FMCG Monitor June 2018
FMCG growth is stagnant in Urban (4 cities) while remains positive in Rural.
Big retail formats: Growth opportunity?
Key market highlights in June 2018 issues:
Despite the stability in the first six months, the CPI in June hit the highest rate since 2011 mainly due to the increase in food and oil price. Vietnam’s economy retains a healthy growth in quarter 2, though a bit slower than the 1st quarter. Overall, the GDP posts a growth of 7.08% for the 1st half of 2018, which shows the ability to reach the full-year target of 6.7%. Together with the strong local demand, the economic growth makes the country more promising for foreign investors.
The value growth of FMCG market is quite stagnant in Urban (4 cities) while maintaining a positive movement in Rural, however, weaker than the 1st quarter due to low season. The total market growth might not exceed +5-6% for the full year of 2018.
The market growth slowdown is mostly driven by the negative performance of Dairy (Urban 4 cities), Packaged Foods (both Urban 4 cities and Rural) and Home Care (Rural). The market witnesses the stagnancy across necessity categories which have big impact on total FMCG spend such as Cooking Aids, Bar Soap, Dishwashing Liquid and Powder Detergent, etc. These categories are suffering from the drop in buyer base.
The most outstanding category in this period is Chili sauce which is more favored by consumers in both Urban (4 cities) and Rural. Reaching 80% of urban (4 cities) households and 64% of rural households, the category is now considered as one of the most popular items in consumers’ kitchen. Capturing the convenience trend, Chili sauce could be ready to consume with a lot of dishes and products like potato chips, noodles, bread, etc. on many occasions. And the product still has room for further growth by expanding its consumer base as well as increasing volume consumption.
Within traditional trade, specialty stores are the only channel achieving a high value growth in Urban area. More Urban (4 cities) shoppers are moving to shop there for their specific needs with a variety of choices, especially baby products and personal care items. Continuously leading the market growth, modern trade gains 3 more share points and maintains its growth momentum at a double-digit rate. Its growth is thanks to the strong improvement of hypermarket format and the rapid development of convenience formats: mini-stores and online.
Spotlight of the Month – Is big retail format still attractive to shoppers?
Amidst the rising need for convenience, hypermarket format is able to achieve a healthy growth thanks to the increase in shopping frequency and spending on each trip. With more investment from foreign retailers such as Lotte, Aeon, Emart; big retail format is playing as entertainment complex which offers to Vietnamese shoppers a wider range of products and services (including imported products), attractive promotions, eye-catching decorations and add-on services. However, more than half of households not yet shop at this channel, is this due to its inconvenient locations? Hypermarket retailers could find new shoppers by understanding what motivates them to shop there and enhancing shopping experience.
Urban 4 cities include Ho Chi Minh, Ha Noi, Da Nang and Can Tho.
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