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Vietnam’s FMCG market pursues growth at home and abroad

While slowing moderately, in line with general economic trends, Vietnam’s fast-moving consumer goods (FMCG) segment is continuing to expand, with strong areas of potential growth both at home and abroad.

The rate of expansion of FMCG sales in Vietnam’s six main population centres slowed somewhat in the first quarter, according to a survey conducted by market research firm Nielsen, rising by 3.6% year-on-year (y-o-y). This compared to 5.7% growth in the fourth quarter of 2015.

Beverages, including beer, dominated FMCG sales in the first quarter, accounting for 39% of turnover, with milk products contributing 16% and food 15%. This was followed by tobacco products (13%), personal care items (8%), household products (6%) and baby products (4%).

Market challenges

The easing of FMCG sales growth reflects a wider cooling in the Vietnamese economy, with GDP expanding at 5.52% y-o-y in the first half, down from 6.32% for the same period in 2015.

The slowing of sales is also the product of a more sophisticated client base, according to Nguyen Anh Dung, Nielsen Vietnam’s director of retail measurement services.

“Urban consumers are increasingly demanding and expecting better choices. They’re looking for more innovations and new consumption experiments,” he told local press earlier this summer. “With a lack of innovation, FMCG is becoming more basic items, which consumers would still buy, but only at a sufficient level.”

The Vietnamese public’s appetite for new products is both a challenge and an opportunity. According to a recent product innovation study, Vietnamese consumers try more new products than other South-east Asian shoppers, with 88% of Vietnamese consumers saying they bought a new item during their last shopping trip, compared to a regional average of 69%.

This trend is something of a double-edged sword. While maintaining customer loyalty to existing brands is a challenge for manufacturers, this willingness to try new things is also a key advantage for firms breaking into the Vietnamese market or existing players launching new product lines.

However, as trade barriers are lowered as a result of the ASEAN Economic Community and the Trans-Pacific Partnership, Vietnamese FMCG producers are likely to face greater regional and international competition.

Potential remains strong

Though there has been some slowing, medium-term potential in the market is strong, according to a report issued by the Ministry of Industry and Trade early this year. Fuelled by growing incomes and a young and active consumer base, FMCG spending is expected to reach $173bn by 2020, up 23.6% from the $140bn forecast for this year.

Indeed, consumer confidence remained strong heading into the second half of the year. Sentiment in the second quarter was only marginally down on the opening three months of the year, according to an August Nielson survey, with the index at 107 points, two below the first quarter’s peak.

The vast majority of Vietnam’s manufacturing and processing firms also have a positive outlook for the second half, a General Statistics Office survey reported, with more than 90% of respondents expecting production to either increase (55%) or remain stable (35.4%) in the second half of the year.

Market prospects

With Vietnam’s population expanding by 1m per annum, the potential consumer market is significant, and the penetration rate for many FMCGs has yet to be maximised, according to Mai Kieu Lien, CEO of dairy industry leader Vinamilk.

“As in other ASEAN markets, Vietnam’s rapid urbanisation and rising incomes led to a growing adoption of Western styles, which led to a boom in FMCGs,” she told OBG. “However, purchasing power in Vietnam is also one of the lowest in the region, so a localised strategy based on pricing has to be put in place.”

A number of leading Vietnamese FMCG producers are looking further afield for opportunities, with the country’s near neighbours seen as having strong potential.

Kajiwara Junichi, CEO of food manufacturer Acecook Vietnam, told OBG, “Most companies are not focused on South-east Asia, especially Indonesia, as they have their local giants. Laos, Myanmar and Cambodia are good markets to enter, as they are not as mature as Thailand.”

Another area of potential growth is Vietnam’s rural regions, home to roughly two-thirds of the population. According to a report by market survey firm Kantar WorldPanel, household income in rural areas is rising faster than in urban centres, albeit from a lower base.

Sales of domestic FMCGs are already increasing at more than twice the rate of foreign brands in the segment, and Vietnamese brands’ market share in non-urban areas is set to grow from 54% of total FMCG sales in 2015 to 64% by 2020.

This Vietnam economic update was produced by Rey Davis-Tuplano, Editorial Manager Vietnam, Oxford Business Group.

