In the dynamic and ever-changing landscape of Fast-Moving Consumer Goods (FMCG) in Vietnam, it is essential for brands and manufacturers to gain a deep understanding of the key factors that shape the industry. As we navigate through 2023, it becomes increasingly evident that several prominent drivers are shaping the market. These include the rise of inflation, the exponential growth of social commerce, the heightened focus on health and wellness, and the momentum behind sustainable living practices. In this comprehensive report, sourced by Kantar, we will delve into these factors and explore their profound impact on Vietnam’s FMCG market, providing invaluable insights for industry stakeholders.
I. FMCG Overview:
Despite facing a challenging period characterized by stagnant consumption volume, Vietnam’s FMCG market displayed resilience and witnessed an overall increase in value throughout 2022. It is worth noting that this growth was primarily driven by price inflation rather than an upsurge in consumption. Notably, online shopping platforms, specialty stores, and traditional wet markets showcased remarkable resilience and maintained a robust double-digit growth trajectory. Furthermore, mini stores and street shops experienced a remarkable recovery following a dip in value during the third quarter. These dynamics within different retail channels highlight the evolving preferences and behaviors of Vietnamese consumers in their FMCG purchases.
II. Long-lasting Global Economic Slowdown:
As Vietnam’s economy achieved record-breaking GDP growth in 2022, the country now faces a set of challenges as we enter early 2023, prominently driven by high inflation rates. The rapid increase in prices has led to heightened concerns regarding job security and income stability among consumers. In response, individuals have become more cautious with their spending habits, adopting a more prudent approach and tightening their financial belts. As a result, FMCG brands and manufacturers must navigate this economic climate sensitively, understanding consumers’ changing attitudes and adapting their strategies to meet evolving needs and expectations.
III. The Future of Online Shopping:
The realm of online shopping, encompassing both e-commerce and social commerce, continues to flourish and experience remarkable double-digit growth rates in Vietnam. The increased frequency of online purchases and higher spending per transaction significantly contribute to this upward trajectory. Notably, the non-alcoholic beverages segment has emerged as a top growth category within online shopping, indicating the expanding influence and impact of online channels in the Food and Beverage (F&B) industry. As technology advances and consumer behaviors continue to evolve, the boundaries between the online and offline customer experience are gradually blurring, creating a dynamic and interconnected ecosystem that presents exciting opportunities for FMCG stakeholders.
IV. Health & Wellness as a Lifestyle:
The global pandemic has undeniably left a lasting impact on consumer behavior, elevating the importance of health and wellness considerations in FMCG choices. Increasingly, consumers are actively seeking out F&B products that offer nutritional benefits or healthier alternatives. Beverages with various health-promoting properties have gained significant popularity, particularly among millennials and individuals of all age groups who prioritize healthier diets and strive to reduce their consumption of fats and sugars. In response, FMCG brands must embrace this paradigm shift and align their product portfolios and messaging to cater to the growing demand for health-conscious options.
V. Momentum for Sustainable Living:
The desire to embrace sustainable living practices remains strong even in the post-pandemic era, with a notable portion of consumers demonstrating a heightened awareness of their environmental footprint and a genuine commitment to minimizing their impact. However, there still exists a perceptible gap between consumers’ aspirations for sustainability and their actual actions. Many shoppers face challenges when attempting to alter their habits, such as reducing plastic usage, due to perceived difficulties in finding affordable and accessible eco-friendly products. To bridge this gap, FMCG brands and manufacturers must take the lead in providing innovative and sustainable solutions that empower consumers to translate their environmental concerns into tangible actions, thus driving positive change on a broader scale.
In conclusion, as Vietnam grapples with the impact of rising inflation, FMCG brands find themselves at a critical juncture where they must navigate the delicate balance between price increases, inflation management, and brand building. Moreover, the future of online shopping in Vietnam is intrinsically tied to the burgeoning realm of social commerce, where seamless integration between online and offline experiences will shape the path forward. Concurrently, the health and wellness paradigm has become an integral criterion in FMCG choices, necessitating proactive adaptations by brands and manufacturers to cater to evolving consumer preferences. Finally, now is the time for FMCG industry stakeholders to harness the momentum behind sustainable living by spearheading initiatives that empower consumers to turn their environmental concerns into tangible actions, thereby paving the way for a more sustainable future.
Key Takeaways
- Rising inflation poses challenges for Vietnam’s FMCG market in 2023, impacting consumer spending patterns.
- Online shopping continues to grow, driven by increased frequency and spending per trip, with non-alcoholic beverages emerging as a top growth category.
- Health and wellness considerations shape consumer preferences, driving demand for F&B products with nutritional benefits and healthier alternatives.
- The momentum for sustainable living persists, but consumers face barriers in adopting eco-friendly practices due to cost and accessibility concerns.
Contact our Vietnam team for support and guidance in navigating the dynamic FMCG landscape and tapping into emerging opportunities in the Vietnam market.
