Nielsen releases quarterly Market Pulse Report for Q3 2015, showing growth in FMCG of 4.5% compared to 0.9% in Q2.
Fast-moving consumer goods (FMCG) growth in the six key cities in Vietnam (Hanoi, Ho Chi Minh City, Hai Phong, Can Tho, Nha Trang, and Da Nang) gained momentum in Q3 2015, with 4.5 per cent growth compared to 0.9 per cent in the last quarter, due to an increase of 3.6 per cent in volume growth (vs. 0 per cent in Q2), according to the quarterly Market Pulse Report released by global performance measurement company Nielsen.
“Although FMCG growth in Q3 shows recovery, the signal reflects the volatility of Vietnam, which puts a lot of challenges on manufacturers to make sound decisions to fully seize the market growth opportunities and drive a profitable business,” said Ms. Nguyen Huong Quynh, Executive Director of Retail Measurement Services at Nielsen. “Compared with FMCG growth across Asia-Pacific, where it has been around 5 per cent each quarter for two years, growth in Vietnam has not yet reached 5 per cent in any quarters over the last two years. Asia-Pacific growth has been mainly driven by volume increases while price increases have slowed down. Similarly, price increases have slowed down in Vietnam but has not been compensated for entirely by volume growth.”
The Market Pulse Report is based on the results of the Nielsen Retail Measurement study of FMCG in major categories. The study provides continuous tracking of product movement through defined retail outlets and the data is used to measure manufacturer and retailer effort as well as consumer off-take.
When breaking down FMCG in Vietnam into seven super categories: beverages (including beer), food, milk base, household care, personal care, cigarettes, and baby care, only beverages shows consistent growth both long term and short term. Beverages continued to be the biggest contribution to total FMCG growth (38 per cent) in Q3 2015 and grew a healthy 9.9 per cent, mainly led by volume increase (+7.3 per cent). The other super categories all stagnated.
“The sustainable growth of beverages is due to three trends that stand out among many others,” said Ms. Quynh. “The first is health, which has been the top concern of Vietnamese people over recent periods. The second is convenience, which can be easily applied across any category. And the last is innovation, which requires manufacturers to think of what exactly should be done to extend their categories to drive consistent growth.”
According to the report, health factors have become a very important influencer of purchasing decisions, as highlighted by 51 per cent of Vietnamese prioritizing nutritionally fortified products, 39 per cent loving products with natural ingredients, and 32 per cent paying attention to low fat/sugar/calories.
Convenience really stands out when looking at in-category pack trends. For impulse categories like food and beverages, convenience is available everywhere in a small/single use pack, which is necessary for impulse purchases associated with personal consumption. Regarding regular consumption categories such as home care and personal care, convenience means products have to be available in an easy-to-use pack. These categories are seeing big packs growing faster, which has the potential to lead to uneven growth. When using bigger packs consumers do not need to go to the store so often and worry about running out, which makes the categories’ future growth slower.
Last but not least, the study also revealed that the trend of innovation requires a lot of effort to identify what manufacturers have to invest to expand their categories rather than just provide something new for a new stage. This is the key factor to make a breakthrough innovation to ensure sustainable growth for the long term.