Among the top 10 most-chosen fast-moving consumer goods (FMCG) brands in Vietnam by sector in 2018, as revealed by Kantar Worldpanel, beer brand Tiger ranks third and is considered an affordable premium brand able to ride the up-trading wave in the country’s beer market. It also promotes a lot of social activities and activations that target Millennials or Generation Y (born between 1982 and 2004) in Vietnam, in the hope of capturing this rising consumer base. Representing 35 per cent of Vietnam’s population, the group are key customers in Vietnam’s FMCG market as they are the shopping generation of the future.

Strategic approach

The main shift in consumption patterns in Vietnam still comes from the simple fact that Millennials are on average much wealthier than any other generation before them. This group of 20 to 40-year-olds form the majority of the emerging middle and affluent class in Vietnam. There were around 20 million middle and affluent class consumers in 2016, or some 23 per cent of the population, and the number will grow to around 30 million in 2020, or 33 per cent, and nearly 47 million in 2030, or 52 per cent, according to the Boston Consulting Group (BCG) Center for Customer Insight in Vietnam. 

Millennials are the first generation of Vietnamese consumers who have disposable incomes that enable them to purchase more products described as “small indulgences” or “lifestyle products”. This expanding group of consumers is driving Vietnam’s booming FMCG market, which has induced a lot of multinationals to come to the country and promote their marketing and product development strategies. 

Multinational FMCG companies have been introducing new product innovations to the market quite quickly over recent years, to cater to the evolving needs of Vietnamese Millennials, according to Mr. Marcin Miller, Director of BCG in Vietnam. “They also increase their marketing spending and invest in brand building, for example engaging Vietnamese celebrities, to make sure they have a ‘lifestyle’ value proposition,” he said.

For global giant Coca-Cola, Millennials are among its key consumers and are contributing to its strong business performance in Vietnam. Millennials are looking for healthier and also innovative product options, so the company is consistently looking for ways to respond to changing tastes and preferences. “The way forward is to focus on three things: choice, convenience, and the consumer,” a representative from Coca-Cola Vietnam said. “Our growing portfolio of beverages attest to this, aligned with our strategy of becoming a total beverage company. We are providing a wider selection of beverage options, available in a range of convenient package or bottle sizes that are ideal for our Millennial consumers’ preferences.”

Among URC’s various brands, the C2 soft drink is its flagship item and many Gen Y consumers grew up with it. “Many of them are now young adults with careers or families and we are in close contact through various social media platforms,” said Mr. Laurent Levan, Chairman and CEO of URC Vietnam. “We are thankful that they continue to patronize C2 well into in to their adult years, thus ensuring our stability and continuity. They are an important demographic given that they are a 33 million-strong economic base and source of demand.”

Similarly, Millennials are the target customers for FMCG retailers and distributors like South Korean convenience store brand GS25 Vietnam, especially those who are students, office staff, and young groups in high-end residential areas. “Gen Y contributes 70 per cent of revenue at GS25 stores near universities, office buildings, or high-end apartments,” Ms. Nguyen Thi Hong Trang, General Director of GS25 Vietnam, told VET. “Gen Y is definitely considered one of our very important customers.”

Taking advantage of identifying its main customer target, GS25 has studied the consumption behavior of Millennials in detail to capture their needs, thereby building a key message that is relevant to them. In the past year, associated activities at GS25, including the launch of new products, promotions, advertising campaigns, scholarships, and community activities are all directed towards Gen Y.

Into their minds

Gen Y is quite influential in many respects, including their peers, generations before them, and the older generation when it comes to household purchases, according to Mr. Ted, General Director of Miniso Vietnam. “Gen Y are trendsetters and Miniso is looking to tap into this as a way of improving what we offer,” he said. 

Gen Y isn’t anywhere near as tight as Gen Z and therefore brands are hoping to cash in on their disposable incomes. “Today’s Millennials often interact with brands through social networks,” Mr. Ted said. “They spend a lot of time surfing social networks and interacting with brands. Miniso has taken advantage of this and used social networks to increase brand awareness.” 

