Vietnamese consumers have great demand for snacks and beer, according to a newly-released report by the global marketing research firm Nielsen.

The “What’s Next in Emerging Markets” report provides compelling evidence that Brazil, Vietnam, Argentina, Ghana, and Ivory Coast consumers are increasingly willing to spend on snack and beer products. The document combines Nielsen data on snacks and beer with macro-economic indicators and forecasts to identify these growth markets.

“Beer and snacks aren’t just fun. They are lead indicators of continued buying preference outside of essentials. Beyond that, the countries highlighted have macro-economic conditions that suggest a favorable environment for growth,” said Regan Leggett, executive director of thought leadership and foresight at Nielsen.

Nielsen says Vietnam is currently experiencing one of its fastest economic expansions in years. It also boasts one of the fastest-growing fast-moving consumer goods (FMCG) industries in Asia at 5.9% in the year to date.

Even more promising, only a few categories are decelerating. Snack is leading the pack in growth, followed by beer and healthy food drinks. Energy drinks and feminine care follow closely behind.

Opportunities abound in emerging markets to capitalize on global beer trends, such as premium, craft, ciders and flavored brews, because historically beer category sales in emerging markets have followed global trends, according to Nielsen.

Beer consumption in Vietnam topped four billion liters last year, representing a year-on-year rise of 6%, according to the Vietnam Beer Alcohol Beverage Association.

The volume is approaching the 4.1-billion-liter target set for 2020 in a master plan approved by the Ministry of Industry and Trade. On average, beer consumption per capita in the Southeast Asian country reached around 45 liters last year.

The beer-loving market is becoming more attractive to overseas investors. For example, Vietnam Beverage Co Ltd, a local unit of Thai Beverage Public Co Ltd, paid a whopping US$4.84 billion for a 53.6% stake in Saigon Beer-Alcohol-Beverage Corporation (Sabeco) in a December auction.

Other global giants have also been racing for stakes in Hanoi Beer, Alcohol and Beverages Corporation (Habeco), another local brewery.

The Nielsen report also predicts rural Vietnam will remain a major growth area for FMCG companies. Rural FMCG sales growth outpaced urban growth, 7.6% to 4.9% in the third quarter of 2017.

However, according to Nielsen, the growth is still inconsistent, as the heavy costs associated with expanding distribution to traditional trade heavy areas will remain a challenge for manufacturers and retailers.

Although FMCG growth is high in Vietnam, it can also be uneven. As a result, companies compete to capitalize on the market’s growth. Smaller, local manufacturers have thrived in this competitive environment, growing twice as fast as those in the top 30.

Local companies are also reshaping the retail landscape. According to Nielsen Retail Audit data, more than 600 modern trade stores were launched between January and October 2017. Of those stores, three local minimarts were responsible for 275 openings.

Smaller format stores like minimarts helped grow the modern trade channel by 9.9% year to date in the third quarter of 2017, twice as fast as the traditional trade channel (5.2%). However, modern trade still has far to go to catch up with traditional trade and wet markets, which account for 83% of all FMCG sales in Vietnam.

SGT