VietNamNet Bridge - Vietnamese manufacturers are equal in strength with foreign goods in the fast-moving consumer goods (FMCG) market.

While foreign brands are dominant in personal and household car products (they account for 95 percent and 67 percent, respectively, of the market shares), Vietnamese brands have advantages in dairy products (72 percent) and drinks (67 percent).

While the FMCG market’s growth has slowed down, Vietnamese brands still can see higher growth rates than foreign brands, 11.7 percent vs 5.9 percent. This helped Vietnamese brands make a big leap to hold more than has half of the market, especially in rural areas (54 percent vs 46 percent).

In the context of FCMG sector’s slowdown, from 13.6 percent in 2013 to 10.6 percent in 2014 and 8.8 percent in 2015, FCMG manufacturers are moving toward rural areas, where 67 percent of population live, thus promising a consumption boom in the future.

“Rural areas have become the great interest of FCMG manufacturers because the sales growth rate in the areas was higher than that in urban areas in 2015,” commented Nguyen Huy Hoang from Kantar WorldPanel, a market survey firm.

There are several reasons behind this. The number of consumers in rural areas is triple that in urban areas (16 million households vs 5 million). The increase of household income in rural areas has been higher than in urban areas in the last two years (10 percent vs 7 percent).

In rural areas, three-quarter of product categories have the consumers’ approach level at below 50 percent, which means that there are still great potential for FCMG manufacturers to exploit.

While foreign brands are dominant in personal and household car products (they account for 95 percent and 67 percent, respectively, of the market shares), Vietnamese brands have advantages in dairy products (72 percent) and drinks (67 percent).

In the areas, Vietnamese brands now can see higher growth rates than foreign ones (14.3 percent vs 6.8 percent). Their rural market share has increased gradually from 50 percent in 2013 to 52 percent in 2014 and 54 percent in 2015, while the figure is predicted to rise to 64 percent by 2020.

The report of Kantar WorldPanel showed that there are some factors are behind the success of domestic brands, including the distribution channel development, suitable products and reasonable prices.

Market Pulse, the report released by Nielsen, also pointed out that rural areas have emerged as a potential market for manufacturers. In 2015, the sales in the areas increased by 5.5 percent.

The report showed the 5.7 percent growth rate in six large cities the fourth quarter of 2015, higher than the 4.5 percent growth rate in the third quarter of the year. 

The growth rate was gained mostly thanks to the output increase (4.9 percent in the fourth quarter and 3.6 percent in the third quarter). The growth was seen in nearly all product categories, except personal care products.


CV