The lastest report from Nielsen on Vietnam's FMCG market has found that Vietnamese manufacturers earned 42% of the FMCG sector’s total revenues, in the four largest market segments -- food, beverages, home care and personal care products. A 2019 report from Kantar Worldpanel also found similar numbers, stating that local brands account for up to 71% market share in larger cities and 78% in rural areas. In the food and beverage segments, Vietnamese enterprises, have a market share of 69% and 45% respectively.
The local brands have the advantage of understanding consumers’ customs and tastes and having extensive distribution networks reaching into the remotest parts of the country. In addition, their quality has been improving recently and their prices have become more competitive and more and more modern retail chains are becoming distributors for local FCMG manufacturers.
However this has meant that foreign companies have been acquiring local brands as an entry point into the market. There is an increasing pace of M&A deals in Vietnam, mostly stayed with state-owned companies who are privatizing their businesses. Kinh Do, one of the largest food processing manufacturers in Vietnam sold its entire confectioneries business to Mondelez International. Thaibev acquired a controlling stake in Sabeco, the largest beverage company in Vietnam in terms of market share, in December 2017. South Korean CJ Corp acquired over 70% share of food processor Cau Tre Foods and 100% of kimchi distributor Ong Kim, in 2018. The same company also acquired 4% share in Vissan Vietnam's leading meat processors.
(Source: Vietnam News)
Elise Fashion Limited, one of Vietnam’s top fashion brands for women and its affiliate brands were acquired by Advantage partners, a Japanese investment firm and its affiliate companies (AP Funds). This marks the first acquisition of a company in Vietnam by AP Funds. Elise is a leading Vietnamese fashion brand targeting the 20-45 year old segment founded in 2011. The company currently operates 95 stores across Vietnam. It offers integrated operations from design and manufacturing to sales at its retail locations.
According to a press release, AP Funds were attracted to Elise because of the company’s high quality product line, dedication to ethical manufacturing and its leading position in the branded women’s fashion market. Advantage Partners aims to promote the company’s growth by utilizing its women’s fashion expertise. Before this, eyewear company Meganesuper and outdoor wear chain ISG ishii-sports were among the Japanese firms’ investments.
At a conference last year, Uniqlo reportedly acquired a 35% stake in Elise for an undisclosed sum, but the deal has not been confirmed.
Advantage partners seems to follow other Japanese firms looking at Vietnamese fashion companies after Stripe International took over NEM Group’s apparel business assets in 2017.
(Source: Vietnam News; Advantage Partners)
The leading health and beauty retail brand in Asia and Eastern Europe, Watsons has launched its first fladship store inVietNam on Jan 17, 2019. The store is strategically placed in the lower level of Bitexco financial tower in District 1, HCM City, offering 6,000 products in beauty and health care. Vietnam is the 13th market to join Watson's network of over 7,200 stores across Asia and Europe.
On the launching date, Watson also annouced its plan for 50 more shops within 5 years to keep up with the two country's biggest players: Guardian, founded in Singapore, and local player Medicare. Vietnam's beauty products market has grown at a compound annual rate of 30% over the past few years, with foreign brands making up more than 90% of sales. Watson is expected to face a fierce competition as these players has been well established in the market. Moreover, there are many smaller cosmetics chains or individual stores sell imported products from South Korea, Japan, France and the U.S. in addition to a bustling online trade in health and beauty products on e-commerce platforms, such as Lazada, Sendo and Tiki.
Vietnamese spent an estimated USD 6 billion on imported cosmetics and beauty products in 2018, a threefold increase over 2016.
(Sources: Inside Retailer Asia: Nikkei Asian Review)
Saigon Beer Alcohol Beverage Corporation (Sabeco), the largest beverage manufacturer in Vietnam, announced its board of directors has approved the removal of a cap on foreign ownership within the company. In order to remove the restriction, Sabeco has removed business lines which require foreign ownership caps, such as trade advertising and tourism operation, which require minimum percentage of local ownership at 51% from their business lines.
