October 2008

Nielsen Vietnam
Grocery Report

INSIDE:
Six key cities
account for 38 percent
of nationwide sales
Local chain Saigon Coop is
most often cited as the preferred
supermarket for grocery shopping
In tandem with the increasing importance
of Internet in Vietnam, manufacturers are
strengthening their online presence
Consumers say they are shopping at Modern Trade
stores less often than Traditional Trade and market stalls
Vietnamese consumers allocate more spare cash to
purchase new technology than their regional counterparts
Vietnam, the new Asian Tiger, is The majority of sales across the total
considered the most attractive FMCG retail market in Vietnam occurs in
emerging retail market for investors the six key cities (HCMC, Hanoi, Danang,
today, and is one of the fastest Cantho, Haiphong, Nha Trang), which
growing nations in Asia Pacific1. account for 38 percent of nationwide sales
in 2007. The off-premise sales have also
The nation’s 2008 GDP growth is estimated
recorded a buoyant 21 percent growth
at 6.5 percent2, substantially below the
from 2006.
original estimate of nine percent, and lower
than the healthy 8.5 percent recorded in Vietnam’s population is estimated at 86.5
previous years. Yet amidst Vietnam’s high million and a huge three quarters of the
inflation, the economy remains robust, with population reside in rural areas. It’s no
the performance of most Fast Moving surprise that almost 40 percent of
Consumer Goods (FMCG) categories Vietnam’s FMCG sales are attributed to
relatively buoyant. rural areas3. What’s interesting for
suppliers is that over time, rural consumers
Nielsen’s annual Vietnam Grocery Report
are introducing new categories to their
provides a comprehensive snapshot of the
repertoires as their level of disposable
retail market in Vietnam from 2006-2007 by
income increases and demand grows for
integrating information from the full range
more sophisticated products. Consumers
of Nielsen research services which include
are also moving from the “must have”
Nielsen Retail Audit, Omnibus Surveys,
staple items such as rice and shampoo to
Global Consumer Confidence Surveys,
discretionary items such as deodorants/
Qualitative Focus Groups as well as statistics
skincare. All leading manufacturers will
from the Vietnamese Government.
need to get into the game early and
Current Retail Landscape capture the share of mind of this largest
With half a million stores countrywide consumer segment in Vietnam.
selling consumer packaged goods – a
13-percent increase from 2006 – Vietnam’s
retail landscape is vast and rapidly growing.
This, coupled with a value growth of 18
percent, means all eyes are on Vietnam for
its huge growth opportunities in the coming
years.

1
Source: Seventh annual Global Retail Development Index™ (GRDI), a study of retail investment
attractiveness among 30 emerging markets conducted by management consulting firm A.T. Kearney.
2
Vietnamese Government Statistic.
3
Source: Nielsen Rural Census.

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Vietnam also boasts a very young population,
with over one third under the age of 19 in
2000, and more than half under the age of
30. For manufacturers, it is key to
cultivate and sustain customer loyalty
among this emerging middle class in the
key cities who are young, independent
professionals and hungry for new brands
and products. In fact, manufacturers of a
number of categories have already kicked
off their marketing efforts by targeting this
large young segment via different product
offerings as well as targeted communications
on the internet and mobile – mediums that
satisfy young people’s appetites and
lifestyles.
In parallel with Vietnam’s rapid development
is the fast emerging Modern Trade channel.
As with total store numbers, the Modern
Trade is growing in terms of numbers (now
394) and contribution to total retail sales
(10%). The key international players
include Big C, Metro Cash and Carry, while
local chain Saigon Coop is most often cited
as the preferred supermarket for grocery
shopping, driven largely by its store
locations and numbers, as well as
competitive pricing.
The Traditional Trade, nevertheless,
continues to play a key role in the
everyday lives of Vietnamese consumers,
accounting for 68 percent of total Grocery
sales. The fact remains that due to
Vietnamese cuisine, fresh food dominates
the monthly grocery budget at 70 percent
or USD168 per month. Vietnamese
shoppers still see the Wet Market as the
best outlet for freshness and price for their
daily essentials. Therefore, we see
shoppers using the Wet Markets almost
daily, and the supermarket fortnightly.
Modern Trade Evolution
Sales through Modern Trade stores have
enjoyed growth of 45 percent in 2007
versus 2006 with the contribution of
Modern Trade sales to total FMCG sales
across Vietnam at 10 percent by the end of
2007. We have seen all Supermarkets, local
and international, increase their store

Vietnamese shoppers utilizing more stores for their regular shopping –

50% of shoppers now use more than one supermarket per month

2006 2007

1 store 55 50

2 stores 36 38

3 stores+ 9 11

Average/ 1.57 1.65

(shops)

Base: All Supermarket/Hypermarket shoppers 2006 (n=910 ) , 2007(n=1009)

MT Value
% Contribution 2006 2007
Personal Care 14.6% 17.8%
Household Care 11.0% 13.3%
Food 4.3% 5.3%

4
Given internet penetration in LATAM is skewed towards high socio-economic groups, our findings are only indicative of trends among this segment of the market, and
cannot be said to represent the general population. Nielsen’s findings are supported in part by a 2002 study conducted by the Food Policy and Nutrition Unit /
University of Brasilia which found that 75% of Brazilian consumers read the label at point of purchase. Mentioned in ‘Nutritional labels and Health Claims: The Global
Regulatory Environment’. World Health Organisation. Countries included in study: Brazil, Mexico, Argentina, Chile.
5
Countries surveyed: Malaysia, Vietnam, Philpines, Thailand, Indonesia, Singapore.

