Fast Moving Consumer Goods (FMCG) manufacturers should look to highly potential rural areas in Vietnam to ensure continued growth, Nielsen Vietnam
has said in its Quarterly Market Pulse report.
“It’s time to get out of the comfort zone which is the six key cities. To fully seize the market growth opportunities and drive a profitable business, it’s rural area – the unknown yet potential land for manufacturers to tap on,” said Nguyen Anh Dung, director of Retail Measurement Services at Nielsen Vietnam.
“The rural community in Vietnam accounts for 68% of the country’s 90 million people and 51% FMCG sales coming from rural. Furthermore rural habitants are now investing in their education, and are enjoying income growth of around 44% over last 3 years. Yet these high-potential opportunities remains largely unknown to many businesses,” Dung added.
When coming to purchase drivers of rural consumers, in addition to valuing the opinions and recommendations of family and friends, consumers in rural Vietnam also respond positively to recommendations from retailers.
Nine in 10 retailers recommend products to their shoppers, achieving on average a one-in-three hit rate (31% of shoppers buy products that are recommended by retailers).
With up to 27.5 million shoppers visiting retail stores every day, retailer recommendations can be a power form of brand endorsement.
The recommendations are made in the context of a slowdown in the FMCG sector. Annualized growth of the FMCG sector in six key cities in Vietnam slowed down to 4.3% in the third quarter of this year, according to the report.
The growth momentum of FMCG in the six key cities maintaining stable while the remaining urban and rural slows down.
When looking at some of the super categories which were doing well in the six key cities, the picture was different in rural.
For example: Home Care achieved 8.2% growth in the six key cities, however its growth maintained at only 0.1% in rural. While Food achieved 7.8% in the six key cities, its growth declined to 0.3% in rural.
Beverage continued to be the biggest category contributing to total FMCG sales with 41%. However, beverage growth nationwide declined for the first time in two years, 4.7% in Q3 compared to 9.2% in Q2, due to the decline in non-alcoholic beverage. Beer still sustained impressive growth with 9.2%.