FMCG forecasted to grow fast during Lunar New Year festivities

February 05, 2018 | 14:13

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The increasing demand for consumer goods and evolving distribution systems enable the fast moving consumer goods (FMCG) to become the fastest-growing segment in Vietnam.

fmcg forecasted to grow fast durng lunar new year festivities

Confectionery and beverages are the favourite items during the Lunar New Year season

With increasing income and a newfound hunger for better living quality, Vietnamese consumers are shopping more and more. They are no longer considered as the highest savers anymore, as they are ready to spend much on consumption, tourism, and household appliance goods.

According to a survey produced by Nielsen, after essential living expenses, Vietnamese consumers are ready to spend on tourism, shopping, new hi-tech gadgets, and other entertainment services. The high growth potential of the economy and increasing consumption demand are expected to boost FMCG at the end of 2017 and in the first month of 2018.

The results of Nielsen’s Market Pulse research showed that FMCG grew by 5 per cent in the second quarter of 2017 in Vietnam, and 5.8 per cent in the third quarter. This figure was forecasted at 6-7 per cent in the fourth quarter. Additionally, an increasing number of super markets and grocery stores are spurring the growth of the FMCG segment in the country.

In 2017, the market saw heated competition between supermarket and mini mart chains, with the 1,000 stores of Vinmart and Vinmart+ (VinGroup), 259 stores of Circle K, 11 stores of 7-Eleven in Ho Chi Minh city were duking it out for supremacy.

According to the General Statistics Office, in 2017, the total retail market hit $130 billion, up 10.9 per cent on-year, including the large contribution of the FMCG sector.

A survey by Kantar Worldpanel Vietnam shows that non-food items maintained their growth momentum, especially personal care products. Beverage items are back in the first place in growth, while milk and milk products increased lightly in rural areas.

On the occasion of the Lunar New Year, Vietnam’s FMCG segment expects a sharp boost. In addition to food items such as confectioneries and household products (washing liquid, washing-up liquid, soap, shampoo, shower gel), Kantar Worldpanel Vietnam forecasts beverage items to see remarkable demand. In 2017, Vietnam consumed around 4 billion litres of beer, 40 per cent of which came from Sabeco.

The Lunar New Year is usually the peak demand for beer during the year, and this year is forecasted to follow traditions.