty or liability that we may have to any client under a given regulatory system.

7. Intellectual Property Rights

Unless otherwise expressly noted, all information on this Site are the sole property of AP Asia, which holds and reserves all copyrights, trademarks, service marks, trade names, trade dress and other rights in the same. No material on this Site may be copied, reproduced, republished, uploaded, posted, linked into, transmitted (by electronic means or otherwise), or distributed or used in any way without AP Asia’s written permission. Nothing on the Site should be construed as granting any licence or right in relation to any of our copyrights, trademarks, service marks, trade names, trade dress and other rights.

You must not transmit any virus, “worm”, “Trojan horse”, or other item of a destructive nature to the Site and it is your responsibility to ensure that whatever you download or select for your use from the Site is free from such items.

8. Use of Cookies

The Site uses cookies to record your acceptance of disclaimers displayed on the Site. These cookies are necessary for the functioning of the Site and you cannot opt out of receiving these cookies.

The Site also uses cookies for the purposes of measuring and improving performance of the Site. These cookies allow us to distinguish you from other users and to detect when you visit the Site on two occasions in a 24 hour period. You can opt out of receiving these cookies at any time by adjusting your browser settings.

9. Law and Variation

The Site is established in Singapore by AP Asia in accordance with and shall be governed by, and your browsing in and use of the Site shall be deemed acceptance of, the laws of Singapore. A condition of using the Site is that in the event of any dispute or proceeding you irrevocably submit to the exclusive jurisdiction of the Singapore Courts and waive any objection to proceedings in such courts on the grounds of venue or on the grounds that the proceedings have been brought in an inconvenient forum.

If any specific term or condition of these Terms of Use is determined by a court of competent jurisdiction to be invalid, void or unenforceable, that determination shall not affect the validity of the remaining provisions of these Terms of Use. Headings used in these Terms of Use are for convenience, are not substantive and shall not be used to interpret or construe any of the provisions contained in these Terms of Use. When used in these Terms of Use the words ‘includes’, and ‘including’ shall be deemed to be followed by the phrase ‘without limitation’.

10. Acceptance of Terms

By accessing the Site beyond this point you represent, warrant and confirm that:

  • You are not a Prohibited Person;
  • You are an Accredited Investor within the meaning of the Securities and Futures Act (Cap 289) of Singapore;
  • If you are in the EEA, you are a Professional Investor;
  • If you are in Switzerland, you are a Qualified Investor;
  • If you are in the United States of America, you are a Qualified Purchaser and an Accredited Investor; and
  • You are not otherwise subject to any restriction prohibiting access to this Site imposed by the laws and regulations of your jurisdiction.

If you are unsure about the meaning of any information provided, please consult your financial or other professional adviser.

If you have any enquiries in relation to our site or the information on it, please contact