FMCG Monitor November 2017
The FMCG market on track for a brighter 2017
Key market highlights in November 2017 issues:
Vietnam economy has seen positive performance since Quarter 3 of the year. Both total demand and total supply are predicted to continue improving in the last quarter with the strong growth of consumer demand and export. The average CPI of 11 months remains stable but the index in December is more likely to rise slightly due to the higher demand for the festive period.
Urban FMCG market keeps showing good movement. Meanwhile, in Rural, the market is improving slowly despite the impact of disasters in the last two months. Vietnam’s positive economic outlook and growing domestic demand are expected to boost the growth of FMCG market by the end of 2017.
Non-food sectors keep up their momentum, especially personal care categories. Beverage is now back to lead the growth of Urban market while Dairy shows a slight increase in Rural partly thanks to milk-based products such as cup yogurt and cream dessert. However, Dairy in Urban and Packaged Foods in Rural are still suffering from the drop of volume consumption.
In Urban, Carbonated soft drinks (CSD) and Energy drinks have been returning to recruit buyers since the beginning of 2017, mostly driven by the market leaders. In Rural, Tonic Food Drink liquid format are developing very well. The category not only expands buyer base but also uplifts consumption. Its success is attributed to the widening distribution network in every corner of Rural areas.
Modern Trade maintains healthy growth from brick-and-mortar stores (both big and small formats) to online channel. On top of that, Minimarkets, Convenience stores and online shopping are getting more and more shopper’s familiarity and gaining more ground in Urban market. While a fifth of Rural shoppers now shops in medium-sized street shops for a larger range of products and choices, which seems a good sign for further expansion of this channel in Rural.
Spotlight of the Month – Promising Private Label?
While Private label accounts for 20-30% of total retail sales in US or EU markets, it still has limited development in Vietnam mainly due to the underdeveloped Modern Trade, the lack of diversified product offers and the effective communication. However, with the rise of smaller modern shopping formats and more investment from “giant” retailers, would it be able to leverage Private label further?
Urban 4 cities include Ho Chi Minh, Ha Noi, Da Nang and Can Tho.
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