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Vietnam Today

FMCG growth slows in Q2

Released at: 15:06, 28/07/2017

FMCG growth slows in Q2

Illustrative image (Source: Internet)

Post-Tet decline may be responsible, according to Nielsen, but Vietnam's FMCG market has been fluctuating over the last two years so attention is needed.

by Ngoc Chi

Nationwide growth in fast-moving consumer goods (FMCG) slowed in the second quarter of this year after reaching a record in the first quarter, according to the latest report from Nielsen released on July 28.

FMCG growth reached 5.8 per cent year-on-year in the quarter, mainly driven by an increase of 5 per cent in volume growth.

All six super FMCG categories nationwide saw growth.

Food and milk-based products grew 8.1 per cent, homecare 5.7 per cent, beverages 5.4 per cent, personal care 5 per cent, and cigarettes 4.7 per cent. Compared to the first quarter, however, all grew at slower rates.

Beverages still accounted for a large proportion of total FMCG sales in the second quarter, at 42 per cent. Food, cigarettes, and milk-based products accounted for 16 per cent, 15 per cent, and 14 per cent, respectively.  

“After impressive growth in the previous quarter due to increasing demand in the Lunar New Year period, FMCG growth then slowed,” said Mr. Nguyen Anh Dung, Director, Retail Measurement Services, at Nielsen Vietnam. “It’s thought that this is merely due to the low season after Tet. However, we should keep an eye on growth over the remainder of 2017, as the market in Vietnam has fluctuated noticeably in the last two years.”

He added that manufacturers must get out of their comfort zones and tap into new markets to manage any fluctuations in growth and drive sustainable business.  

The report also revealed that rural areas continue to show great potential for many manufacturers. While urban areas saw 5.1 per cent growth year-on-year in the quarter, rural areas grew 6.5 per cent, mainly led by volume growth, and contributed 57.5 per cent to total FMCG sales.

Mr. Dung emphasized that over 60 per cent of Vietnam’s population live in rural areas and this presents excellent opportunities for companies. Urbanization, internet access, and smartphones have changed the lives of rural consumers and brought them closer to their counterparts in towns and big cities, making them live in a diversified media world.

More surprisingly, rural consumers are willing to pay more for products of higher quality. There is therefore space for new products to step into these far-flung markets. “There’s never been a better time for manufacturers to take advantage of today’s rural reality to expand their business and seize the growth opportunities,” he said.

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