Customers shop at a supermarket in HCM City. Several key macro trends are shaping Vietnam's FMCG landscape in 2024 and beyond. (Photo: VNA) In its recent report on the Vietnam FMCG market outlook 2024,Kantar has a positive outlook for Vietnam’s economy, saying that despiteobstacles and short-term headwinds, the long-term economic trajectory remainsrobust.
Nevertheless, rising costs have had and will continue to have animpact on shoppers’ budget management strategy. Value remains a key driver,with consumers making conscious choices about where to allocate their budgets.
“While rising prices and economic uncertainty may present apicture of tightened belts across the board, the consumer landscape is nuanced.
“Essential categories remain at the forefront of budgets, discretionaryspending may see cuts, particularly in categories like eating out andentertainment.”
However, consumers have not entirely shut down their wallets,according to the report. They are still willing to "splurge," buttheir spending is driven by value.
Added values in health, experiences and convenience may promptthem to seek out products that justify their worth.
This presents a unique opportunity for FMCG brands to navigatechallenging times and position themselves for growth.
The key lies in understanding how different consumer segments areadapting their behaviour and adopting strategies that cater to these shifts.
In addition, rising prices have led to a slowdown in in-home FMCGvolume growth, even as average spending continues to rise. This raises thequestion: Is this increase driven solely by inflation, or are consumerschanging their shopping baskets? Understanding the answer is crucial fordeveloping effective marketing strategies.
Even in difficult times some brands thrive while others findgrowth elusive. While competitive pricing coupled with strategic promotions isa must, success in securing consumers’ share of wallet hinges on brands’ability to seize the opportunities to offer consumers smarter solutions andvalue-driven choices.
As for the impact of changing demographics on the FMCG market, thereport says Việt Nam's demographic structure is painting a new picture.
The once "golden population" is maturing, with an aging,urbanising population and smaller household sizes emerging.
This shift holds significant potential for FMCG businesses asdemand for diverse products surges across different age clusters. Risinghousehold incomes and decreasing household sizes, however, indicate a demandfor evolving value proposition, where affordability might not be the soledriver.
Kantar suggested strategies for FMCG brands and manufacturers suchas decoding drivers of changes in consumers’ shopping behaviour, mastering themulti-channel landscape, building a winning portfolio with consumer-centricinnovation, and maximising promotions by focusing on quality over quantity.
Its data reveals that over half of FMCG brands struggled to keeppace with the competition in 2023, particularly within growing categories whereapproximately one-third of brands began to lag.
As competition intensifies in 2024, this highlights the urgentneed for brands to identify their unique growth drivers to stay ahead ofcompetition.
The FMCG retail landscape in Vietnam is shifting to moreconvenient and modern formats but not all modern trade channels can win,according to the company.
To succeed, brands need to understand the reason behind ashopper's visit to each channel and adapt their approach accordingly.
With respect to building a winning portfolio with consumer-centricinnovation, different strategies are required for different categories,depending on size, growth and competition landscape.
For FMCG manufacturers with a vast portfolio, identifying keycategories to prioritise investments is crucial.
There are opportunities for rising FMCG categories as well asmature categories.
Finally, promotions are one of the most effective ways to driveimmediate volume sales uplift though not all have the same impact.
By understanding the true effectiveness of different promotiontypes on brand growth, brands can harness the power of promotions to not onlydrive impact on revenue but also build brand loyalty./.
VNA
