Welcome to our article, where we delve into the potential trends in the Vietnam FMCG market based on the insights from the Vietnam FMCG Market Report 2020 sourced by Kantar Worldpanel. This comprehensive report highlights key indicators, market trends, and consumer behavior in both urban and rural areas. By understanding these trends, businesses can adapt their strategies to capitalize on the growing opportunities in the Vietnamese FMCG market.
I. Overview of Vietnam FMCG Market Report Insight Handbook 2020:
The Vietnam FMCG market report provides a comprehensive overview of the current landscape and trends in the fast-moving consumer goods (FMCG) sector. In 2020, the total revenue from services and consumer goods increased by 11.6%, indicating robust growth. One notable contributor to this growth was the flourishing tourism industry, which had a positive impact on the overall economy. Food and consumer goods continue to dominate as the largest expenditure for Vietnamese consumers, emphasizing their essential role in daily life.
The FMCG value in Vietnam experienced a commendable increase, with a growth rate of 5.5% in big cities and 8.8% in rural areas. This disparity highlights the distinct consumption patterns between urban and rural regions. Among the different FMCG categories, beverages and personal care products recorded the highest growth rates, reflecting shifting consumer preferences and evolving lifestyles.
One notable trend in the Vietnamese market is the rising demand for convenience and environmental sustainability. Consumers are increasingly seeking products and services that offer convenience in their busy lives while also considering the environmental impact of their choices. In the beauty care industry, fragmentation remains a key characteristic. The market is composed of numerous players, both local and international, offering a wide range of products and services. The FMCG industry in Vietnam is also embracing the omni-channel trend, recognizing the importance of reaching consumers through multiple touchpoints.
II. The Main Indicators of Retail in FMCG:
In Vietnam, the retail sector plays a vital role in driving economic growth and consumer spending. Positive signs in the Vietnamese economy, such as an increase in Core CPI and stable GDP growth, indicate a favorable environment for the FMCG industry. The retail sector, encompassing goods and services, has experienced slight growth, suggesting that consumer spending needs are on the rise.
Looking ahead, the forecast indicates stable growth in GDP and CPI for the coming years. This projection bodes well for the FMCG sector, as it indicates sustained economic development and increased purchasing power among Vietnamese consumers. Services and consumer goods are expected to continue contributing significantly to Vietnam’s economic growth, further emphasizing their importance in the retail landscape.
III. The Trend of the FMCG Market:
The FMCG market in Vietnam exhibits distinct trends and dynamics between urban and rural areas. While urban areas show signs of recovery, with a focus on resilience and adaptation, rural areas demonstrate strong growth potential. Both urban and rural FMCG markets display stable long-term growth trends, driven by evolving consumer preferences and changing market conditions.
In terms of value growth, the FMCG market in big cities experienced a 5.5% increase, while rural areas witnessed a more substantial growth rate of 8.8%. Traditional trade remains effective in Vietnam, but modern commercial competitors are emerging, challenging established norms and driving innovation. Vietnamese consumers prioritize food safety, health, and environmental concerns when making purchasing decisions. This increased awareness has driven changes in consumer behavior and expectations.
IV. FMCG Growth by Category:
The FMCG market in Vietnam exhibits varying growth rates across different categories. Consumers allocate a significant portion of their spending on beverages and personal care products, indicating the importance of these categories in their daily lives.
Among the FMCG categories, personal care products demonstrate the largest growth rate, reflecting changing consumer lifestyles and an increased focus on self-care and well-being. Dairy and dairy products also exhibit considerable growth, driven by factors such as rising disposable incomes, urbanization, and evolving dietary habits.
It is worth noting that consumption trends in the dairy and beverage industries differ between urban and rural areas. These regional disparities highlight the importance of understanding local preferences and tailoring marketing strategies accordingly. Businesses that can effectively navigate these variations are likely to capitalize on the diverse opportunities presented by the Vietnamese FMCG market.
V. Shopping Channels:
The rise of digitalization has significantly impacted shopping channels in Vietnam. Online shopping, in particular, has experienced substantial growth, especially in urban areas, where there has been a remarkable 38% increase in online sales. E-commerce platforms have played a pivotal role in driving this online shopping boom, providing convenience, accessibility, and a wide range of product options for consumers.
In urban areas, there is a noticeable shift in consumer behavior towards specialized stores, mini supermarkets/shops, and convenience or supermarkets/hypermarkets. This trend reflects changing consumer preferences, with an emphasis on personalized experiences and convenience. While traditional shopping channels still dominate in rural areas, the increasing availability of e-commerce platforms is gradually reshaping consumer habits, albeit at a slower pace.
Businesses operating in the FMCG sector need to adapt their distribution and marketing strategies to cater to the evolving shopping preferences of Vietnamese consumers. A multi-channel approach that combines both online and offline channels can help reach a broader customer base and meet their diverse needs.
In conclusion, the key takeaways are:
- The Vietnam FMCG market is experiencing overall growth, driven by increased consumer spending and stable economic indicators.
- Beverages and personal care categories show the highest growth rates, presenting opportunities for brands in these sectors.
- Online shopping is thriving in urban areas, while traditional trade remains prominent in rural areas.
- Businesses should consider consumer concerns about food safety, health, and the environment to align their strategies with changing consumer preferences.
To learn more about how our agency can help your business navigate the evolving Vietnam FMCG market, contact us today.