This decision would enableThai Beverage (ThaiBev) to expand their ownership in Sabeco and turn the company into a 100% foreign owned company. ThaiBev owns 54% of shares acquired from the Vietnam government through a USD 5 billion M&A deal. The shares were acquired by a Vietnamese legal entity named Vietnam Beverage Co.,ltd, which received 100% of its invesment from BeerCo., a subsidiary of ThaiBev. This is considered one of the largest M&A deal in South East Asia in recent years.
ThaiBev is Thailand's largest and one of Southeast Asia's largest beverage companies, with distilleries in Thailand, Scotland, and China. It is helping bring Sabeco's brands to international market. In August, 2018, the logo of Bia Saigon, the No.1 beer brand in Vietnam has appeared on Leicester City’s jerseys, via a multi-year global partnership agreement with LeiCester City's Football Club.
During the half year since the acquisition was completed, ThaiBev earned VND 2,360 billion (USD 101 million) net profit, and paid out dividends VND 2,000 billion (USD 86 million) of dividend payment by the end of the year. During the first 9 months of 2018, Sabeco experienced year-on-year revenue growth of 7.8% ; however net profit dropped by 6.3% compared to the same period last year.
(Sources: VietnamNet; Hanoitimes)
VinGroup, one of he biggest conglomerates in Vietnam announced its completion on the acquisition on the 23-store Fivimart supermarket chain in October, 2018. Vingroup's retail arm - VinCommerce - acquired a 100% stake in Fivimart and the chain will soon be renamed as VinMart to join the current chain with 100 supermarkets and 1,400 convenient stores located nationwide. In addition to continuing to sell consumer goods, food, home appliances and cosmetic utensils, these new supermarkets will also sell fresh food and products with Vingroup’s brands such as VinEco agricultural products, VinMart Cook’s pre-processed foods and VinMart Home consumer goods.
The deal between VinGroup and Fivimart was closed after the Japanese Retail Group , Aeon, terminated their investment in Fivimart after four years due to the underperformance. Vingroup’s supermarket system was launched in 2014. After less than four years, the system of VinMart and VinMart + has the fastest growth rate in Vietnam. With this aquisition, VinCoomerce officially replaced Saigon Co.op to own a retail system with largest scale in Vietnam.
Central Group, Thailand's largest retail conglomerate headquartered has unveiled plans to spend as much as USD 500 million to expand its retail network in Vietnam over the next five years. The investment will directed towards tripling the number of its stores and shopping malls to as many as 750. The company is also adding new retail formats to capture growing consumer demand for non-food items. Their LookKool gift shop has already expanded to 27 stores since its launch late 2017. They are experimenting to check the viability of other brands such as cosmetics shop Hello Beauty and DIY store Home Mart.
Central Group is the largest foreign retailer in Vietnam. The group currently has 250 outlets in Vietnam with a floor space of 700,000 square feet. This includes 31 Big C shopping malls; 35 Big C hypermarkets; 25 Lanchi Mart outlets; 50 fashion stores under the Robins, DELALA, Supersports, and Marks & Spencer brands; 56 Nguyen Kim electronics stores; more than 40 stores of the new retail concepts such as LookKool, C-express, B2S, Hello Beauty; and three online platforms, NguyenKim.vn, Robins.vn and B2S.com.vn.
Since its establishment in July 2011, it has made several investments, including acquiring a stake in electronics retailer Nguyen Kim and the acquisition of Big C supermarket chain.
(Source: Nikkei Asian Review; The Nation)
The leading e-commerce platform in Vietnam - Sen Do Technology JSC (Sendo), has announced that it has received an investment of USD 51 million in a Series B funding round, led by Japan's SBI Group. Other Asian investors that joined the round include SoftBank Ventures Korea, Daiwa PI Partners, SKS Ventures, BEENOS, eContext Asia, FPT Group and Beenext.
