Tet 2023 – Behind the recovery
Understanding the FMCG growth drivers of Vietnamese New Year 2023
FMCG made a strong recovery in value in both urban and rural areas of Vietnam during Tet 2023 compared to the previous year. This was driven by increases in both volume and price, while in Tet 2022, the country had just emerged from a lockdown lasting months and some restrictions preventing festive gatherings were still in place.
The value of FMCG has also grown significantly since the pre-Covid years (2019), driven by a 15% rise in average price. FMCG volume growth has been at a slower pace than price increases. With inflation predicted to average at 4.5% this year, brands and manufacturers must find ways to connect with consumers through relevant and meaningful offers.
Tet 2023 FMCG growth is fuelled by the recovery of FMCG gifting after it took a nosedive last year. FMCG gifting rebounded by 29% in Urban areas and 22% in rural areas.
FMCG products' practicality, convenience, and perceived value for money help to make them a popular gifting option alongside non-FMCG categories such as money or clothing.
Taking a closer look at Tet 2023 FMCG growth by sector, we see that Beverages contributed a significant amount – a category that declined during lockdowns but achieved robust growth throughout 2022, and especially during the festive season in early 2023.
Non-food FMCG sectors, particularly Personal Care, also helped to drive FMCG value growth this past Tet, now life is back to normal, and consumers are increasing usage occasions for Personal Care products.
Beverages is the most valuable of all the FMCG sectors in the Tet period and has grown over the last year to reach a level that not only exceeds the last two Tets during the pandemic, but is also higher than pre-pandemic levels.
This is specifically due to the higher consumption of Alcoholic Beverages which has increased since Covid-19 restrictions were lifted and people could freely meet to celebrate again.
Packaged Foods has grown consistently year on year with a strong rise in Tet 2023.
Despite the strong rebound of FMCG gifting in Tet 2023, it has not recovered to pre-pandemic levels. Looking at its performance over the past six years, FMCG gifting is shrinking over the long term due to the faster rise of Real Purchase of FMCG and other non-FMCG gifting options.
In lieu of this long-term decline in gifting, challenges for brands and manufacturers are:
•How can you leverage the Tet spirit to connect with your consumers and maximise your brands’ potential?
•How can you differentiate your products and services from your competitors and create a unique value proposition for your customers during the Tet period?
•How have consumers’ needs, preferences, and behaviours evolved across Tet periods and how can you tailor your gifting offers accordingly?
