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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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UPCOMING EVENTS

SAIGON EXHIBITION & CONVENTION CENTRE (SECC)
February, 22 - 24th 2017 - EXHIBITION: PLASTICS VIETNAM 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city


February, 22 - 24th 2017 - COMPACK VIETNAM 2017 - – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city


March, 02 - 04th 2017 - SHE 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city


March, 02 - 04th 2017 - VIETNAM INTERNATIONAL CAFFE SHOW 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city


March, 08 - 11th 2017 - VIFA EXPO 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city - Vietnam International Furniture & Home Accessories Fair


March, 15 - 17th 2017 - AUTOMECHANIKA HO CHI MINH CITY – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city


March, 21 - 23rd 2017 - PROPAK VIETNAM 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city - The 12th International Processing, Packaging Exhibition and Conference for Vietnam


March, 21 - 23rd 2017 - PHARMA TECH VIETNAM 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city - The 7th International Pharmaceutical & Cosmetics Processing, Testing, Filling, Packaging & Ingredients Exhibition


March, 29 - 31th 2017 - INMEX VIETNAM 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city - The 6th edition of Leading & Definitive International Maritime Expo in Vietnam and Indochina


March, 29 - 31th 2017 - HVACR VIETNAM 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city - The 11 th International Exhibition on Heating, Ventilation, Air - Conditioning, Air Filtration & Purification, Refrigeration Systems, Pumps, Valves, Compressors and related systems

April, 05 - 08th 2017 - SAIGON TEX – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city - Saigon Textile & Garment Industry Expo / Fabric & Garment Accessories Expo 2017

April, 12 - 14th 2017 - VIBA 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city

April, 12 - 14th 2017 - LEDTEC 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city

April, 18 - 20th 2017 - COSMOBEAUTE VIETNAM 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city - The 10th Vietnam International Exhibition and Conference on Cosmetics, Beauty, Hair & Spa

April, 18 - 20th 2017 - AESTHETICS VIETNAM 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city - The 5th International Exhibition and Conference on Aesthetics in Vietnam

April, 25 - 27th 2017 - FOOD & HOTEL VIETNAM 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city - The 9th International Food & Drink, Hotel, Restaurant, Bakery and Food Service Equipment, Supplier & Services Exhibition and Conference

May, 04 - 07th 2017 - VIETNAM MOTORCYCLE SHOW 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city

May, 18 - 20th 2017 - ASGA VIETNAM 2017) – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city - International Exhibition on Screen Printing & Graphic Imaging in Vietnam 2017

May, 18 - 21th 2017 - International Jewellery and Watch Vietnam 2017 (14th edition) – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city

May, 25 - 28th 2017 - The 13th SAIGON AUTOTECH & ACCESSORIES 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city - All kinds of automobile, motorcycle and all products of supporting industry in the fields

June, 07 - 09th 2017 - ICT COMM 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city - Vietnam International Exhibition on Products and Technology of Telecommunication, IT and Communication 2017

June, 08 - 10th 2017 - Telefilm 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city - Vietnam International Exhibition on Film And Television Technology

June, 13 - 15th 2017 - RUBBER & TYRE VIETNAM 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city - The 4th International Exhibition and Conference on Rubber Industry and Tyre Manufacturing

June, 2017 - PAPER VIETNAM 2017 The 5th International Exhibition and Conference on Paper and Pulp Industry for Vietnam – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city

June, 23 - 27th 2017 - THE INTERNATIONAL EXHIBITION VIETBUILD 2017 - PHRASE 1 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city

July, 04 - 07th 2017 - MTA VIETNAM 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city - The 15th International Precision Engineering, Machine tools and Metalworking Exhibition and Conference

July, 12 - 14th 2017 - THE INTERNATIONAL SHOES AND LEATHER EXHIBITION VIETNAM (SHOES & LEATHER) – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city

July, 19 - 22nd 2017 - VIETNAM ETE 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city

July, 19 - 22nd 2017 - ENERTEC EXPO 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city

August, 02 - 05th 2017 - VMS 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city

August, 09 - 12th 2017 - FOOD & BEVERAGE 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city

August, 09 - 12th 2017 - PROPACK VIETNAM 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city

August, 17 - 19th 2017 - VIETNAM MEDI-PHARMED EXPO 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city

August, 29 - 31th 2017 - VIETFISH 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city

September, 13 - 16th 2017 - VN Plas 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city - The 17th Vietnam Int'l Plastic Rubber Industry Exhibition

September, 20 - 23rd 2017 - PHARMED & HEALTHCARE VIETNAM 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city

September, 27th - October 1st 2017 - THE INTERNATIONAL EXHIBITION VIETBUILD 2017 - PHRASE 2 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city

October, 05 - 08th 2017 - VnPackprint 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city - The 17th Vietnam Int'l Packaging & Printing Industry Exhibition

October, 05 - 08th 2017 - VnPrintlabel 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city - The 17th Vietnam Int'l Print Label Industry Exhibition

October, 05 - 08th 2017 - VnFoodtech 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city - The 17th Vietnam Int'l Food Processing Industry Exhibition

October, 18 - 21st 2017 - VIETNAMWOOD & FURNITEC 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city

October, 25 - 29th 2017 - VIETNAM INTERNATIONAL MOTORSHOW 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city

November, 02 - 04 2017 - VIETNAM Int'l Maternity Mom & Kids Fair 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city

November, 22 - 25th 2017 - VTG 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city - The 17th Vietnam Int'l Textile & Garment Industry Exhibition

December, 06 - 09th 2017 - VIETNAM EXPO 2017 IN HOCHIMINH CITY – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city

December, 06 - 09th 2017 - VIETNAM HARDWARE & HAND TOOLS 2017 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city

December, 14 - 18th 2017 - VIETBUILD HOME - PHARSE 3 – Saigon Exhibition & Convention Centre (SECC), 799 Nguyen Van Linh Street, District 7, Ho Chi Minh city

 

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