Being one of the largest rounds raised by a Vietnamese startup, the funding supports Sendo's plans to expand the company's C2C platform, launch the B2C marketplace SenMall, and make SenPay the leading fintech platform in Vietnam. Sendo’s executive chairman and co-founder Nguyen Dac Viet Dung, has been quoted in the media saying that Sendo has a target of increasing its sales to USD 1 billion in 2020 from the current USD 330 million.
Sendo is the first e-commerce marketplace combined with logistics providers and banks to provide customers with a full package of guaranteed transactions.
The Vietnamese e-commerce market estimated to be worth USD 2.2 billion in 2017 is expected to grow to USD 30 billion by 2026.
(Source: Deal Street Asia; Hanoi Times; Techinasia; e27)
In July 2018, a leading Korean branded processed meat company, Jinju Ham, acquired a 25% stake in Saigon Nutri-food JSC which is a wholly-owned subsidiary of Masan Consumer Corporation. New products of the entity will be under the brand "Masan Jinju".
Jinju Ham is the oldest sausage producer in Korea, operating since 1963, with market leading positions in the sausage and home meal replacement segments. It has developed best-in-class R&D and technological know-how. Masan Consumer Corporation, a subsidiary of Masan Group Corporation, is one of Vietnam’s largest branded food and beverage companies with market leadership in large consumer categories such as seasonings, convenience food, and beverages. Masan Consumer Corporation’s portfolio includes brands such as Chin-su, Nam Ngu, Tam Thai Tu, Omachi, Kokomi, Vinacafé, Wake-Up, Vinh Hao, and Quang Hanh.
The strategic partnership is expected to combine Jinju Ham’s know-how with Masan’s understanding of Vietnamese consumers and brand building capabilities. New innovations under this strategic partnership are expected to be launched in the second half of the current year
Park Jungjin, CEO of Jinju Ham commented that the Vietnam processed meat market has the same dynamics as Korea and China 20 years ago. He believes that synergizing their respective platforms will enable Masan-Jinju to drive the process meat contribution to 20%-50% over the long-term, similar to China and Korea today.
(Sources: Masan Group; Deal Street Asia; Vietnamese)
On June 11th 2018, one of the biggest player in the FMCG industry in Vietnam, AEON Vietnam in collaboration with AEON Association, organized the AEON Suppliers Conference to seek suppliers and manufacturers who can join hands with them in producing goods under the TOPVALU brand. The conference attracted more than 100 domestic and 30 foreign enterprises.
Japan-based AEON group established Aeon Topvalu Vietnam Co in 2016 as a product development and procurement arm to increase local sourcing for Topvalu, which represents a wide range of private brand products, while emphasizing the importance of quality management and offering guidance about trade practices to local firms.
Currently, AEON Vietnam sources over 40,000 products from over 2,000 domestic suppliers. The company’s retailing chain in Vietnam includes four AEON Malls, 53 supermarkets, and 110 convenience stores.
The group is looking to buy more apparel, fishery products and processed food from Vietnam for sale in its home market of Japan. The value of goods procured in Vietnam by Aeon has bene growing in double digits over the past few years, exceeding JPY 22 billion (USD 200 million) in the year to March 2017 and is expected to grow further moving ahead.
(Source: VIR, Japan Today)
In its Quarterly Market Pulse report, the global measurement and data analytics company - Nielsen- said that the number of convenience stores in Vietnam has nearly quadrupled since 2012. The nationwide fast-moving consumer goods (FMCG) sales of traditional trade channel dropped during the first quarter of 2018 to negative 1%. However, FMCG sales through modern trade channels in urban region continued to gain momentum, in contrast to a slowdown in traditional trade in both urban and rural areas. The modern-trade FMCG sales in urban region registered a 10.7% year-on-year growth, while the urban traditional-trade FMCG growth rate decreased to 2.6%.
