FMCG Overview 2016
2016 FMCG growth was as expected but brighter perspective for 2017
Key market highlights in 2016 issues:
CPI 2016 reached an increase of +2.66% versus last year but still under control, driven mostly by an increase of crude oil. Total retail sales of consumer goods 2016 grew a bit higher than 2015. In general, Vietnam economy is expected to have stable growth at 6.5% in 2017.
Both Urban 4 cities and Rural FMCG market post slightly stronger growth rate in the last quarter of the year. FMCG growth full year 2016 bounces back in Urban 4 cities nearly double its growth in Rural. 2016 was a tough year for Rural which faced economic difficulties. However, Q4 of Rural market recorded as the best performance in 2016, which seems to be a positive signal for Rural in the following year. Both Urban 4 cities and Rural market are predicted to reach a growth of ~5-6% in 2017.
While most sectors of FMCG perform better than last year in Urban, almost all sectors in Rural market experience deceleration. Dairy, Beverages and Home Care are most suffering in Rural.
Rice Cracker and Liquid Detergent continue to shine bright in 2016 in both Urban 4 cities and Rural. In spite of flagging Rural market, nutrition categories keep expanding consumer base in this area.
Shopping frequency drops more sharply than last year though basket value in each shopping occasion increases. It seems to be harder and more competitive to approach consumers.
Up-sizing is still an overriding trend, increasing in Rural but slowing in Urban 4 cities. They seem to save more time and get more value for money with bigger packs. Is this one of the reasons that make consumers shop less often as product consumption also lasts longer?
More down-trading is observed in Rural market and the trend remains among necessities.
Street shops sustain their dominance, accounting for over 60% value share in both Urban 4 cities and Rural. Ministores (Minimarket & CVS) achieve the most outstanding performance, posting a strong growth of 36% in Urban 4 cities. Proximity & smaller formats are now driving the market growth.
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