Local players reshape FMCG sector

The new report Go Glocal released today by the global measurement company Nielsen revealed that local players have irreversibly re-shaped Asia’s fast moving consumer good (FMCG) sector.

Local players are defined as those operating only in a single market—the respondent’s home country while multinationals is defined as those that operate in many markets.

“National pride” is highlighted as the key factor contributing to consumers’ choice of local versus global brands in Vietnam. A desire to support home-grown brands makes nearly half of Vietnamese respondents (48 per cent) choose local brand instead of global one. Besides, value for money (40 per cent) and having positive experience with the brand (27 per cent) are among the top-selected reasons for selecting a product.

Earlier on, another report by Nielsen - the Global Brand - Origin Survey, which examined whether consumers prefer goods produced by global/multinational brands or by local players revealed that around 80 per cent – 90 per cent respondents in Vietnam say a brand’s country of origin is as important as or more important than nine other purchasing drivers, including selection/choice, price, function and quality.

In both modern and traditional trade, regional and local brands are said to grow faster than global players. Traditionally, multinationals’ strength resided in the modern trade format due to its centralised distribution network, trading terms and shared expertise in category management.

Meanwhile, local players’ strength lay in traditional trade where they could leverage their own direct to store distribution networks, local knowledge and relationships which gave them flexibility and agility in a highly fragmented market.

However, times have changed and local & regional players have level led the playing field in modern trade growing twice or three times that of multinationals.

Also, more than two-thirds consumers in Vietnam (69 per cent) believe local brands are most attuned to their personal needs and tastes. Traditionally, local players ruled categories that resonated closely with local nuances such as food and beverages. And in Southeast Asia, these categories still drive the greatest growth for local companies today at 17 per cent for beverages and 10 per cent for food.