Rural areas boast rapid growth in FMCG

According to Nielsen Vietnam, the FMCG market grew by 5.4% last year, higher than the previous year’s 4.9% growth in spite of a decline in the last quarter. The final quarter also saw a 0.5% fall in growth rate when compared to the third quarter of 2017. The consumption of essential goods in the market, including drinking water, food, milk, family and personal care products experienced a drop off to the end of the year, with only the beverage sector rising by 3.2%, Nielsen Vietnam reports.

Nguyen Anh Dung, director of Nielsen Retail Measurement Services, says the circulation of goods via traditional commercial channels and retail shops in both rural and urban areas showed a sharp plummet toward the end of last year due to the impact of several devastating storms on the country, which caused huge property and human losses.

Mr Dung has identified another cause for the decline, as the traditional Lunar New Year (Tet) came later than the previous year, falling in mid-February, instead of early January.

Nielsen highlights FMCG growth in rural areas as a new source of development for producers. However, expansion to such areas also presents challenges for businesses who have to bear the cost of delivering products to these areas. This is a difficulty not only for Vietnam but all Asian countries.

Some rural areas have greater prospects than others, therefore, businesses need to carefully define potential areas to best utilize investment sources. To achieve success in more rural areas, producers must understand the customer base, notes Nielsen Vietnam.

Mr Dung says rural customers are demanding more   premier quality services and products as they seek products associated with an urban lifestyle thanks to the burgeoning development of advanced technology and infrastructure.