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.
| Source: Kantar Worldpanel |
Demand for in-home consumption nomalizes
According to Kantar's Worldpanel data, after a period of social gap, the growth of the in-home packaged food sector has slowed down 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 might delay their purchases as a result of stockpiling or return to purchasing level of pre-Covid-19 period for instant noodles, cakes and canned foods.
Ngoc told Hanoitimes that sales of cooking aids or snacking products are more likely to normalize 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
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 are the most successful sector and is the main driver of the abnormal spike in the FMCG market throughout the year of stay-at-home economy,” he said.
| Source: Kantar Worldpanel |
During the Covid-19 period, one third of Vietnamese online consumers switched from traditional are new to online shopping in the FMCG industry, mainly contributing to the growth of the online channel in the whole year of 2020, according to Kantar’s research.
The online channel achieved an increase of 76% in terms of online transactions in 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 China.
| Source: Kantar Worldpanel |
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 foods, or fast foods) which is however still small in terms of share in online basket.
“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.
Ngoc from Kantar Vietnam added: “As traditional channels are still dominant in Vietnam retail market and are the most popular shopping places for Vietnamese consumers, these shops managed to sustain a growth of 6% in 2020.”
