Connect with us +84 (8) 3829 8430

info@bbgv.org

Founding Sponsor

All Retail Lifestyles Environment ICT Financial Services Creative Industries Chemicals Agriculture Doing Business in Vietnam
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.

>

Read more
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 

>

Read more
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

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

16992007_10154303928050544_6627351475331135170_o.jpg

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.

Read more
British Education Mission to Vietnam

IMG_4115.JPG

 

BBGV was pleased to welcome the British Educational Suppliers Association (BESA) on their Mission to Vietnam, on the 6-9th March 2017. BBGV provided support to the Mission in conjunction with the Department of International Trade.

The BESA mission included visits to both Hanoi and Ho Chi Minh City. The delegates were kept busy during their time in Vietnam and met with representatives of the Department of Education and Training as well as many representatives many educational establishments including Vietnamese Schools, Universities and International Schools, publishers, importers and distributors.

In his welcoming speech in Ho Chi Minh City, the Consul General Ian Gibbons made reference to the world class educational technology offered by BESA members. He also commented that the mission fitted well with the Strategic Partnership Agreement signed in 2010 in which Education was one of the seven priority focus areas for cooperation between the UK and Vietnam Governments.

Mr Pham Ngoc Thanh the Deputy Director of Ho Chi Minh Department of Education and Training in his speech confirmed the need for further development for English Language and ICT within the Vietnamese school system.

Presentations were made to an appreciative audience at the mini workshop by nine members of the UK educational suppliers industry including Boclips, Collexi Limited, Cambridge University Press, Data Harvest Group Ltd, Discovery Education and Hodder Education, RM Results, WCBS and Zzish

Following the workshop, the mini-exhibition took place where members from BESA met with many Vietnam based companies on a 1-2-1 to discuss the opportunities of working together.

The mission concluded with BESA members visiting the British International School and the International School of Ho Chi Minh City.

 

Photos from the event

 

 

Click here for more information

 

 

Read more
UK Secretary of State for International Trade Liam Fox visit to Vietnam

BBGV was proud to support the recent visit to Vietnam by Dr Liam Fox MP, UK Secretary of State for the Department for International Trade and President of the Board of Trade.

 

DSCF8027.JPG


Dr Fox’s held a number of ministerial meetings, of which, Brexit and future trade relations were a key theme. At the meeting with Vietnam Prime Minister Nguyen Xuan Phuc, the positive messaging from Lord Price’s visit in October that the UK would remain a key trading partner for Vietnam was reinforced. The Prime Minister warmly welcomed Dr Fox’s reassurance that the UK continues to support entry into force of the EU-Vietnam FTA and there was strong ambition from Vietnam to move forward the trade and investment dialogue to facilitate growth following Brexit.

At the meeting with the Chairman of the Ho Chi Minh City’s People’s Committee, Mr Nguyen Thanh Phong, Dr Fox emphasized the goodwill from UK to keep enhancing the cooperation and relationship between the UK and Ho Chi Minh City. Dr Fox and Chairman Phong particularly discussed the UK offer on education, smart cities and infrastructure development.

Also in this visit to Ho Chi Minh City, Dr Fox visited Landmark 81 which once completed will be the tallest building in Vietnam. British companies Atkins, Arup and Mace have all had a leading role in delivering this project.

In the theme of harmonious cooperation between Vietnam and UK, Dr Fox, along with sir Peter Rigby, founder of SCC-Europe’s largest independent IT group, formally opened its second Global Delivery Centre in HCM City. With the support from BBGV for the initial stage, the company is looking at a long term high quality investment in Vietnam with strong plans for further expansion.

Dr Fox’s visit concluded with a keynote address at a reception hosted by the British Business Group in Vietnam and attended by leading UK and Vietnamese businesses, where the Secretary of State outlined to a receptive audience the Government’s vision for the UK in a post-Brexit world.

 

Read more

Advertise with BBGV