Transcript for "Vietnam's FMCG Consumer Outlook 2026": To our webinar, Vietnam FMCG Outlook twenty twenty six, held by Workpanel by Nomurais of Vietnam. My name is Tung Kin, research consultant at Workpanel by Nomurais of Vietnam. And together with me, I would like to introduce miss Ho Yee Phuong, our analytic director. It's our honor to hold this session today with you. Our goal today is to provide you key drivers for navigating the brand role with confidence in 2026. Therefore, our sharing will cover two main parts, Vietnam macroeconomy at length, and after that, zooming into in home MMCG insights with four pillars for brand role. To start our section, let's have a quick glance at Vietnam economy, how we transition from past momentum to future prospects. And by that, we can understand how macro indicators impact on consumers and brands' performance. Question is, what has happened in 2025? Reflecting on 2025, we saw a year of solid economic growth for Vietnam. Vietnam hit an 8% GDP growth. It's now in line with the government's initial targets. Alongside with this role, the income per capita has continued to to rise, officially moving Vietnam into the upper middle income market. And this shift is a notable milestone for consumer purchasing power, indicating the affordability for manufacturers to maximize consumer expenditure. And furthermore, the good momentum is driven by the servicing sector. This was fueled by massive national celebrations. For example, the eight fifty and the eight eighty anniversaries, which are celebrate economic growth. Overall, the macro picture landed positively, Yet, is consumers both active on the same page with this positivity? So to answer that question, actually, despite a good macro indicators, we are still seeing a very cautious and hesitant consumer sentiment. When being asked about their primary concerns, consumer consistently point to the concern over their wallet, including worries about their household income, job security, and cost of food. And especially in 2025, we also see the food safety worry remain as a top of mind concern. The past year, especially after the quality of 2025, we see the investigations into the counterfeit and goods origin, which boost the food safety to the forefront of the public conversation. So in this context, it's clear why consumers are maintaining a conservative spending habit and becoming more selective about their products they choose. So we have reviewed what has happened in 2025. So what's to expect in the future? Over the past year, we see the effort of the government when they has enacted policies to stimulate the domestic consumption. Most notably, the VAT reduction maintained at 8% instead of, 10%, and the updated personal income tax reductions have directly boosted the disposable income. And beside that, we also see the effort of the government to create a more transparent business environment. The tightened control on the counterfeit is still ongoing in 2026 alongside with the increased support for the SME. So it it solves a clear commitment to a healthier and more transparent market. So to sum up, looking ahead in 2026, we believe that there will be a chance for the legitimate legitimate manufacturers in Vietnam to see the opportunity follow-up. So we have reviewed what has happened and what to expect in the future macro environment. So how about in home FMCG? So question are, how did FMCG move, and how can key manufacturers see opportunities to growth forward? To explore these questions, let's turn into the second section, in home consumption, patterns, ratios, and possibilities. In the context that consumers are spending more cautiously, in home MCG value growth has been impacted, driven by the demand reduction. So based on our continuous household purchase tracking data in urban four ks city, the top chart, and rural, the bottom chart, we can see that although the average price had has increased, it has not been enough to compensate for the decline in the volume. This momentum this movement has been witnessed for past two years, notably in rural areas when the purchase volume declined by 6% versus last year. A little bit detail into the five sectors in FMCG, the downward trend in volume is more seen in three categories including dairy, beverages, and bucket foods. In detail, in home beverage consumption declined as the demand shifted to at home activities alongside with the increasing prices of coffee in 2025. Dairy and packaged food sectors were also heavily impacted due to the cost of consumer sentiment, following a series of concerns regarding the counterfeit scandals in 2025. So in fact, by combining all the data sources, we see a clear shift in consumer spending from in home to out home, while the total F and B revenue maintained a high growth momentum estimated around 10% in 2025. Then the domestic tourism also saw impressive growth of 23% over the past year. This has significantly contributed to the FMCG spending on at home occasions. Given the slowing growth rate of FMCG for in home consumption, the question is which sectors are still achieving impressive growth. So to answer this question, we analyze the volume growth rate of FMCG categories in 2025 versus year ago and also 2024 versus year ago to point out four main groups, the accelerators, the recent boosters, the slowing movers, and underperformers. In 26% of categories fall into the accelerators that have maintained consistent growth over the past three years. The similar pattern among these accelerators is the ability to attract complex consumer needs, for example, about health and well-being, also convenience demand. Subcategories, for example, CZ offers opportunity, for example, multi purpose planers, OsterSource, LipCare, Foundation Cosmetics, and Mille Mecca. How about the movement of the FMCG players? So here is a very interesting figure. 