In addition to the increase in the number of convenience stores, the number of health/beauty and modern drug stores has also doubled during the past two years. Mini-marts accounted for the highest number of store openings in 2016 and 2017. Mr. Nguyen Anh Dzung, Executive Director, Retail Measurement Services, Nielsen Vietnam, said, "According to our observation, modern retailers will continue to expand and to invest in their stores to attract more shoppers. So, the future of these small-format modern stores looks very optimistic and the growth of this channel will continue and even accelerate in the future."
The overall slowdown in growth was attributed to a change in consumer perception and behavior toward Tet holidays change. "Consumers might prefer having a simpler Tet by releasing household chores, simplifying social duties and focusing on having good moments with family. Nevertheless, the 2018 Tet consumption level reached the similar level as 2017 which had been a historic peak. So, these factors could mean that whitespace opportunities still exist for FMCG manufacturers in order to stay relevant to consumers in the festive seasons," added Mr. Dzung.
On 28-29 March 2018, Vietnam held a Retail and Franchise Conference in Ho Chi Minh City, Vietnam, during which the experts underlined the country's position as an emerging hotspot for retail and franchise businesses. According to the International Franchise Association, Vietnam is ranked 9th out of 12 identified markets with strong growth potential for retail and franchising market segments. These segments are expected to expand fast particularly due to the growth of increasingly demanding middle class group in the country.
“Viet Nam has all the potential elements, such as a large consumer base, rapidly rising incomes and a generation of educated, young and growing professionals, bringing optimistic prospects for national and international brands to double the country's retail and franchising industry in next five years,” said Suttisak Wilanan, deputy managing director of Reed Tradex.
However, "Viet Nam has not had a professional franchise market, the Vietnamese franchise market is still new, and local businesses do not have much understanding or experience with it", said Nguyen Phi Van, founder and chairwoman of Retail & Franchise Asia. “In the next five years, there will be a strong evolution when we learn lessons from failure and success in the past five years,” Van said.
As Vietnamese businesses are now exploring new business opportunities available via franchising, Vietnam has become a lucrative destination for foreign companies that want to enter new markets.
Thailand’s biggest mall developer, the Central Group, plans to invest an additional USD 6.3 billion on expanding its domestic and overseas retail networks and hotels in the next five years, with Vietnam being singled out as a key strategic market for the group. The group has large investments in Vietnam - in April 2016, Central Group announced that it was acquiring Vietnam’s Big C supermarkets from Casino Group (France) at the price of EUR 920 million to become to the largest retailer in Vietnam. Currently, the giant owns 31 Big Cs, 59 Lanchi Mart food stores, 49 fashion outlets under the Robins, Delala, Supersports and Marks & Spencer brands, 79 Nguyen Kim and B2S stores, and three online platforms (nguyenkim.vn, robins.vn and B2S.com.vn), employing 17,000 people in Vietnam and serving over 175,000 customers a day. By 2022, the group aims to quadruple its footprint in Vietnam with 753 stores, occupying 2.5 million square metres in 57 provinces. With the aggressive expansion effort, the group expects the sales contribution in Vietnam to increase to more than 20% by 2022, from the existing 13% in 2017.
(Sources: Vietnam Plus; VEN)
Vietnam has been named by US global management consulting firm A.T. Kearney as one of the six most-attractive retail markets in the world in 2017. Driven by a growing economy, urbanization, young population, and rise in incomes, Vietnam’s retail market is projected to reach USD 179 billion by 2020.
The growth is due to the rapid expansion of convenience stores and mini-marts and the increase of technology application in the industry. Despite that fact, the retail market is only two percent covered by convenience stores, leaving plenty of room for growth. In the convenience channel, IGD is forecasting high double-digit compound annual growth over the next four years in Vietnam (37.4%), based on the performance of the leading convenience store operators in the market.
