2022 was a year of recovery for Vietnam, as the country emerged from strict lockdowns and restrictions. The Vietnamese economy as a whole achieved impressive growth, putting the country on course for robust and sustainable growth in the coming years.
At the same time, the global economic slowdown has made – and will continue to make – an impact on the consumer market, with inflation in Vietnam expected to continue rising in 2023.
Key highlights from Kantar Worldpanel’s Vietnam FMCG Monitor Full Year 2022 include:
Household budgets come under pressure
Vietnam’s economy recorded an impressive GDP growth of 8% in 2022, the highest in over a decade, in the face of global uncertainties brought by rising inflation, the conflict in Ukraine, and lingering concerns about the pandemic.
The impact of global instability and inflation was felt on the local economy, with the consumer price index (CPI) rising significantly toward the end of last year and further increases anticipated this year, putting pressure on purchasing power.
Volume rises give a promising sign
The FMCG market grew in value compared with the previous year, in both urban and rural areas, driven mainly by increasing prices. Volume consumption increased in rural areas, albeit at a slower pace than the price hikes.
In Vietnam’s major cities, the bounce back of beverages and non-food sectors contributed significantly to FMCG growth, in terms of both value and volume. In rural regions, all FMCG categories showed strong growth except for packaged foods, where consumption declined.
Beauty is the hot category
The beauty care sector is on track for a strong rebound in 2023, following a decline in 2021, thanks in particular to a number of facial care categories that recorded double-digit growth in two consecutive years.
Ecommerce growth is slowing
While still enjoying a healthy increase in its shopper base, the growth of the online channel is plateauing following a strong start in early 2022. Modern trade and traditional formats regained their popularity as people spent more time out of home.
Shoppers prepare to rein in spending
Since the last quarter of 2022, consumers have become increasingly concerned about their household financial situations, following a wave of layoffs in many industries. Amidst ongoing price hikes, this new burden is likely to have an impact on grocery spending as people tighten their budgets.
Manufacturers and brands need to respond quickly to these changes and concerns by understanding who is feeling the strain, how they are reacting to price increases, and what brands can do to support shoppers in different groups.
In 2023, the FMCG market will face challenges including huge inflationary pressures and consumers will continue to rationalise their spending. Our experts can help you to identify growth pockets and win shoppers, using real purchase data and exclusive insights into your target groups.
Download our comprehensive Vietnam FMCG Monitor 2022 report below.