63% of FMCG categories have seen a decline in the market share of the top three manufacturers. This proves that these market leaders are increasingly facing intensive challenges from the smaller and emerging brands. As a result, it's so important for brands to clearly define a unique competitiveness to attract target consumers and prove value for money to win in each trip. And as the world leader in the household projects behavioral research, World Bank of Bank of America, Vietnam, households, proposes the w pillars, which are four core strategic pillars for Bengal in 2026. These pillars include, first, who, which means targeting mac micro consumer segments, y, to build a rights related value proposition based on a deep understanding of consumer demand space. What, to balance the product portfolio between the the core SKU and how to develop meaningful new products. And last but not least is where, where to design channel strategy based on mission led. And now let's zoom into the first w, who, to understand the rise of the macro consumer clusters. Vietnam enters 2026 with a notable demographic shift. Our country sees a diverse and distinct consumer groups in terms of quantity and quality. In terms of the quantity, we are a massive market with 102,000,000 people, which is 1.5 times the size of Thailand and three times the population of Malaysia. However, our birth rate is suffering from a downward trend currently standing at 1.9 93 children per woman. Besides, according to World Bank forecast, within the next ten years, Vietnam will officially become an aging society as those aged, more than 65 and over 65 will account for 14% of the population pyramid. Regarding the quantity quantity quality, our demographics, as of 2025, nearly 39% of the population resides in the urban areas, showing significant urbanization compared to 34% just in a decade ago. Additionally, average monthly per capita income has grown by 7% annually. Over the past five years, this progress officially moved Vietnam into the upper middle income group starting in 2025. However, development indicators still need further improvement in rural area and mountainous regions compared to the urban centers to bridge the regional equality gap. Therefore, with the structural change in demographics, the consumable trait become more scattered that requires each brand to have a more detailed biofuel five segmentation. Within the context of the diverse consumer lock sales, there is a portrait of Vietnamese households based on the research of GSO and work panel by numerator focusing on four main dimensions, household size, household income, age of the main shopper, and family life stage. With this portrait, we will show you an example how brand can explore the growth by zooming into the household side. One of the key highlights on the household side is the emergence of the nuclear family with less than three members per household. This group is estimated at around 14,000,000 households. Interestingly, we see a collaboration between the household size and the average spending per capita on FMCG. The fewer members, the higher spending per capita on FMCG. Nuclear households are high value ticket consumers. Furthermore, these nuclear families tend to spend more on category that offer consume convenience lifestyle such as canned foods, instant coffee, and instant noodles, as well as the trend of the self care orientation, including buying more for the most risers, makeup, and makeup removals. We also found a very interesting trend among this nuclear family. Small household size, but bigger love for pets. They spend 1.8 times more on pet food than the standard families do, up opening opportunities for pet economy. If we look at our neighbors in Taiwan, we can see a similar pattern. As birth rate drops and family becomes smaller, spending on pet increases. By 2024, the number of registered dogs and cats in Taiwan actually outnumber newborn babies. The average price of pet food increases by 11% year on year. This is such a powerful case study for Vietnam. It's a chestnut. As our household size shrink, the pet food market is set for a new growth engine in the future. This is all of the first pillar. And next day, miss Ho Yin Fung, our analytics director at work panel by numerator, will help us to go through other w g pillars. Okay. Thanks, Akin, for the introduction. So up to now, we have spent quite some time talking about who the consumers are. So we talked about smaller households, micro consumer clusters, and also how different their needs are are today. So now I want to move to the next a very important question, which is how do we make consumers actually choose our brand? So this is where the idea of resonating value proposition comes in. So in similar terms, it is just the clear reason why a shopper should choose your product over all the other options in front of them. So it's not about listing features. It's not about saying that your product is high quality, but it's about answering one very simple question. Why should I buy this one today? Okay. So in order to create a strong reason to buy, we need to first understand what happens inside the shopper's mind. And every purchase is driven by two things. So first is the triggers, and second is the barriers. First, for triggers, so these are the reasons that, you know, push people, to towards buying your brand. It could be performance. It could be safety, convenience, taste, or health benefits. And then we come to the barriers. So these are the reasons that stop people from buying more, or buying again or buying at all. It could be price, the fear around, poor quality, lack of trust, or just simply confusion. So growth happens when we strengthen the triggers and remove the barriers. So instead of asking only what do consumers like about brand, we also need to ask what makes them hesitate. So only when we understand both sides, we can design a proposition that can truly drive volume and not just awareness. So, let me bring this idea into life with a real case study, of a shampoo brand in Asia. So this is an example of a shampoo, that launched a new variant, specifically targeting male consumers. The product has been I mean, the new launch has been in the market for almost two years. It was well distributed, well promoted, and also technically a good product. However, when we compare, the performance with the previous, with other variants of the brands, we find that the performance is not up to expectation. So penetration among the male shoppers of this new launch is only half of what the existing variants have achieved. So the big question that the brand has asked was very simple. So what is holding this product back, and how can we unlock its full potential? I believe that it is a very common situation that many manufacturers here today also relate to because we already launched a good innovation. We already invest a lot in that, but why isn't it taking off? So in order to answer that questions from that case study, we