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coverage dramatically over the last year.
There are 394 Modern Trade Outlets in
Vietnam, up 22 percent from last year. The
frequency of visiting supermarkets has
increased in the past few years, with 43
percent of shoppers in HCMC visiting a
supermarket weekly.Supermarkets are
visited twice a month and remain the most
important channel for Personal Care &
Household products (40-45%). Personal
Care categories in particular seem to be
increasing their importance in Modern
Trade with sales contribution from 14.6
percent in 2007 to almost 18 percent this
year.
Store accessibility is the key driver of store
choice and is a key driver of Saigon
Coop-mart’s success, while Metro is more
renowned for its lower price offering. In
terms of brand loyalty by category, there is
a high level of store switching noted for
Personal Care categories and a higher level
of emotional involvement for the shopper
compared to those in the food and
beverage categories.
More shoppers visited supermarkets in any
month in 2007, up three percentage points
versus last year, yet this doesn’t correspond
to higher levels of spending. Vietnamese
consumers continue to visit the Modern
Trade channel but allocate the bulk of their
grocery spend to Wet Markets and
traditional grocery stores.
Within Nielsen’s Store Equity Model,
awareness and consideration remain the
key contributors. Brand association,
particularly “Store accessibility” is also
crucial to the success of Modern Trade
outlets in Vietnam.
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Three Key Emerging Trends
Metro Male
Personal Care categories are becoming
more robust with male-targeted products.
Shampoo, facial care and deodorants have
increasingly focused on male consumers,
with a staggering 41 percent of deodorant
sales, for instance, attributable to the men’s
segment.
Heavy marketing campaigns aimed at
young Vietnamese males are being
launched by various brands with the
product categories expanding from
Personal Care categories to Food and
• 84% of men agree they
Beverage categories.
invest in personal grooming
According to a global Nielsen survey on because it makes them
personal grooming, 87 percent of men feel better about
surveyed claimed to be more interested in themselves
personal grooming today than they used to
• 81% agree they invest in
be and 61 percent say it is perfectly okay for
personal grooming
men to spend time and money enhancing
because they want to look
their appearance. Vietnam also mirrors the
good for their partner
global trends with the rapid emergence of
men-only stores or shelf space as well as
the male-specific versions of products • 75% agree they invest in
previously tailored for “women only” personal grooming
(e.g Facial Care). because they want to
attract a partner
The global survey also revealed that 81
percent claim the pressure to look good It’s important to note that
these days is much greater than it was these numbers are much higher
during their parents’ generation and 81 than global averages
percent claim they buy health and beauty (respectively 62%, 56% and
products. Personal grooming in urban 42%).
Vietnam has long passed the “basic” stage
when products were used simply for their
key functional features – the use of personal
care products is now becoming more
personal and more emotional for both men
and women.
Going Green
The Vietnamese population is becoming
increasingly health-conscious.
In Ho Chi Minh City alone, Ready-to-drink
(RTD) tea has now overtaken soft drinks as
the number one non-alcoholic beverage.
The ‘green’ trend is contagious, spreading to
confectionery and gum, feminine hygiene,
washing detergents, milk, toothpaste and
tissues as manufacturers race to get a piece
of the “green” pie.
Teen & Online
With a third of the population under the reading news online, and engage in a host
age of 19, Vietnam presents huge of social networking and gaming activities:
opportunities for companies that have a 54 percent use the internet predominantly
vast interest in the teen market. for chat rooms and online social groups; 33
percent play games and 22 percent say they
17 percent of the population has Internet
read online advertisements. In tandem with
access, an extraordinary figure for a country
the increasing importance of Internet in the
at this stage of development. This compares
daily lives of Vietnamese, manufacturers
to 10 percent in China and four percent in
are also strengthening their online presence,
India. In the two key cities of HCMC and
with more marketing and a stronger brand
Hanoi, a third of the population is now
presence on popular sites and networks.
online. Vietnamese consumers in the 18-30
age group spend the majority of their time

News, chatrooms and gaming are where they spend their online time…more so than just email

