COVID-19? impact on Vietnam FMCG market

According to Jason Yu, Managing Director of Kantar’s Worldpanel Division, Greater China, the impact of this outbreak might have some similarities to SARS in 2003, based on our consumer panel data in China 15 cities in 2002-2003. Read more.

In China, Kantar also conducted a nationwide consumer survey on Chinese consumers’ changing behavior and attitude during the outbreak, and with our continuously tracking consumer panel, we are now able to assess the impact of COVID-19 outbreak on FMCG Market during China New Year 2020, find out more on below articles:

• Impact of COVID-19 outbreak on China FMCG Market during Lunar New Year
• Measuring the impact of the coronavirus on China’s consumption

In Vietnam, we could probably see the same patterns. Here are our thoughts on the impact of COVID-19 on Vietnamese consumer behaviors in both the long and short term.  

In the short term:

• The spread of coronavirus becomes a global health emergency, leading to an increased health consciousness among Vietnamese consumers. In order to stay safe and protect themselves, they would prefer “less physical contacts” with the crowd in their daily activities. As such, shopping traffic could be reduced with a bigger basket size on each trip, which might impact on the retail sales and FMCG sales in short-term.

• Spending on eating and drinking out (F&B) and other activities outside the home would be cut down during the coronavirus outbreak, however, FMCG for in-home consumption is expected to sustain growth. The consumption of household cleaners and personal hygiene would also pick up due to the increase of self-protection, including handwash, hand sanitizer, and wet tissue and probably hand cream/lotion as a result of washing hands more often.

• Healthy foods like fruits, fruit juices that help increase immunity are projected to see an upward trend. Consumers might also have a tendency to stock instant foods such as instant noodles, sausages, snacks, etc, especially in areas where there are infection cases found. 

• In terms of retail, smaller, clean and proximity shopping places like street shops, minimarkets and convenience stores would be temporarily favored against wet market or larger super/hypermarket. Furthermore, this situation is significantly increasing the number of transactions for online shopping and home delivery.

• On the other hand, due to the delays in shipments of import and export activities caused by the coronavirus outbreak, there are challenges for suppliers and traders to produce, distribute and stock goods. It’s more likely to result in an uplift in price which might demotivate consumer spending during the fight against the Covid-19.

In the middle-long term:

The impact of this outbreak in 2020 might also accelerate the trends that we already observed in 2019.

• Firstly, it could raise further the health and hygiene consciousness among Vietnamese consumers, which would drive the further development of hygiene products for personal care and home care including bar soap, handwash, hand sanitizer, cleaning household products, tissue, etc. These products are currently small in terms of both consumer base and consumption, but are expected to become more popular afterwards as more and more consumers now start to get used to purchase these items with a higher level of volume consumption.

• Secondly, in 2020, we expect to see an increased share of ecommerce. Thanks to its convenience and advantage of “less physical contact”, online to offline (OTO) and ecommerce delivery model fits well with consumers’ needs during this time. The online shopping platforms and delivery services are predicted to witness a growth acceleration in both shopper base and incremental spend by (1) attracting new shoppers who have never shopped online before (three fourth of Vietnamese households have not purchased any FMCG products online in 4 key cities, according to our consumer panel data updated to FY 2019) and (2) increasing/upgrading spending from existing online shoppers.

• Lastly, with emerging channels growing in popularity as mentioned above, including minimarkets, convenience stores and ecommerce, there will be a continuing shift from traditional shopping behaviors to omni-channel and multi-channel shopping, reinforcing the rising omnichannel trend in retail and FMCG market in the coming time.