Vietnam FMCG monitor: innovation for growth
The FMCG market is much more innovative over time.
The latest FMCG Monitor presents an integrated update on Vietnam's FMCG market, which is expected to grow at +5% in 2018. These are some of the market highlights in April issues:
Consumer price index (CPI) increases slightly over the last year. Thanks to the Government’s efforts, CPI kept stable during the first four months of 2018. Retail sales of consumer goods continue to sustain healthy growth. This growth is noticeable in four urban cities, such as Ho Chi Minh (+12,8%), Da Nang (+12%) and Ha Noi (+10%). This reflects a steady growth of local demand for consumer goods, which helps to boost economic growth.
The FMCG market decelerates in urban and rural markets. In the short term, the rural market is leading the growth, while the four cities are still growing at a weaker pace, compared to the same period last year (the highest peak since 2015). Overall, total FMCG market is forecasted to grow at +5% in 2018.
Personal Care is leading the market growth both in the cities and the rural areas, followed by Beverages. Although all sectors record positive performance in the rural market, Dairy and Packaged Foods experience negative growth in the urban area. However, categories bringing up innovation and favouring convenience are still performing good there. Cream desserts, ketchup, cheese and chili sauce are some examples of succesful products in the four cities.
Cakes stand out with double-digit growth in both urban and rural markets. This category has reached a wider consumer base and uplifted volume consumption. Consumers are treating cakes as a quick meals or break-time snacks with nutritional ingredients. This represents a growth opportunity for this category.
Modern channels continue to expand rapidly with more local and international players stepping into the race. The rise of Ministores in the four cities reflects the consumers’ demand of convenience and fast service. Noticeably, online channel also enjoys an impressive movement, gaining one share point and adding nearly 98000 urban households to its shopper base. This could be a sign of another interesting year for modern trade development.
Spotlight of the Month – More Innovations, more efforts?
The FMCG market is much more innovative over time, especially Personal Care and Packaged Foods sectors. Constant innovation is always essential to respond to the changes of consumers’ needs and expectations. However, not many recent launches can hit the trial base as before and some even struggle to retain consumers, indicating a lack of succesful ideas. The market is in need of TRUE innovation!
Urban 4 cities include Ho Chi Minh, Ha Noi, Da Nang and Can Tho.