Achieving growth in FMCG (fast-moving consumer goods) industry in Vietnam is getting more difficult, market researcher Kantar Worldpanel said in a report released on Thursday.
Kantar Worldpanel’s observation in four major urban cities of Ho Chi Minh, Hanoi, Da Nang and Can Tho and rural areas of the Southeast Asian country showed that FMCG market grew slower in May, in line with the global trend.
“Consumers continue shopping less often with fewer categories in their shopping basket, which leads to the lower volume of in-home consumption,” the market researcher said in its latest FMCG Monitor report.
Fast-moving consumer goods or consumer packaged goods are products that are sold quickly and at relatively low cost. Examples include non-durable goods such as packaged foods, beverages, toiletries, over-the-counter drugs and many other consumables.
Unlike Personal Care and Beverages, which are leading the growth, other sectors experience negative performance in the observed areas.
“Even Dairy, the potential sector in rural, posts a flat growth in this area,” the report reads.
Kantar Worldpanel named consumers’ rapidly changing needs and expectations as the biggest challenge to FMCG growth.
“Consumers today are not only focusing on the basic needs but also moving to new aspirations. They have the tendency to cut their budget of grocery expenditure to spend for non-FMCG items,” the report said.
People are getting busier and go shopping for FMCG less often.
“As a result, there are fewer shopping occasions for categories and brands to be picked up off the shelf.”
Besides that, the data reported a slowdown has been particularly seen in supermarket channels though 2018 seems to be another year for modern trade with a growth rate of 15 percent.
“This [slowdown] can be explained by its competing position with mini-stores and online in terms of speed and convenience and with hypermarket in terms of good deals and shopping experience,” Kantar Worldpanel reasoned.
However, two trends, including convenience and health, still prevail amid the more challenging environment, raising hope for future growth.
Despite the slowdown of the total FMCG market, those categories such as rice soup, cream desserts, box tissue capturing these trends could sustain growth, the report anticipated.
“Vietnam’s retail picture promises a lot of changes in the near future,” the monitor report finally concluded.