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VIETNAM RETAIL SECTOR BRIEFING 2016

With increasing incomes, rapid urbanisation together with strong economic growth and young population, Vietnam is nowadays one of the fastest growing retail markets in Asia. The year 2016 has seen a significant emerge in retail sector with many remarkable events such as high-value M&A affairs or serial opening of convenience store chains so far; while the amount of FDI generally maintains robust.
For details of the report, please see attached file here 

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The Training Gateway 2017 – Export Opportunity and Cooperation for Development

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The Training Gateway, which is held annually, is the occasion for UK delegates to visit Vietnam and work on Education and Corporate Training Trade Mission. This year, the Business Centre of BBGV is honoured to support this event.


The content of the training programmes delivered will cover many outstanding sectors, such as: teacher training, vocational training in hospitality and catering, oil and gas engineering, leadership and management training, English Assessment, etc.,. During the first 2 days in Ho Chi Minh City and another 1 day in Hanoi, the delegates would have the opportunities to introduce their training programmes to key participants, who are mostly Human Resource directors and educational buyers in the region, through Master class/ workshops, mini exhibitions along with B2B meetings and site visits.

 

Prior to the main event, there will be a pre mission webinar on Thursday 27th of April between 8:30 and 9:30 am (UK time) as a great opportunity to find out more about the mission and raise any questions. To register for the webinar, please Click here
For more information about the scope and schedule of the event, please find it here



If you would like to join as a delegate, please contact Ms. Amanda Selvaratnam by Amanda.Selvaratnam@york.ac.uk

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Consultancy field trips program with CASS Business School of London (CASS)

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On 29th of March, BBGV had the pleasure to once again welcome the MBA students from CASS to Vietnam for consultancy field trips, as a co-host annual activity since 2009.

 

CASS is located in the financial centre of London, educating MBA and Executive MBA students. Their two-year programme is ranked as one of the world’s best. CASS students are professionals and managers in their 30’s and represent the best institutions in the City of London and other European business capitals.

 

During their one-week stay in Vietnam, around 50 students are divided into groups and worked intensively on business development projects at Vietnamese companies. The projects are specialised in new marketing or cost cutting strategies, company restructuring, new distribution strategies or the possibility of entering new markets. The hosting companies benefited from working with experienced executives come from over 30 countries and different industries. For this year visit, they were Vietnam Airlines, Le Bros, Viglacera, Maritime Bank, Vietcombank, Canifa, IDC Group, Hanoia and PYS travel.
This program also gives the local senior management teams opportunities to utilise their skills and knowledge of international business to grow beyond the border of Vietnam.

 

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Doing Agri-Business in Vietnam Webinar


The webinar Doing Agri-Business in Vietnam was successfully held by BBGV on February 17, 2017. The invited experts, in the role of stakeholders, have provided valuable information on overview of agri-business in Vietnam, updates on recent legal frameworks for registering new agri-tech items (machinery & equipment), agricultural stuffs (animal feeds, feed additives, and fertilizer); and practical experiences in doing agri-business in Vietnam.

Please click download the full Audio and Presentation

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SCC – New Global Delivery Centre opened in Ho Chi Minh City

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source: UKINVIETNAM


With the key support from The Business Centre- British Business Group Vietnam (BBGV), SCC has successfully launched its second Global Delivery Centre in Ho Chi Minh City on February 24, 2017. The inauguration ceremony welcomed the participation of Dr Liam Fox - UK Secretary of State for International Trade, along with SCC founder - Sir Peter Rigby.

SCC, with 40 years of development, is the largest independent IT group in Europe, which not only provides businesses with quality IT infrastructure solutions and services, but also contributes to UK national charities and heritage.

After the earlier approach to Vietnam with a Preferred Partner framework agreement signed with Vietnamese software giant FPT Software in September 2016, SCC’s operation expansion to Vietnam has marked its “another important strategic milestone for the business”, said CEO James Rigby. The new operation also contributes to enhance the business partnership between two countries.

In his speech, Sir Peter Rigby sent great appreciation to the organizations, including BBGV, for the enthusiastic assistance to SCC expansion plan. With £32m revenue generated in fiscal year 2016, the new Centre aims to deliver great support to clients in both Eastern and Western areas.

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