According to Kantar World Panel, FMCG consumption in Vietnam is high compared to other countries in Southeast Asia in the fourth quarter of 2021 - the post-social distancing period (June - September 2021). Specifically, the total growth rate of FMCG consumption in urban and rural areas of Vietnam in this period was 3.9% and 5.2%, respectively, while that of Thailand was just 3.5%.
In addition, Vietnam's retail revenue growth for the accommodation & catering goods and services segments was 9.1% and 3.3% in March 2022 – the same level as before the pandemic. The General Statistics Office informed that the increasing consumption value was due to both increase in retail price and in consumption volume.
Besides, BMI also forecasts that Vietnam's total household spending may increase in the period between 2022 and 2025. Therefore, VDSC believes that Vietnamese consumers will maintain strong purchasing power for FMCG products despite the negative effects from the Covid-19 pandemic.
Domestic FMCG manufacturers such as MSN, KDC, DBC or Nova Consumer will be among the biggest beneficiaries of this trend due to their lower selling prices compared to imported FMCG products.
According to a new report by VNDIRECT Securities Company, the food and beverage industry will recover and have a higher growth rate from 2022, with the main driving force coming from the reopening of dine-in services and the recovery of domestic demand.
Specifically, service activities, including tourism, transportation and entertainment, may be allowed to operate at full capacity from the second quarter of 2022, after Vietnam achieves its goal of fully immunizing more than 70% of the population. Moreover, consumption will go up again with total retail sales of consumer goods and services expected to increase by 10-12% year-on-year in 2022 thanks to many supportive factors.
Accordingly, people's real income is improved with the forecast that Vietnam's GDP will increase by 7.5% year-on-year, while inflation is expected to increase by 3.45% year-on-year in 2022. Tourism has revived after international flights were licensed for commercial purposes from the first quarter of 2022, leading to a strong recovery of tourism, entertainment, accommodation and dining activities.
On top of that, the Government may launch a larger fiscal stimulus package to support the economy including cash subsidies for those negatively affected by the COVID-19 pandemic, tax reductions (value-added tax, corporate income tax) and increasing public investment in transport infrastructure and social housing. These policies aim to restore domestic demand.
Meanwhile, according to a report of Decision Lab (a provider of digital marketing optimization and evaluation solutions in Vietnam), Gen Z (1997 - 2012) will be the generation that promotes the development of the F&B industry in the future. Although these people do not have high income, they use the products and services of the F&B industry the most. They are willing to spend a large amount of money on food and drink (VND 900,000/month). This is also the top target group that international culinary venues seek.
The F&B industry revenue data for the first half of April 2022 also partly reflects this trend as the growth rate reached nearly 40% compared to the same period in the first quarter of 2022 and doubled compared to the same period in the fourth quarter of 2021.
Some international and domestic organizations also forecast that the F&B industry has great growth potential. The world's leading market research organization Mordor Intelligence Inc said that Vietnam's food and beverage industry will achieve a compound annual growth rate of up to 8.65% in the period 2021-2026.
The first trend is healthy food because after the COVID-19 epidemic, Vietnamese consumers are willing to pay more for healthy products. This is also one of the main reasons stimulating the rise of healthy eating trends. Accordingly, businesses operating in the F&B industry in Vietnam can take advantage to tap into the market niche of healthy snacks, green foods, etc. to attract potential customers.
Coming out second is the trend of dishes that have been preliminarily processed and the self-service operation process. Currently, traditional restaurants have applied self-service operations and sold more pre-prepared dishes to increase revenue. Customers feel interested and satisfied with ready-made canned products.
Third is the development of multi-channel service. According to experts, although online sales have grown strongly and popularly during the 2 years of the COVID-19 epidemic, most Vietnamese customers still prefer on-site self-service. Thus, in order to maximize profits and reach a large number of customers, F&B businesses should deploy sales in the form of multi-channel sales.
Final is modern payment habits. According to a survey of Mastercard's "New Payments Index 2021", up to 84% of consumers in the Asia-Pacific region have seen a significant increase in their access to new forms of payment, meanwhile, 88% of users used at least one new form of payment last year.
Source: Kantar World Panel, VNDIRECT, Decision Lab
Compiled by VietnamCredit