have offered to went back to the consumers. So we asked the male shoppers two things. So first one, what makes you choose this variant among the buyers? And, also, for the non buyers, what makes you hesitate or stop buying it? And what we found was very interesting. Some male consumers clearly said that they bought that new launch because it offers strong antidindra and also the scalp care benefit. So that was the main trigger. However, the same message also created barriers. So some men told us that this shampoo is only for dandruff problems. So once their problems of dandruff is gone, they don't need it anymore, or it is not suitable for sharing with the whole family. So even though the product worked well, the way it was positioned kind of limit its usage occasion. So this is a a critical insight because sometimes what attracts consumers can also restrict growth for the brand. So, after we find out the triggers and barriers, also with the findings, the brands has come up with different proposition to test. So they tested the message around looking younger hair, moisturize moisturizing the scalp, gentle formula, strong fragrance, or preventing, preventing hair fall. Also, all of these benefits, were very positive, and the results show that most of them were liked by consumers. But liking a message and buying, because of that message is the same thing. So the next question is that which, of these propositions actually turns interest into repurchasing volume? K. So what we analyze is that we link the interest level of each proposition with the shopper's real past behaviors to evaluate which one could drive post volume for the brand. So this slide, shows that one of the most, important learnings from the study. So on the left hand side is the the benefits that driving sharper interest. Many men agree that they like, like these, benefits. However, when we look at the the right table on the real actual purchasing behavior, the pictures changed. So the benefits that truly drive the volume growth were give me younger looking hair. And while unblocking scalp support to prevent hair fall can drive, you know, the interest, it doesn't drive volume as much as gentle formula for sensitive scalp. And, also, anti dandruff is appreciated once it's combined with the assurance that the formula is not harsh on the hair. So, the findings, is that a resonating, value proposition must drive both emotional confidence and everyday usage, not just solve a temporary problem, I e, the antidandruff. So based on this insight, the brand actually did not change the product itself. Instead, they changed how they communicate, the product. So previously, the product, the communications focused heavily on technical ingredients and also the antidandruff claims. So going forward, the mess messaging shifted a little bit, towards to gentle care for the scalp, healthy and younger looking hair and suitable for everyday use. So this allows the product to move from a problem solving shampoo to, like, an everyday grooming choice. So this is, an example of how the right position can unlock growth without an additional r and d investment. Okay. Now let's zoom out, from one product to an entire brand portfolio. So in today's FMCG environment, the growth does not come from launching more products, but it comes from a purposeful portfolio management. So this means that we need to clearly understanding that which products are our core growth engines, which innovation can bring true incremental volume, and which launches just create short term noises. Okay. So the challenge today, that we are facing is not the shortage of innovation. It's because we're overloaded. The the chart on your left hand side, you will see that consumers, nowadays, they could see up to 35 new products every day. And this level of innovation, keep the market exciting. But at the same time, it also creates extreme competition, for attention because with so many options, most of the new product struggle to to be to stand out, to be remembered, or repurchased. So most of them, disappear very fast. And as a result, launching a product is easy, easier than ever, but building the sustainable demand is also higher than ever. Okay? Our data, clearly shows that only a very small percentage of new brands, of variants managed to reach, a meaningful penetration after one year launch. So on the left hand side is the the example of a food and beverage. So here I show the, biscuit category. So with nearly 500 new launch per year, only 2.9% of this new launch can reach one point penetration per year. And the same thing happened for personal care on the left hand side with only 1.2% of new innovations can reach one point integration a year. And when we look at the repeated rate, even fewer, of these, innovation can achieve a a good repeat purchase. So it means that while innovation is necessary, it is not, you know, automatically a growth driver for the brand. And in order to have a good innovation, we have to have a clear demand understand a clear demand space and have a strong reason for the client for the consumers to buy and also to come back. So, where should the sustainable growth, actually come from? So what we see very clearly in our data is that about a strong relationship between the performance of the hero skills and also the total brand growth. So this is the the slide talking about the the value growth of the car skills on the horizontal axis and the brand growth on the vertical axis. We see a very strong correlation between the car SKUs and also the total brand. So when the, car SKUs grow, the brand grows. And when the car products decline, the brands decline. And even the new launches cannot fully offset the loss. So this highlights a very important principle. Innovation can support the brand but cannot miss the growth engine and, you know, the car driver of the brand growth. So here's, some examples of the FMCG brands in Vietnam. We do see that the same, pattern repeat, across the car brands. So here we look at Colgate, VINAMIL, Chinsu, OTH brand. So all of these brands are growing well, and they are really demonstrating the the principle that keeping their hero skills relevant. And they just use the innovation to expand, not to replace their car portfolio. Yeah. So, I know that we have to protect the car, but, of course, we need to also innovate. Right? So the big question becomes that how can brands continue to innovate but