Growth of 3.4% comes after sluggish 2014 but retailers aren't celebrating just yet.
Fast Moving Consumer Goods (FMCG) appeared to have recovered somewhat in the first quarter of the year, recording 3.4 per cent growth in volume and 4 per cent in value in the six key Vietnamese cities of Hanoi, Ho Chi Minh City, Hai Phong, Can Tho, Nha Trang, and Da Nang after a sharp downturn in sales last year, according to a recent report from market researchers Nielsen.
Beverages drove the recovery but other categories such as food and home care also played a role. Retailers interviewed by Nielsen, however, remain cautious about the future despite the apparent turnaround.
The report also noted that more than 80 per cent of FMCG sales in Vietnam still come from traditional trade channels, which include around 1.3 million traditional stores around the country. The sheer number of traditional stores makes Vietnam one of the most complex markets for FMCG manufacturers to build distribution networks and manage logistics. Furthermore, only 30 per cent of traditional stores contributed to the top 80 per cent of category sales.
In addition to the complexity and number of traditional stores, the power to make or break a brand or product also lies with traditional retail store owners. During a recent study Nielsen found that just 70 per cent of traditional retail stores comply with producers requests to stock their products, highlighting the importance of winning over a retailer.
Of the brands most supported by Vietnamese retailers, Hao Hao, Vinamilk, and Coca-Cola were the Top 3, with more than half of store owners indicating they will stock more of these products and recommend them to customers.
“Despite the growth in FMCG our own Retailer Confidence Index was only at 71, which shows that retailers remain hesitant,” said Executive Director of Retail Measurement Services at Nielsen Vietnam, Mr. Nguyen Huong Quynh. “Retailers are mainly concerned about what directly impacts on their business, such as stock, margins, and customer services support.”
Nielsen N.V. (NYSE: NLSN) is a global performance management company that provides a comprehensive understanding of what consumers watch and buy. Nielsen’s Watch segment provides media and advertising clients with total audience measurement services across all devices where content - video, audio and text - is consumed.