GS25, the first Korean convenience store chain operator to enter the Vietnamese market, is expected to open 2,500 outlets in Vietnam in the next 10 years, while Shop & Go and B’s Mart are running another 300 stores. Vin Mart, the largest retail chain in Vietnam will open 100 stores in 2018, while Family Mart, Japan’s second largest convenience store chain will open 800 franchised stores in the same period. The retail industry, especially the convenience store segment, remains one of the most attractive options for foreign investors.
(Sources: Vietnam Briefing; IGD)
While the global annual beer consumption rate has declined in recent years, Vietnam’s beer consumption has consistently rose to make it to one of the top three highest beer consuming countries in Asia since 2016. According to a report by Vietnam Beer Alcohol and Beverage Association (VBA), beer consumption in Vietnam is estimated to be over 4 billion liters in 2017, an increase of 6% from the figures in 2016. With the current population of 93.7 million, each Vietnamese consumes an annual average of 42 liters of beer. This consumption rate is expected to continue its upward trajectory following the master plan of the Ministry of Industry & Trade to further develop the industry. With a projected population at 105 million in 2035, annual consumption rate per Vietnamese will be around 52 billion liters of beer per year by that time.
With this massive demand for beers in Vietnam, more foreign players have come into market, the most popular of which are Heineken, Carslberg and Sapporo. This growing presence and popularity of international brands has limited the ability of Vietnam's largest beer makers Saigon Beer Alcohol and Beverage JSC (SABECO) and Hanoi Beer Alcohol and Beverage JSC (HABECO) to maintain its market share. In 2017, HABECO fell short by 12% for its year-end revenue target of VND 8.8 trillion (USD 389 million) as they only recorded VND 7.8 trillion (USDn311 million) in sales. This 2017 revenue is even 4% lower from its 2016 figures.
(Sources: Food Navigator Asia; Ha Noi Times)
The first flagship store of Dolce & Gabbana has just opened in Ho Chi Minh City, after the success of its pop-up store in January this year. The store, located inside Ho Chi Minh City’s Rex Hotel, features women’s and men’s ready-to-wear, shoes and accessories. Along with the opening, Dolce & Gabbana also introduced its international campaign #DGclone to Vietnam.
The store is is operated as a franchise under Imex Pan Pacific (IPP) Group, a distributor of luxury brands in Vietnam such as Rolex, Cartier, Chanel, Bulgari, Versace, Burberry, Salvatore Ferragamo. IPP and Dolce & Gabbana have agreed that the store in Vietnam will regularly launch new collections at the same time as other regional markets, with retail prices at the lowest in the region.
According to research firm TNS, Vietnamese incomes are at a level where over 50% of the urban population is considered to be middle class. As Vietnam begins to embrace private enterprise, its nouveaux rich are snapping up shoes at Gucci, handbags at Louis Vuitton and watches at Cartier, making the country a magnet for high-end luxury brands.
(Source: CPP-luxury; VNexpress; TNS)
Since the 2000s till now, Vietnam has welcomed a series of foreign mass fashion houses which include Mango from Spain, Oasis from the UK and GAP from the US. The latest entrants to the market in this year are giant apparel houses H&M and brands from Inditex Group (Zara, Pull&Bear, Stradivarius and Massimo Dutti), which have successfully entered the Vietnamese apparel retail market recently. Meanwhile, Uniqlo from Japan is also accelerating recruitment to open its first store in the country in the near future. There are more than 200 international brands in the country, accounting for more than 60% of market share, highlighting the potential of the retail market due to consumer optimism and willingness to pay. According to an official survey, Vietnam’s consumer confidence index reached 117 in the final quarter, and it is ranked as the fifth most optimistic country globally.