also ensure that our innovation can contribute to long term growth rather than just, creating noise. So to answer this, we need to go back to consumers and understand why they consume, not just what they consume. So in order to resonate with today's evolving consumers' needs, brands need to identify the demand space that offers the most meaningful and scalable growth opportunities. So this is the example of, beverage, where we do find out the four demand space and brands that clearly define which demand space they want to win are much more likely to succeed with innovation. So here we have four demand space. The one the first one is focused in in field. So these are the moments that, can jump start the energy and keep the consumers alert and productive for all day long. Then we have the indulgence. So these are the moments that consumers can feel relaxed, recharged, and rework, their self. Then we have, the hydrate need. So this is like the the thirst quenching, a very basic, need of hydration from the consumers. And the last one is the healthy moments. Yeah. And here's the case study when we focus on the folk, when we when we zoom into the focus and feel demand our space. And within that, there is a need for a nutritious snack. So, the successful brands move beyond simply saying that this product is healthy, but they also need something fun, something for snack and healthy at the same time. And we do see some example case that can address this need. For example, vanilla milk, high protein, plant milk, or male, soy milk in Korea from Korea. So they both address a real everyday needs. They help bring people to get through a busy day, but at the same time, providing convenient nutrition on the go. So by doing so, they make nutrition more relevant to modern lifestyles and also unlock new growth opportunities. Okay. The last, WH, is about where. So even with the right product and the right proposition, growth can still fail if the channel strategy is not aligned. And we all know that different channels serve different, needs. Shopper goes to mini market, supermarket, traditional, or online for different reasons. And this way this is why we need to have a mission to that channel strategy because it's really important. First one, let's start with a feature of the channel landscape in Vietnam. So, the la on the left hand side is urban four cities, and the right hand side is rural. Here we clearly see, the systemized and also the the convenient channels are continuing to grow. So here we do see mini markets and online shopping are becoming, like, more relevant touch point, especially in urban areas. At the same time, traditional trade is now under pressure, and modern trade for mass, especially Hyper and Super are slowly recovering. This changing channel landscape requires brand, to adapt how they show what in each channel. Another important change is shopping behaviors. Nowadays, shoppers are making fewer trips per year, but they are visiting more different store types. So this means that, with each shopping trip, it becomes more competitive. So if the brand missed this moment, you have to wait long for a second chance for in that channel. So, to win in this changing, channel landscape, brands need to understand the shopping mission. Right? Is the shopper here for a quick top up, or do they want to stock up for the whole household or to browse or discover new products? Each mission would require a different pricing, pack, promotion, and communication, and brands that align with shopping with the right shopping mission are much more likely to be chosen at the point of purchase. Okay. So to summarize everything that we have discussed today, strong brand growth in 2026 onwards will come from four key pillars. First, we need to understand and target the micro consumer cluster precisely. Second, we need to build resonating value proposition that drive real purchase behavior. Third, manage your portfolio with purpose, protecting core products while innovating meaningfully. And the last one, win, with mission led general strategies. So these four pillars would work together, not in isolation. Okay. And that's, the end of our our webinar today. I think we do have some minutes for a short q and a. Okay. The first one, I find this one quite interesting. What should we invest more, car or or innovation? I think I think that's a good question. And, if we link if we link back to, our previous, sharing, we would recommend that branch should not pick one over another. But in the other, then call first, innovation second. What we consistently observe in the data that I just showed you earlier is that when the car skills grow, the brand grows. And when the car skills decline, innovation cannot fully compensate. Right? And core products deliver most of brand penetration. So core needs to be first. And at the same time, innovation would should be used to serve new usage occasions, new target by groups, or new demands, and we need to be selective with innovation. And before launching, coming up with any r and d plan, we need to ask ourselves that what role does this innovation would play in our portfolio? I hope it answers your question. Okay. The second question, your dad talk a lot about resonating value proposition. What does that mean for brand messaging? Okay. Our main point was about delivering the right brand message more clearly, because what we see today is that many brands communicate too many benefits, too much technical details, too much about ingredients, that sounds good, but don't really drive real behavior because real behavior because this doesn't resonate with a consumer's need. So what we want to highlight is that, resonating proposition should address a clear consumer trigger. It should reduce the key barriers and reflect how the products fits in real life. So in the shampoo case that we showed earlier, even though the antiseptant was attractive, but at the same time, it's the product needs to be gentle for everyday health care healthy hair. Right? Because that's the one that drive volume. So the implication for all brands is that we need to start with how consumers would actually use the product, not just what the product can do. Yeah. I think we're running out of time. So if you have any questions, please feel free to, send the questions to our email, account as right on the screen. Thank you for your attendance today. See you at the next webinar of our panel.