Transparency in Transportation Operations

1.Overview

With increasing disposable income, rising living standard, stable GDP and economic growth, young population and low inflation, Vietnam is one of the most dynamic emerging market in Southeast Asia region. Fast moving consumer goods industry has promised a robust development.

2. FMCG in Vietnam

The MoIT forecast that total revenue of the consumer goods-related sectors in Vietnam will hit 140 billion USD in 2016, thus creating great opportunities for FMCG businesses at home to boost production and expand the market. There is a significant volume growth from -1,6% in 2014 to 2,7% in 2015 in terms of demand for FMCG and the figure is expected to continue increasing in 2016 and 2017 (Nielsen, 2015). Vietnam’s volume growth in 2015 in only behind Thailand and the Philippines in South East Asian religion. In short term, urban citizens remain positive value growth of 3,6% whereas value of growth in rural areas grow at weak pace. The latest statistics released by the Ministry of Industry and Trade show that after China, Thailand is Vietnam’s second biggest suppliers of consumer goods with its garments and household utensils present in nearly 8,600 markets across the country. Besides, Japan and the Republic of Korea are also penetrating into the Vietnamese market through chains of convenience stores.

It can be seen from the chart beverage contribute the largest value to FMCG industry while baby care products remain the lowest value contribution. Interestingly, urban prefers liquid tonic food drink with the rise of 4,4 PTS when the most popular beverage in rural is soya milk with the increase of 8,7 PTS.

The data of Kantar research shows that traditional trade outlet such as wet markets and grocery stores is still one of the most popular channel for FMCG. Convenient stores/mini market is a new rising star in distribution channel which experience 60% growth from 2014 to 2015. For example, VinMart + have appeared from 100 to 200 store in 2015, Circle K from 97 to 129 stores, and Shop & Go from 103 to 130 stores. E-commerce also will be a big trend which reaches steady growth of 13%.

Consumer confidence index also experiences positive trend since Vietnam is the 6th most optimistic country globally. Despite of the increase of 6,3% CPI in 2015 compared to 2014, Vietnamese consumer is prudent, still prefer saving than spending. Pricing has also been one of the most important decision making factor during purchase. Additionally, dropping shopping frequency proves that Vietnamese consumer has been lessen spending

The demand for high end FMCG is still week regard to relatively low income of majority of Vietnamese consumers in rural areas. Compared to other South East Asian countries, Vietnam’s per-capital expenditure on food and non-alcoholic beverages was US$200 in 2011 while this figure is US$900 in Thai Land and US$1000 in Malaysia.

3. Future trend and potential investment

Vietnam has emerged as a popular destination for multinational and regional retailers. It is allegedly agreed that Vietnamese consumers are more likely to prefer foreign brands. In addition, 57% of Vietnam’s population below 35 years old, 44% monthly increasing income, 30% urbanisation rate with 3,4% growth rate per year; and 1.6 times more college and university graduate (Nielsen) result in the shift toward modern trade outlets such as shopping mall and supermarket. Some of well-known foreign retailers are AEON (Japan), Lotte (Korea), Central Group (Thailand), Mark and Spencer (UK). In additional to strong foreign competitors, Vinmart and Citimart are the most popular domestic rising stars in FMCG/retail market in Vietnam.

In 2015, 48% of Vietnamese consumers stated that “staying fit and healthy” is the top concern (Nielsen). Therefore, Vietnamese consumers have become more concerned about the quality, hygiene and safety of the products. Due to high competition in FMCG industry in terms of manufactures and retail outlets, Vietnamese consumer have more purchase power decision. This implies that manufactures as well as retailers also need to be more selective with the products that provide to customers.

According to Nielson report in 2 big cities: Hanoi and HCMC, 92% of internet users are online shopper and 93% of shopper are middle class and millennial. Additionally, in such a busy world, on-the-go lifestyle will become a big trend in Vietnam. Thus, it indicates the high demand for online platform that conveniently host information and acquire interaction between online and offline store choices. Also lack of innovative approach and strategy to attract online shoppers is a huge issue in Vietnam market at the moment. Also there has been a huge lack of accessibility to online channel in rural areas and other smaller cities. E-commerce in FMCG promises high potential for investment