When entering Vietnam, GS25 studied the market and identified trends, especially among young Vietnamese, and set out methods for the selection of new product launches and strategies to promote images and reach customers through multimedia channels such as Facebook, YouTube, and online news channels. It cooperated with talented key-opinion leaders (KOLs) and celebrities in many fields to convey messages to Gen Y. With its main message of “Bring you to Korea”, GS25 has given customers the same experience found in standard shops in South Korea with featured, exclusive products, a modern shopping space, and friendly services. 

Meanwhile, URC Vietnam had tried to engage Gen Y through relevant research. This involves traditional models together with new digital platforms, which is their preferred mode of communication. “Through insights gained, we are able to better adapt to their needs and aspirations, especially with new product launches and in ensuring brand availability in touchpoints relevant to their habits,” Mr. Levan said. “URC is sensitive to the needs and aspirations of Gen Y. As such, we continually strive to deliver better quality and safety by successfully securing various international quality accreditations, which is one of the stories that we intend to communicate actively to this generation.”

“We are also aggressively engaging new and emerging touchpoints that serve Gen Y’s demand for convenience, by ensuring brand availability in various channels,” he went on. “Our innovation pipeline is robust, responsive and dynamic, to feed the Gen Y hunger or thirst for new experiences. We are confident that they will meet or even exceed Gen Y’s expectations. URC has recently introduced three new products: C2 milk tea, C2 black tea, and C2 peach black tea, for a bold tea taste.” 

Likewise, expanding its beverage line also enables Coca-Cola to satisfy the diverse needs of Vietnamese Millennials. The company is now not only selling Coca-Cola and Fanta but also options like Fuzetea Plus and Nutriboost and even Coca-Plus Coffee, which combines the iconic Coke taste with pure coffee while containing less sugar. In October last year, Coca-Cola launched the very first ready-to-drink coffee product, Georgia Coffee Max, which is testament to its deep understanding of young local consumers’ tastes and habits. 

Acquiring consumer trust

Social networking is definitely an effective way for brands to connect with Millennials and it is clear that mobile advertising is gaining the upper hand in today’s digital world, especially when a large number of Millennials buy or are looking for product information directly from mobile devices instead of desktop computers or laptops. “But connecting with Gen Y online is not easy because traditional advertising is ineffective,” Mr. Ted from Miniso said. 

In order to win the trust of Millennials, according to Mr. Miller from BCG, multinational FMCG companies need to be consistent, especially in quality, need to listen to them, and must customize their products to their needs. What does not work for MNCs is clustering Vietnamese consumers together with, for example, their Thai counterparts. Many MNCs assume that Vietnamese consumers are the same as elsewhere in Southeast Asia. As a result, he added, they don’t adjust their products and marketing in Vietnam and a number of companies have lost significant market share due to poor marketing efforts and limited knowledge about consumers in Vietnam.

He recommended that FMCG companies be very clear about who their target consumers are, what their needs and desires are, and how to communicate with them effectively. Some companies, especially MNCs, have struggled with that in the past. When it comes to marketing campaigns and building a brand identity in Vietnam, many brands have failed, including major players. Friesland Campina, for example, struggled to keep up with Vinamilk’s well-targeted marketing campaigns a few years ago, while others, like Danone, were forced to withdraw from the market. FMCG companies should also quickly bring product innovations to the market, as Vietnamese Millennials are more open to new products and tastes than previous generations.

According to Coca-Cola Vietnam, important factors in connecting with Millennial consumers include understanding their needs and what roles products play within their lifestyle. “This enables us to create the products that respond to these needs, whether it’s smaller packaging for those we want to take their drinks on the go or have a refreshing beverage that also has antioxidant benefits,” the company representative said. “Looking into their behavior, really understanding what they need and providing them with products that fit their lifestyle enables us to truly connect with our Millennial consumers.”

VN Economic Times