(Sources: Vietnam Business News; VietnamNet)
World-renowned furniture retailer IKEA will be stepping into Vietnam soon. In an interview with Bloomberg, IKEA Chief Executive Officer Torbjorn Loof has confirmed that the Swedish furniture brand has included Vietnam in its expansion plans. The company, which already has a presence in Singapore, Malaysia, Thailand and Indonesia, is now targetting entry to Vietnam and the Philippines. The arrival of the Swedish brand is expected to happen within the next five years, and will be added to the over 400 stores that the company has already established in different markets across the globe.
According to an EBVN report, only about only 20% of furniture products are produced by Vietnamese-owned, small-scale enterprises, whereas the rest is imported mostly from neighboring countries such as China, Malaysia, and Thailand. Accordingly, over 80% market share of the furniture market in Vietnam belongs to multinational companies and companies with foreign capital investment.
(Sources: Saigoneer; EBVN)
Foreign soft drink manufacturers have taken control of more than half of Vietnam’s USD 4 billion non-alcoholic beverage industry, surpassing the market share of local producers. Bottled water market is dominated by Nestle’s La Vie and PepsiCo’s Aquafina with 80% market share. Suntory accounts for an aggressive market share of 30% in the ready-to-drink market. Seeing the potential of this market, Suntory has announced its plan to invest USD 87.5 million in Vietnamese production in the next four years. The new production lines are said to boost tea capacity per year by roughly 60%.
According to Vietnam Beverage Association, Vietnamese beverage producers lack both finance and human capital. Moreover, F&B safety scandals over the past few years have left a negative impact on local products. Many consumers with improving disposable income are willing to pay extra for healthier or imported products.
(Sources: Food Navigator – Asia; Beverage Daily)
Vietnam is forecast to become the fastest-growing convenience store market in Asia by 2021, with a growth rate of 37.4%, according to the Institute of Grocery Distribution (IGD)’s latest research. Vietnam led the pack of South East Asian nations, a region where the convenience store sector is expected to develop greatly in the coming years. It is followed by Philippines (24%) and Indonesia (16%).
Foreign and local convenience stores are expected to flood Vietnam in the coming years, particularly big names in the industry, such as Family Mart and 7-Eleven from Japan, Circle K from the United States, B’s Mart and GS Retail from Korea. The VinMart+ chain plans to reach 1,000 convenience stores across Vietnam this year. These companies have already established their presence in Vietnam, but are urged to expand across the country due to the spending and shopping behavior shift of Vietnamese people.
Convenience stores are gradually revolutionizing the shopping habits of Vietnamese. In this regard, it is foreseen that convenience stores will replace the traditional stores in the near future.
(Sources: Vietnam News; Vietnam Net Bridge)
Vietnam Dairy Products Joint-Stock Co. (Vinamilk), which is Vietnam’s largest dairy producer, has imported more than 2,000 Holstein Friesian cows from the US. The cows are all high-yield dairy animals that can produce 14,000 litres of milk in 305 days and were carefully selected and underwent strict quarantine and health checks prior to their arrival in Vietnam. Since 2012, Vinamilk has been importing cows from Australia, New Zealand and the United States. In order to meet not just local but also global dairy demands, Vinamilk plans to increase its herd to 160,000 this year and 200,000 by 2020. Meanwhile, its daily fresh milk output is targeted to reach 1,500-1,800 tonnes over the next three years. In terms of revenue, Vinamilk posted $1.7 billion sales in 2016 and is aiming to increase it to $3 billion by the end of 2017.
Vinamilk, Vietnam’s leading dairy producer, currently operates a network of over 220,000 retail outlets nationwide, while their products are sold at 100 percent of supermarkets and convenient stores in the country.
(Source: VN Economics Times, Vietnam News, Tuoitrenews)
7-Eleven, the world’s largest convenience store chain opens its first store on June 15, 2017 in Ho Chi Minh City District 1. Vietnam is the 19th country for 7-Eleven with Seven System Vietnam JSC as the master franchisee and operator for the country.
