FMCG Monitor March 2018
FMCG market slows down in Urban 4 Cities, speeds up in Rural
Key market highlights in March 2018 issues:
Vietnam’s GDP continues to post stellar growth in Q1 2018 by 7.38% over last year - the highest growth rate of Q1 since 2010. This is mainly fueled by positive results in most of sectors: construction, industry, services and especially export. In line with government effort to keep inflation rate below the target 4%, CPI is also well controlled in the 1st quarter. Retail sales of consumer goods sustains a healthy growth. Despite positive signals in the beginning of the year, much more efforts are still needed to keep sustainable growth for 2018.
The FMCG markets in both Urban 4 key cities and Rural are growing at the same pace. However, in the short term, Urban (4 key cities) market growth slows down while Rural market continues picking up and has now surpassed Urban (4 key cities) in terms of value growth.
Non-food sector shows ongoing development along with higher living standards. Beverages also demonstrate good performance in both Urban 4 and Rural, partly thanks to Tet season. Dairy, however, still suffers negative growth in Urban 4 cities due to the changes in mother’s perception and the fierce competition between milk with other nutrition products.
Over 70% of households want to see more products that make cleaning simple and quick. More consumers are drawn to Home Care products that favor convenience. In both Urban 4 cities and Rural, Liquid Detergent continues to enjoy impressive growth, driven by the rapid expansion in consumer base. The rise in washing machine ownership is also attributed to the category growth, with 84% in Urban 4 cities and 36% in Rural where adding +6 percentage points versus year ago.
The retail picture looks more dynamic in Urban 4 cities where modern channels are gaining ground from traditional trade with minimarket/convenience stores and online formats continuously expand their reach. Shoppers turn to modern shopping formats for greater convenience and diversity of choices, but still favor specialty stores to find specialized products for their specific needs.
Spotlight of the Month – Is Liquid Tonic Food Drink gaining drinking occasions from Liquid Milk?
Liquid Tonic Food Drink (TFD) enjoys strong growth in both Urban 4 cities and Rural. Do young consumers see the category as a substitute for liquid milk in some drinking occasions, with just as much nutrients and a more kid-friendly taste? There is still headroom to grow the category further in terms of both volume consumption and buyer base, especially in Rural areas. Will this category change the landscape of Dairy competition?
Urban 4 cities include Ho Chi Minh, Ha Noi, Da Nang and Can Tho.
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