FMCG growth: struggle in urban vs. steady recovery in rural
Throughout the last quarter of 2013, Vietnam’s economy has expanded at an annual rate of +6.04%, an improvement if compared with the previous quarters, indicating that growth is picking up. Yet, the recovery is still far from sustainable, as there remain various threats that could potentially undermine macro stability.
According to observation by Kantar Worldpanel during the 12 weeks ending December 1st, it is a tough ride to gain 2-digit growth in Urban as FMCG consumption is struggling hard to sustain growth at +9%. Meanwhile, Rural is stepping up firmly for a recovery, posting +14% value growth compared to the same period last year. Key channels in urban including Street Shops, Wet Market and Modern Trade are suffering from moderate growth. In Rural, Street Shop is expanding fast while Wet Market and Modern Trade remain stagnant.
Over the review period, Snack & Nuts have excellently earned a +26% increase in volume compared with the same period last year by attaining a robust expansion of +103,000 new buyers and achieving +13% growth in average volume consumption. In Rural, Facial Cleanser is the most outstanding category among the leading Personal Care with +79% uplift in value consumption.
If Western countries have Christmas and New Year, the Vietnamese have Tet – the most important and popular festival in Vietnam. Tet is celebrated on the first Lunar New Year days, which usually fall between late January and February. Though the celebration last only a few days, Vietnamese starts to prepare for Tet by shopping for foods, drinks, new clothes, and re-decorate their houses around one month in advance. Spending on FMCG nearly doubles during this period. Beverages are the key beneficiary of the spending spree brought on by Tet, particularly in ‘cans’, ‘boxes’ or premium presentations. During Tet 2013, Confectionery, Soft Drinks and Cooking Additives are the top growing categories with exceptionally 3-digit growth in volume consumption! Among FMCG items, Beer and Biscuits are the most common gifts with 35% of urban households received beer/biscuits as gift during Tet 2013. Carbonated Soft Drinks and Cooking Oil follow closely with 33% and 31% of gift penetration. Sugar is also very common with ¼ of urban families receive it as Tet gift in 2013. “With its special role in Vietnamese culture, Tet plays as a seasonal momentum to boost up a spectacular spending spree across the country. Tet 2013 sees the uplift in consumer spending in preparation for Tet starting from 4 weeks before the first day of the Lunar New Year, in both Urban and Rural. Grasping this opportunity to speed up would bring worthy rewards to manufacturers and retailers.” - commented David Anjoubault, General Manager at Kantar Worldpanel Vietnam.
Tet 2013 period: 4 weeks before the 1st day of Lunar New Year (i.e. 4 weeks ending 10/02/13) | Tet 2013 period: 4 weeks ending 10/02/13
In Vietnam, it is a rough ride to gain 2-digit growth in urban while rural is stepping up firmly for a recovery.
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