Packaged foods forecast to grow slowly in Vietnam

, Packaged foods forecast to grow slowly in Vietnam

Fast-moving consumer goods (FMCG) categories meeting the needs of Vietnamese consumers will be the potential to continue growing in the coming time.

As Vietnamese consumers in urban areas have begun increasing the out-of-home demand again thanks to the country’s successful Covid-19 control, growth of the food sector is expected to slow down in the short term this year, local insiders have said.

, Packaged foods forecast to grow slowly in Vietnam

, Packaged foods forecast to grow slowly in Vietnam

Demand for in-home consumption drops

According to Kantar’s data, after a period of social gap, the growth of the in-home packaged food sector has decreased compared to the peak of the social distancing period last year. “The growth this year is unlikely to repeat the sudden increase of last year again. Each category will have different forecasts,” Nguyen Thi Nhu Ngoc, Marketing Manager of Worldpanel Division, Kantar Vietnam, said.

In urban areas including Hanoi, the beach city Da Nang, the southern city of Can Tho and Ho Chi Minh City, Vietnamese consumers could delay buying them or spend money on instant noodles, cakes and canned products, like that of the pre-Covid-19 period.

Ngoc told Hanoitimes that sales of some meal makers or snacking products are more likely to decrease consumption due to the drop of in-home consumption occasions as outdoor activities got back to normal.

“Among the items, the categories meeting the needs of consumers such as convenience, health benefits, relaxation/entertainment, will still be the potential ones to continue growing in the coming time,” she said.

Food and online shopping lead growth in 2020

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FMCG last year showed a stronger growth, mainly driven by the impact of Covid-19.

“FMCG for in-home consumption marked a remarkable year, hitting a robust growth in 2020 amid the pandemic, driven by the increase in volume consumption,” said Fabrice Carrasco, Managing Director for Vietnam & the Philippines, and Asia Strategic Projects Director of Kantar Worldpanel.

, Packaged foods forecast to grow slowly in Vietnam

, Packaged foods forecast to grow slowly in Vietnam

“Packaged foods are the most successful sector and is the main driver of the abnormal spike in the market throughout the year of stay-at-home economy,” he said.

During the Covid-19 period, one third of Vietnamese consumers switched from traditional to online shopping in the FMCG industry, partly contributing to the growth of the packaged foods in the whole year of 2020, according to Kantar’s research.

Growth in the online channel in Vietnam (with an increase of 76% in the last quarter of 2020) mainly came from new buyers that led in terms of the number of transactions in urban areas in Asia, outstripping the growth of South Korea and Malaysia.

Vietnamese online shoppers’ shopping carts are also expanding to more diversification from just beauty products, mom and baby products to items in the food & beverage (F&B) category (excluding fresh, or fast foods like food delivery) which portfolio is still small for online channel.

, Packaged foods forecast to grow slowly in Vietnam

, Packaged foods forecast to grow slowly in Vietnam

Besides the online channel, hypermarket and emerging ones such as mini supermarkets and convenience stores have enlarged and continue expanding their market share.

However, in the channel structure, street shops (grocery channel) still account for more than 50% of total market share, although the figure has decreased gradually compared to the previous years.

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Nguyen Thi Nhu Ngoc from Kantar Vietnam attributed the decline to the fact that the Vietnamese consumers in the major cities are familiar with shopping via the traditional channel, leading to its revenue growth of 6% in 2020.

This article was originally published in Hanoitimes

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