Over half of Vietnam’s FMCG brands struggled to compete in 2023

Worldpanel’s latest analysis reveals changing demographics and shopper strategies redefine the meaning of ‘value’.
16 May 2024
Over half of Vietnam’s FMCG brands struggled to compete in 2023
peter christou

General Manager, Worldpanel Division, Vietnam

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Vietnam's FMCG sector stands at a crossroads. While economic growth projections for 2024 are positive, consumer confidence at the end of 2023 remained subdued.

This disconnect reflects a complex interplay of macro forces and evolving consumer behaviour that brands must understand in order to thrive. Worldpanel’s Vietnam FMCG Outlook 2024 report delves into these trends, equipping brands with the insights needed to navigate this dynamic landscape.

A year of complexity and adaptability

2023 saw Vietnamese consumers grapple with rising commodity prices. This led to a fascinating display of adaptability, with shoppers employing a mix of strategies to manage their budgets. While some categories witnessed a reduction in volume, others grew by addressing shoppers’ needs.

This highlights the growing importance of value consciousness, where consumers prioritise essential goods but are willing to invest in categories and products that add value beyond functionality.

Notably, a trend towards reduced FMCG volume at the end of the year underscores the urgent need for brands to adapt to both short-term fluctuations and long-term shifts.

Macro shifts reshape the FMCG landscape

Several key macro trends are shaping Vietnam's FMCG landscape in 2024 and beyond:

Economic outlook: While the overall outlook for 2024 is positive, it is apparent that rising prices have and will continue to have an impact on shoppers’ budget management strategies. Value remains a key driver, with consumers making conscious choices about where to allocate their budgets.

Demographic transformation: Vietnam's demographic structure is painting a new picture. The once ‘golden population’ is maturing, with an aging, urbanised population and smaller household sizes emerging. This shift holds significant potential for FMCG businesses as demand for diverse products surges across different age clusters. Rising household incomes and decreasing household sizes, however, indicate the need for brands to evolve their value proposition, where affordability might not be the sole driver.

Changing consumer trends: Rising prices have led to a slowdown in in-home FMCG volume growth, even as average spending continues to rise. This raises the question: is this increase driven solely by inflation, or are consumers changing their shopping baskets? Understanding the answer is crucial for developing effective marketing strategies.

Four pillars for growth in Vietnam's FMCG market

  1. Decoding the drivers of change

    Kantar’s data reveals that over half of FMCG brands struggled to keep pace with the competition in 2023, particularly within growing categories where approximately one-third of brands began to lag behind their rivals.

    As competition intensifies in the FMCG arena, this highlights the urgent need for brands to identify their unique growth drivers, and quantify the impact these have on growth and decline to stay ahead of competition.

  2. Mastering the multi-channel landscape

    The FMCG retail landscape in Vietnam is shifting to more convenient and modern formats – but not all modern trade channels can win. By decoding the shopper missions for each channel/retailer and adapting their strategies accordingly, brands can ensure their products are not just seen, but chosen in the right places, at the right time.

  3. Building a winning portfolio

    Not all categories are created equal. For FMCG manufacturers with a vast portfolio, identifying the key categories and hero SKUs for prioritising investment is crucial in achieving category growth and profitability.

  4. Optimising promotions: Quality over quantity

    In a value-conscious environment, simply offering promotions to drive short-term sales growth might not always be beneficial to brands. Evaluating the efficacy of different types of promotions will allow brands to assess the true impact of their pricing and promotional efforts and refine their strategies accordingly.

    Vietnam's FMCG sector in 2024 presents both challenges and opportunities. Read Worldpanel Vietnam’s latest report – Vietnam FMCG Outlook 2024: Winning new age consumers in shifting times – to unlock the insights and tools your brand needs to thrive in this dynamic landscape and reach out to our experts for further insight.

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