Winning new age consumers in shifting times

Vietnam's FMCG sector stands at a crossroads. While economic growth projections for 2024 are positive, consumer confidence at the end of 2023 remained subdued.

This disconnect reflects a complex interplay of macro forces and evolving consumer behaviour that brands must understand to thrive. Kantar's Vietnam FMCG Outlook 2024 report delves into these dynamics, equipping brands with the insights needed to navigate this dynamic landscape.

2023: A year of complexity and adaptability

2023 saw Vietnamese consumers grapple with rising commodity prices. This led to a fascinating display of adaptability, with shoppers employing a mix of strategies to manage their budgets. While some categories witnessed volume reduction, others grew by addressing shoppers’ quest for value.

This highlights the growing importance of value consciousness, where consumers prioritise essential goods but are willing to invest on categories and products that add value beyond functionality.

Notably, a trend towards reduced FMCG volume at year-end underscores the urgent need for brands to adapt to both short-term fluctuations and long-term shifts.

Macro shifts reshaping the FMCG landscape

Several key macro trends are shaping Vietnam's FMCG landscape in 2024 and beyond:

Economic Outlook: While the overall economic outlook for 2024 is positive, it was apparent rising prices had and will continue to have an impact on shoppers’ budget management strategy. Value remains a key driver, with consumers making conscious choices about where to allocate their budgets.

Demographic Transformation: Vietnam's demographic structure is painting a new picture. The once "golden population" is maturing, with an aging, urbanising population and smaller household sizes emerging. This shift holds significant potential for FMCG businesses as demand for diverse products surges across different age clusters. Rising household incomes and decreasing household sizes, however, indicate a demand for evolving value proposition, where affordability might not be the sole driver.

Changing Consumer Trends: Rising prices have led to a slowdown in in-home FMCG volume growth, even as average spending continues to rise. This raises the question: Is this increase driven solely by inflation, or are consumers changing their shopping baskets? Understanding the answer is crucial for developing effective marketing strategies.

4 pillars for growth in Vietnam's FMCG market

Decoding drivers of change

Kantar’s data reveals that over half of FMCG brands struggled to keep pace with the competition in 2023, particularly within growing categories where approximately one-third of brands began to lag.

As competition intensifies in the FMCG playground, this highlights the urgent need for brands to identify their unique growth drivers to stay ahead of competition.

Mastering the multi-channel landscape

The FMCG retail landscape in Vietnam is shifting to more convenient and modern formats but not all modern trade channels can win. By decoding the shopper missions for each channel/retailer and adapting strategies accordingly, brands can ensure their products are not just seen, but chosen in the right places, at the right time.

Building a winning portfolio

Not all categories are created equal. For FMCG manufacturers with a vast portfolio, identifying the key categories and hero SKUs to prioritise investments in is crucial in achieving category growth and profitability.

Optimising promotions: quality over quantity

In a value-conscious environment, simply offering promotions to drive short term sales growth might not always be beneficial to brand growth.  Answering regarding the efficacy of different types of promotions will allow brands to assess the true impact of their pricing and promotional efforts and refine their strategies accordingly.

Equip yourself for success in Vietnam’s FMCG Market

Vietnam's FMCG market in 2024 presents both challenges and opportunities. Kantar's Vietnam FMCG Outlook 2024 report offers the data and insights needed to navigate this evolving landscape.

Read the report today:

Our team of experts is ready to help you navigate the shifts in consumer preferences and leverage consumer insights to develop winning strategies in 2024.