Uses of the internet in HCMC and Hanoi

By Age Group

21%
Catching up with news 54%
8%
Chatrooms 54%
13%
Email 40%
5%
Play games 33%
4%
Listen to music online 27%
9%
Read small advertisings 22%
5% 41-50
Watch movies 20%
2%
Study / homework 16% 18-30
6%
Work 10%
1%
Job search 9%
5%
Search for or update information 8%
3%
Check the weather 6%
1% 46% of Internet
27% Internet
Dating online 6% users still use at
2% usage at home
Shopping online 4% Internet services
1%
Banking online 3%

Source: ACNielsen Omnibus 2007

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Economic Impact on Retail Sales
Sales in all categories are not necessarily impacted by price rises with
Given Vietnam’s high inflation rates, the
double digit CPI matched in volume terms
current economic crisis in the U.S and
stock market uncertainty across the globe,
High Inflation Categories (May ’08)
it is not surprising to see consumer
Price Inflation Volume % Growth
confidence dropping dramatically world-
Cooking Oil 64 12
wide in the latest quarter in 2008. In
Vietnam, consumer confidence dropped to Noodle 62 6

96 – the lowest ever since Nielsen’s Global Sweet. Cond. Milk 27 (2)
Consumer Confidence survey began in
Sauce 22 29
Vietnam in 2005. That compares to a global
consumer confidence record low of 88. Toilet Tissue 18 12

15
Inflation is a hot topic in Vietnam – This is Laundry (2)

no surprise given Vietnam’s Consumer CSD 14 6

Price Index (CPI), at 21.6 percent, is the 13 11

RTDM
highest in Asia. Basic wages are expected
Dishwashing Liquid 11 55
to increase by up to 22 percent in 2009, so
further inflationary and labor challenges Cigarette 11 11

lay ahead for all major players in Vietnam.

Source: Nielsen Retail Audit – Vietnam 6 Cities

According to Nielsen’s recent Inflation in

Vietnam study4, which examined the
changes in attitudes and behaviours
among Vietnamese consumers resulting
from high inflation, 77 percent of consumers
claim they have changed their store choice
because of the rising prices. Consumers
say they are shopping at Modern Trade 77 percent of
stores less often than Traditional Trade and
consumers claim they
market stalls5.
have changed their
At a product level, staple goods such as
noodles, edible oil and sauces, are the
store choice because
most affected. Yet consumption levels for of rising prices
these categories are still hitting double-
digit sales growth - edible oil, for example,
has seen the highest price inflation of all
(66%), yet it enjoyed a 12-percent growth
in sales. Likewise, sauce has experienced a
29-percent sales growth despite a price
hike of 22 percent.

4
Nielsen’s Inflation in Vietnam study, 2008.
5
Nielsen’s Inflation in Vietnam study, 2008.

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In a time of budget constraints,
family is of utmost importance
Another insight from the Nielsen Inflation
study is that a family’s well being commands
a high priority for Vietnamese consumers,
who would trade off spending on discretionary
personal items for family needs. They are
also more willing to upgrade to more
premium products of better quality.
The findings show that 73 percent of
consumers are willing to continue to buy
products for the family regardless of price
increases and 79 percent are less likely to
purchase items for themselves.
As such, performance of products for the
family is relatively intact –the high
inflation rate should therefore have low
impact.
Discretionary spending
Since 2000, Vietnam’s GDP has grown by
43 percent in urban areas, and with it has
come an emerging middle class with an
increasing disposable income. The average
monthly disposable income has increased
greatly over the past 5 years – in 2002, 81
percent of households lived on less than 4
million VND per month while today, more
than 50 percent of households earn more
than 4 million VND per month.
The increasing affluence of the Vietnamese
consumers is well reflected in the growing
penetration levels of Hi-tech products
across Vietnam. 94 percent of A-class
consumers now own a PC and a staggering
97 percent own at least one mobile phone.
Even within the lower socio-economic
groups (E/F), over half have the luxury of
owning a mobile phone.
Vietnamese consumers also allocate more
spare cash to purchase new technology
than their regional counterparts in Asia
Pacific. According to Nielsen’s 2007 Global
Consumer Confidence Survey, 53 percent
of people spend most of their disposable
income after covering essential living
expenses, on keeping up with technology.
This compares to 43 percent in China and
22 percent in Singapore.
For more information, please
contact Asha Phillips:
asha.phillips@nielsen.com
(84) 8 3 847 6300 ext 199

High levels of ownership for high-tech goods particularly mobile phones and 94% of A class own a PC…
the Vietnamese are a tech savvy nation

Hi-Tech Ownership (Households)

Audio system 70
w CD/VCD/DVD 98

Hand phone 49
97
Computer 4
94

Photo camera 6
65

Microwave 62
Radio/cassette/ 34
Audio (no CD) 54
12
VCR 30 E&F (%)
21
Radio 36
A class (%)
VDO camera 18

CD player 17

Source: ACNielsen Omnibus

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About The Nielsen Company
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