Fast moving consumer goods are expected to have another year of strong growth in 2018 and rise 6-7 per cent over the preceding year, according to a Kantar Worldpanel report on Viet Nam FMCG market.

A positive economic outlook and growing domestic demand are driving a rise in fast-moving consumer goods. 

The report pointed out that the FMCG market showed improvement in four large cities (HCM City, Ha Noi, Da Nang and Can Tho) and in rural areas in the fourth quarter of last year.

For all of 2017, the urban market strengthened its performance while the rural market picked up but is not stable just yet.

Positive growth has been seen across the personal care category, with facial moisturizer and make-up items being the most outstanding categories, gaining consumer spending in urban and rural markets.

The growth of facial moisturisers was largely attributed to more consumers starting to focus on beauty care in rural areas.

The snack market is now the main source of growth for packaged foods in both urban and rural markets. More innovations and the increase in convenient indulgence in food consumption are driving the growth of snack foods. Brands can leverage this trend by creating and capturing additional snacking occasions.

According to the report, in the short term, the beverage sector remains the growth driver of the urban market. Personal care continues developing very well in both urban and rural markets as consumers increasingly adopt a diverse repertoire of products.

Regarding the retail landscape, wet markets continue to lose share to other channels while minimarket/convenience stores accelerate their expansion in urban key cities.

Modern trade increased 15 per cent in the last quarter, outpacing traditional channels. The retail market is expected to heat up further for 2018 with new entrants and new retail models. In rural markets, medium-sized street shops continue to win shopping occasions.

Viet Nam’s economy surpassed 2017’s GDP target, posting the highest growth rate since 2011. Key economic indicators show good achievements, such as import/export, FDI, retail sales and others.

2018 performance could be brighter with an estimated expansion of 6.7 per cent. However, in the middle and long terms, there are still some challenges (low labour productivity and environmental issues) that need to be foreseen and overcome to reach sustainable economic development, the report said. — VNS