FMCG Monitor May 2019

Key market highlights in May 2019 issues:

Key Indicators

Despite Lunar New Year season, CPI is continuously well-controlled in the 1st quarter, recording the lowest rate over the last 3 years. The domestic demand of consumer goods continues to thrive, posting a robust growth of 13%. Although Vietnam economic growth in quarter 1 does not reach the same peak as last year, it's still the highest GDP growth rate since 2011, maintaining a positive progress.

FMCG Growth

In long term, FMCG market shows a continued slowdown in Urban 4 key cities while makes an impressive performance in Rural areas. In short term, the market looks brighter thanks to the spending spree of consumers during Tet holiday. The value growth hits the highest peak over the past 4 years in both Urban 4 key cities and Rural.

Healthy growth is observed across all sectors in both Urban 4 key cities and Rural, driven by the increase of volume consumption. Beside Beverage and Dairy are the sector driving the market growth in Urban and Rural respectively, Personal Care has been developing fast in both regions.

Hot Category

Ready-to-drink growing up milk is among the top growing categories in this quarter, especially in Rural areas. Its growth is mainly driven by acquiring new buyers and also uplifting volume consumption in Rural. However, the category is still underdeveloped and holds high potential to expand further in terms of both consumer base and consumption.

Retail Landscape

Modern trade makes a significant movement, gaining three share points in Urban 4 key cities, thanks to both big and small retail formats as well as online channel. In Rural, medium-sized street shops remain as the best recruitment channel in terms of winning new shoppers. The positive growth has been seen across modern and traditional channels, emphasizing the more-fragmented retail landscape as well as the growing importance of OMNICHANNEL shopping trends in Vietnam.

Spotlight of the Month – What is the opportunity for convenience stores to win new shoppers?

In Ho Chi Minh city, 60% of Gen Z shop foods and beverages in convenience stores (CVS) for out-of-home consumption in the first quarter of 2019, which is almost double the shopper base among Gen Y and Gen X. While FamilyMart earns the most spending from all age groups, B’smart is the number one store chain among Gen Z. The key success factor of B’smart is to encourage much higher spending of students when they are in-store, yet still has a big gap in terms of traffic (both penetration and shopping frequency) compared to other CVS chains.

Urban 4 cities include Ho Chi Minh, Ha Noi, Da Nang and Can Tho.

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