Established in 1927 in the U.S.A, Texas, the company was taken over by Japan’s Seven & I Holdings Group in 2015 who has brought the franchise to the Southeast Asian region. Vietnam aims to open 20 stores in 2017 and more over the next three years. Foreign investments for Vietnam’s convenience store market include Circle K, FamilyMart, and AEON’s MiniStop.
(Sources: Tuoitre News, Vietnam Economic Times, Vietnam News)
With a growth of 6.5% in 2016, the outlook for Vietnam’s Fast Moving Consumer Goods (FMCG) sector in 2017 will be promising. According to Nielsen Vietnam, retailers in Vietnam have to be up-to-date with the latest innovations as the retail sector is going through a revolutionary change in the digital age where everything is connected to satisfy the customers' diverse needs. Foreign investment into the retail sector is injecting funds as well as best practices that have been used in developed countries. Vietnam is starting to use Enterprise Resource Planning (ERP), SAP S/4HANA Retail and big data solutions, which help to create more opportunities in helping retailers enhance their competitiveness. According to the Vietnam’s Ministry of Industry and Trade modern retailing accounts for 25% of the market in 2016.
(Sources: Nielsen, Vietnam News, Vietnam Net Bridge)
According to Nielsen, a data company for consumers, Vietnam’s FMCG growth hits a three-year high of 9.6% in the first quarter and beverage accounted for the largest proportion. Below is the report by Nielsen on the study of Vietnam’s six major FMCG - beverage, milk based, home care, personal care and cigarette. Positive growth is reflected in all six categories. The growth may be due to the festive Lunar New Year period where consumers are willing to spend.
There is also growth in the rural areas in the contribution for Vietnam’s FMCG sectors. FMCG sales in rural area doubled the growth rate of urban areas. Below is the graph of FMCG growth for urban and rural. Vietnam’s population lives in rural areas but now more income and much accessibility to product information and hence a great opportunity for companies in the FMCG sector.
(Sources: VN International, Vietnam Economic Times, Vietnam Net Bridge)
Many pharmaceutical companies in Vietnam is selling liver supplements to increase profits. Duoc Hau Giang, one of Vietnam’s largest pharmaceutical company reported an increase in revenue in 2016 due to a rise in sales of liver supplements. With an increase of 4.8%, about 2% of the revenue came from liver supplements. Traphaco, also reported its sales of liver detox supplements has also doubled within a five-year period.
(Sources: The Voice of Vietnam, Retail News Asia)
The data shows that Vietnam's fast moving consumer goods (FMCG) sales in the last quarter of 2016 had the best improvement in three years, with 7.3% rise in comparison to the same period a year ago. The category that did particularly well was the beverages, accounting for 40% of sales, followed by food and milk based products, which made up 15% each of the total. It is believed that the key driver of this growth was influenced by the Tet period, which is Vietnamese New Year.
Sales growth of FMCG in rural areas have bounced back strongly from October-December with a 7% on-year jump, contributing 51% to total FMCG sales nationwide. These areas are the largest consumer base and these consumers have rising incomes which result in higher spending power.
(Source: VN Express)
Vietnam is Asia’s top beer consumer with about 3.8 billion liters consumed in 2016 and it is forecast that 3.9 billion litters will be produced in 2017; an increase of 10% from 2016. However, brewers are facing difficulties due to the increase in consumption taxes burdens. Despite the tax burdens, the country’s beer industry hopes to produce 4.2 billion litres in 2020 and 5.5. billion litres of beer in 2035.
Heineken is the leading premium brand in Vietnam and these following brands hold huge market shares in the country - Habeco, Hue Brewery under Carlsberg and Sabeco. Vietnam has 129 brewing facilities in Hanoi, Hue and Ho Chi Minh City. Despite the large domestic production, Vietnam is still importing 3 million litres of beers and exports more than 70 million litres of beer annually.
