Description
FMCG Monitor Q2 2023: Vietnam’s FMCG Market Faces Challenges
The Vietnam FMCG Monitor Q2 2023 report shows that the country’s FMCG market is facing challenges, despite a slight improvement in the economy.
The economy is showing signs of improvement, but consumers remain cautious and financially stressed.
The GDP growth in Q2 2023 was 4.14%, up from 3.23% in Q1. However, this is still below the pre-pandemic level of 6.8%. The CPI also eased to 2.4% year-on-year, but this is still above the government’s target of 2%.
Despite the slight improvement in the economy, consumers remain cautious and financially stressed. This is due to a number of factors, including rising inflation, job insecurity, and the ongoing war in Ukraine. As a result, consumers are cutting back on their spending, especially on non-essential items.
The total value of household consumer goods is experiencing downward growth momentum.
The total value of household consumer goods (FMCG) grew by 2.4% in Q2 2023, down from 3.2% in Q1. This is the lowest growth rate since Q4 2020. The slowdown in FMCG growth is being driven by a number of factors, including the cautious spending behavior of consumers, the rising cost of living, and the ongoing trade war between the US and China.
Volume growth remains strong in rural areas, but is slowing down in urban areas.
Volume growth in FMCG has been more resilient than value growth, as consumers in rural areas are more price-sensitive. However, volume growth is also slowing down in rural areas, as consumers are starting to feel the pinch of rising prices.
Mini stores and online channels are gaining popularity, while traditional channels are losing market share.
Mini stores and online channels are becoming increasingly popular among consumers, as they offer a wider range of products, more convenient shopping experiences, and lower prices. Traditional channels, such as supermarkets and convenience stores, are losing market share as a result.
Consumers are becoming more price-conscious and are increasingly looking for promotions.
As consumers become more price-conscious, they are increasingly looking for promotions and discounts when shopping for FMCG products. Brands that are able to offer attractive promotions will be more likely to succeed in the current market environment.
Implications for brands:
The challenges facing the Vietnam FMCG market have a number of implications for brands. Brands need to focus on the following areas to navigate these challenges:
- Value and affordability: Brands need to focus on offering products that are of good value and affordable to consumers. This means using cost-effective production methods and avoiding unnecessary markups.
- Digital and e-commerce: Brands need to invest in digital and e-commerce channels to reach consumers in rural areas and to compete with online retailers.
- Promotions: Brands need to offer attractive promotions to drive sales and attract consumers. This could involve offering discounts, coupons, or free gifts.
By focusing on these areas, brands can navigate the challenges facing the Vietnam FMCG market and continue to grow their business.
