Welcome to our agency’s discussion on the FMCG market in Vietnam during Q2 2022. In this article, we will discuss the impact of high inflation on the industry, changes in consumer shopping behavior, and key insights into the macro economy and retail landscape. Understanding these factors is crucial for businesses operating in the FMCG sector to adapt their strategies and meet the evolving needs of consumers.
- Macro Economy:
Despite the positive GDP growth recorded in the second quarter of 2022, Vietnam’s economy is currently facing significant challenges due to the unforeseen circumstances caused by the COVID-19 pandemic. The impact of the pandemic has resulted in a rise in the Consumer Price Index (CPI) above 2% during this quarter, which may potentially pose new challenges in the coming months. While there has been progress in the recovery from the pandemic, with the gradual easing of restrictions and resumption of economic activities, the increasing cost of living, including the cost of essential commodities such as oil and gas, as well as food items, has become a rising concern for consumers. This surge in prices has put additional pressure on consumers’ purchasing power and may influence their consumption patterns and choices.
- FMCG Overview:
The FMCG (Fast-Moving Consumer Goods) industry in Vietnam experienced a notable shift in consumption patterns during the second quarter of 2022. Specifically, there was a decline in the volume consumption of certain product categories, such as Dairy and Packaged Foods, as the “new normal” became more familiar to consumers and stockpiling activities decreased. Despite this decline in volume, the primary driver of growth across all sectors was the increase in the selling price of products. As consumers adapted to the changing circumstances and adjusted their spending habits, they faced higher prices for FMCG products. In the Rural market, the Dairy and Home Care sectors performed relatively well, driven by increased prices paid by consumers for these essential goods.
- Hot Category:
Amid the challenges posed by the ongoing pandemic, certain categories within the FMCG industry experienced notable growth and demonstrated resilience during the second quarter of 2022. In-home consumption of refreshment beverages, including Juice, Ready-to-Drink (RTD) Tea, and Energy Drinks, showcased a strong recovery during this period. These categories outperformed their pre-pandemic performance, indicating a shift in consumer preferences and behavior towards these products. The increasing consumption of refreshment beverages can be attributed to consumers seeking convenient and refreshing options while spending more time at home. With the ability to offer convenience, variety, and a refreshing experience, these categories have successfully captured consumers’ attention and gained traction in the market.
- Retail Landscape:
The retail landscape in Vietnam witnessed notable changes and adaptations during the second quarter of 2022. Emerging channels, such as Online and Mini-stores, continued to strengthen their position in both Urban and Rural areas, experiencing double-digit growth. These channels have been able to cater to consumers’ evolving needs and preferences by offering convenience, a wide range of products, and efficient shopping experiences. The online channel, in particular, has gained significant traction as consumers increasingly embrace e-commerce platforms and digital shopping. However, traditional large-format stores faced challenges in the urban market, potentially due to shifting consumer behaviors and preferences. On the other hand, in Rural areas, the Health and Beauty sector demonstrated strong growth and resilience, indicating the potential and market demand for these products in less urbanized regions.
In conclusion, the FMCG market in Vietnam faced challenges during Q2 2022 due to high inflation, impacting both consumers and businesses. However, with the economy expected to rebound rapidly, there is optimism for the retail industry and significant transitions taking place. To succeed in this evolving landscape, businesses in the FMCG sector need to stay agile and adapt their strategies to meet changing consumer demands.
Key takeaway points:
- Vietnam’s economy has shown positive GDP growth in Q2 2022, but high inflation remains a challenge.
- Consumer concerns are shifting towards the rising cost of living, including the cost of oil/gas and food.
- Volume consumption in the Dairy and Packaged Foods sectors decreased in Q2 2022.
- Increase in paid prices was the primary driver of growth across all FMCG sectors.
- Refreshment beverage categories, such as Juice, RTD Tea, and Energy Drinks, showed strong recovery in Q2 2022.
- Emerging channels like Online and Mini-stores experienced growth, while large formats faced challenges.
- The retail industry in Vietnam is undergoing substantial transitions, driven by economic rebound and changing consumer preferences.
For more information and insights into the FMCG market in Vietnam, or if you require assistance in navigating the changing landscape of the FMCG industry, feel free to contact us any time!
