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Overview of Vietnam’s FMCG industry 2022

Overview of Vietnam’s FMCG industry 2022

Thursday 17, 11 2022
The growth rate of the FMCG industry in Vietnam has been around 10-12% over the past decade. During the pandemic, it was about 6%. With a growth rate of 19% in the first 8 months of 2022, this industry has recovered strongly.

Industry overview

The total retail sales of consumer goods in Vietnam reached about USD 180 billion in 2021, most of which was FMCG. The growth rate of the FMCG industry has been around 10-12% over the past decade. During the pandemic, it was about 6%. With a growth rate of 19% in the first 8 months of 2022, this industry has recovered strongly.

Vietnamcredit FMCG industry

According to Kantar, the FMCG industry is witnessing high inflation (nearly 7%), affecting both consumers and businesses. Consumers are changing their shopping behavior to adapt to inflationary pressures. In the first quarter of 2022, consumer demand for FMCG products remained low. The growth of this industry is mainly through increasing the selling price of products.

In 4 major cities, after benefiting from people buying goods in mass for storage during social distancing, now milk and packaged foods are facing a decrease in consumption volume in the second quarter of 2022 when everything has returned to normal. In contrast, in rural areas, milk is a commodity with strong growth.

Sauces such as ketchup, chili sauce and mayonnaise had the largest sales volume in the first quarter of 2022 despite the increase in price.

Despite some difficulties due to the impact of Covid-19, beverage products saw a strong recovery in the second quarter of 2022. Bottled juice, tea and energy drinks are the products with the strongest consumption in the past 3 years.

As of the second quarter of 2022, in 4 major cities, online shopping channels and small stores recorded consumption growth rates of 24% and 21%, respectively, while supermarkets and large stores grew negative 3%. In contrast, in rural areas, supermarkets and large stores recorded an abnormal growth of 49%. This is something that brands and retailers need to keep in mind.

Vietnamcredit Kantar

Kantar’s report also shows that up to 51% of households buy branded rice and 18% buy branded meat, showing an opportunity for fresh food producers to turn to branding to bring value to their customers.

Key trends in consumer shopping behavior in 2022

Consumers continue to streamline their spending

Most consumers save money and buy only essential items, in which food is the number one priority, followed by milk and cooking aids. Spending on personal care, especially on beauty items, is down.

People shop less but spend more on each trip. They also increase spending on online shopping channels and minimart.

Towards a more digitized life

Increasing spending on online shopping channels and minimarts is one of the clearest manifestations of the need for a "digitized" life.

Brands need to focus on improving service quality and find new ways for consumers to interact with brands.

Convenient retail

Vietnamcredit Convenient retail

Free ship is important to attract customers. According to a survey, up to 85% of shoppers expect free shipping instead of fast shipping. If the shipping cost is expensive, it will lead to high abandonment rate. That's why e-commerce platforms constantly have to launch Freeship codes, or ship subsidies as a competitive factor.

Source: GSO, Kantar

Compiled by VietnamCredit

Tag: vietnam FMCG industry; e-commerce; consumer behaviors

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