FMCG growth flattens out in urban Vietnamese market

According to our observation in 2012, 10% out of 16% incremental growth in FMCG market is from new products while only 6% comes from existing ones.

The latest FMCG Monitor report from Kantar Worldpanel published today for the 12 weeks ending October 6th 2013 shows different pictures across Urban and Rural areas. After a slight pick-up by end of Quarter 3, market growth in Urban is struggling hard to stand at 11%. Yet, provided that economic conditions improve towards end of this year, urban FMCG market is expected to gain back some momentum and continue to move on. Meanwhile, FMCG in Rural is stepping up firmly at 14% in terms of value. Consumption grows healthily across all FMCG sectors. The only exception is Packaged Foods which has been suffering from staggering growth since end of Tet. In terms of retail landscape, all key channels maintain a healthy 2-digit growth over the past 3 months, except Wet Market.

During the examined period, Kantar Worldpanel notices the excellent performance of Box Tissues in Urban with 77% volume growth thanks to a 37% increase in average household consumption and an incremental recruitment of 51,000 new buyers. In Rural, Chocolate Malted Beverages was the most outstanding category with 37% uplift in volume consumption by successfully expanding its reach to additionally 235,000 new households and increasing average consumption by 17%.
Every year, manufacturers invest billions of USD on new product innovations to meet constantly evolving consumer needs and usage occasions. This translates into a high speed of innovation: there is one new product launched every 2 hours! According to our observation in 2012, 10% out of 16% incremental growth in FMCG market is from new products while only 6% comes from existing ones.

Kantar Worldpanel Vietnam monitors consumer purchase behaviour of more than one hundred FMCG categories from its 2,350 urban household panel, and by closely studying nearly 300 new variants of 25 major categories* in the last 5 years, our analysis indicated that in one year after launch, a new product (variant level) can attract 1 in 15 households (7% penetration), of whom, 28% have repurchased. Noticeably, trial build slows down dramatically after 3 months. After this initial period, the performance of a new launch can be fairly predictable. Therefore, marketers have 90 working days to best target the early adopters.

“New products are substantial to market growth, and even more prevails when the market slows down. Yet, continuous support is the key to sustainable growth of new products. Manufacturers need to build awareness and visibility through media communication and strong distribution in the first year, while shopper-based promotion campaigns are encouraged in the second year to retain buyers and defend against competition from copycats.” – commented David Anjoubault, General Manager of Kantar Worldpanel Vietnam.

(*) 25 categories include: adult milk powder, liquid milk, yoghurt, instant coffee, chocolate malt beverage, soya sauce, taste enhancer, hair care, skin cleansing, facial care, body care, deodorant, oral care, sanitary napkins, laundry, fabric conditioner, dishwashing liquid, and household cleaners.

Follow links on the right side of this page to download full reports in both English and Vietnamese.