FMCG growth in value hits highest peak in Q1

The market research firm said in its latest FMCG monitor report that despite the Lunar New Year season in February, Vietnam’s consumer price index was kept under control during the quarter, recording the lowest rate in three years. The domestic demand of consumer goods continued to thrive, posting robust growth of 13%.

In the long term, the local FMCG market shows a continued slowdown in four key urban cities, namely the capital city of Hanoi, the central coastal city of Danang, HCMC and the Mekong Delta city of Can Tho, while seeing an impressive performance in rural areas.

Also, the market looks brighter in the short run, thanks to the spending spree of consumers during the Tet season.

Healthy growth has been observed across all sectors in key cities and rural areas, bolstered by an increase in consumption.

In addition, beverage and dairy are the respective sectors driving the market growth in urban and rural areas, while personal care has been developing quickly in both regions.

According to the report, ready-to-drink milk was among the top growing categories in the quarter, especially in rural areas. Its growth was mainly driven by new buyers and also the increasing volume of consumption in the rural region.

However, the category is still underdeveloped and holds high potential to expand further, in terms of both its consumer base and consumption.

Also, modern trade has made a significant movement, especially in the four key urban cities, backed by both large and small retail, as well as online channels.

In rural areas, medium-size street shops remain the best recruitment channel in terms of winning new shoppers. Positive growth has been seen across modern and traditional channels, emphasizing the more-fragmented retail landscape, as well as the growing importance of omnichannel shopping trends in Vietnam.

This month, some 60% of Gen Z — referring to those born in the late 90s — in HCMC shopped for foods and beverages in convenience stores for out-of-home consumption during the first quarter of 2019. The figure is almost double the shopper base among Gen Y and Gen X as those born in the 80s and early 90s.

While Japanese retailer FamilyMart earned the most spending from all age groups, B’smart is the number one store chain among Gen Z.

The key success factor of B’smart is to encourage much higher spending among students when they are in store, yet still sees a large gap in terms of traffic, including penetration and shopping frequency, compared to other convenience store chains, according to the report.