(Sources: Tuoitre News, Vietnam Net Bridge)
Research firm FTA estimates that the market value of education, healthcare and entertainment products and services for children in Vietnam is USD 5 billion a year, boosted by demand from the countries 7.5 million children aged 0-4 years. Competition in the market for children’s products and services is not as fierce as in the FMCG sector.
Many investors have poured money into the market to tap onto the opportunities. Brands that have been launched recently include Con Cung, BiBo Mart and Kids Plaza. Both online and bricks and mortar stores targeting this segment have flourished, such as Beyeu.com. Foreva.vn (webtretho) and Babyhop.
Bibo Mart and Kids Plaza dominate the market in Hanoi, with 36 and 39 shops respectively. In Ho Chi Minh City, Bibo Mart has 34 shops, while Kids Plaza has 18. Both brands are expected to march towards other cities and provinces.
Meanwhile, Con Cung, which offers fashion products, dresses for pregnant women, toys, food and milk has opened 86 shops in a short space of time, including 49 in HCM City, one in Da Nang and the others in neighboring provinces. The bran is planning to expand further in 2017.
(Source: Vietnam Net Bridge)
The Vietnam E-Commerce and Information Technology Agency (VECITA) forecasts that 30% of the population will be buying goods and services over the internet by 2020, with each shopper spending an average of USD 350 per year, putting total online spending at USD 9.8 billion. BCG estimates that average per capita income will rise to USD 3,400 per year by 2020.
Various factors are contributing to the growth of e-commerce in Vietnam. Young citizens especially those in the urban areas have been shaping their online shopping habits to include fashion, electronic goods and also books and even food items. While consumers have demonstrated a decided unwillingness to use financial cards due to high banking fees, all major internet retailers in Vietnam offer Cash On Delivery as the default payment method.
Additionally, large players like Lazada and Mobile World JSC also offer online payments by instalments, while credit card owners enjoy instant access to online payment by instalments by using their credit cards from banks associated with the retailers.
(Sources: VETICA, BCG. Euromonitor International)
FPT Retail, the owner of the FPT Shop chain which mainly retails mobile phones and other gadgets, has been appointed as an official distributor of Vinamilk, the country’s leading dairy processor, and one of Vietnam’s top brands.
FPT Retail is a retail specialist. In the past four years, it has become one of the fastest growing retail chains in Vietnam with more than 350 FPT Shops and F.Studio by FPT in 63 provinces and cities in Vietnam. The company inaugurated its first Vinamilk stores in HCMC this month, and will be completely responsible for the operation, personnel management and marketing strategy for the stores. Consumers shopping at these stores can expect to enjoy benefits such as high-quality products, direct/online consultation, delivery, as well as special promotions and offers.
After the successful testing phase of the first two stores that are being given a trial run in HCMC, the two sides are expected to expand nationwide, with some 1,000 Vinamilk retail shops being planned.
(Sources: FTP, The Saigon Times)
Korean discount retail chain E-mart has announced a USD 200 million investment into Vietnam, continuing the trend of foreign investors entering the Southeast Asian nation’s rapidly growing consumer sector.
The agreement between the Korean discount giant and Ho Chi Minh City was signed last week and will see E-mart invest in building supermarkets, commercial facilities and local ‘social development’ facilities over the next four years. This follows its move in 2015 in opening the Shinsegae Hope Toy Library in Ho Chi Minh City, followed by a USD 60 million supermarket in Go Vap District. The chain has positioned itself as a high-end retailer and target urbanites. Go Vap has a high population density, with more than 28,000 people/km2, (which is seven times denser than Ho Chi Minh City). Most Go Vap residents are considered middle class.
E-mart originally planned to open 52 stores in Vietnam by 2020, citing fast-growing consumer spending power in urban Vietnam. Central government data shows retail sales rose 7.4% year-on-year last August and is predicted to reach USD 109 billion in 2017.
(Sources: Inside Retail Asia, Deal Street Asia)