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Vietnam Market Watch: Consumer Goods, Farm Exports, and Lagging Internet Speeds - Vietnam Briefing News

Fast Moving Consumer Goods Sector Shows Strong Growth

Vietnam’s fast moving consumer goods (FMCG) sector is showing strong growth despite slowing moderately in the first quarter of the year. Beverages, including beer, accounted for 39 percent of turnover, dominating the sector, followed by milk products at 16 percent, food at 15 percent, tobacco products at 13 percent, personal care items at 8 percent, household products at 6 percent and finally baby products at 4 percent. Statistics show that around 88 percent of Vietnamese customers bought a new item during a shopping trip compared to the other Southeast Asian shoppers at 69 percent.

FMCG is expecting to reach US$173 billion by 2020, up 23.6 percent from the US$140 billion forecast for 2016, fueled by rising incomes and a young consumer base as outlined by the Ministry of Industry and Trade. The General Statistics Office (GSO) has also stated that manufacturing and processing firms remain positive with more than 90 percent of firms expecting to either increase production or remain stable in the second half of the year. In addition, two-third of Vietnam’s population lives in rural areas with household incomes rising faster than urban centers, further expecting to contribute to FMCG growth.

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Farm Exports Continue to Rise

Exports from Vietnam’s agro-forestry-fisheries reached around US$2.5 billion in September. The Ministry of Agriculture and Rural Development stated that agricultural exports in the same period rose 7.2 percent with a value of US$11.1 billion. Coffee showed the highest increase by around 22 percent in value during the same period last year. Around 1.39 million tonnes of coffee, at around US$2.48 billion was shipped to markets abroad between January and September. Following that was pepper at 13.1 percent in value.

Tea and rubber also recovered, earning US$152 million and US$1.1 billion respectively. Rice exports, however dropped 12.5 percent in value equaling US$1.69 billion. The largest country to receive Vietnam’s exported rice was China at 35.5 percent market share, followed by Ghana and Indonesia. In addition, the US, Japan, China and South Korea were the four main importers of the country’s seafood making up 53.7 percent of the total export revenue. The developments bode well, as exports are continued to rise as Vietnam sets to ratify agreements like the TPP.

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Mobile Internet Speeds Still to Catch-Up

In recent reports by Akamai, OpenSignal and Ookla, mobile internet speeds in Vietnam were lowest in the world with average internet speed of 2.6 Mbps and peak speed of 29.7 Mbps in the first quarter. Vietnam was just above countries like Algeria, Ghana, New Caledonia and Venezuela which were at the bottom of the list. The study was done based on the use of smartphones, tablets, personal computer and other devices connected to mobile networks. Vietnam ranks 57th globally. In the Asia Pacific region it ranked 13th out of 15 countries.

Nevertheless, speeds have improved significant from the past year. Another reason some analysts say for the slow speed is that while mobile networks offer 3G service, operators narrow their service in packages once service capacity has been used up, which may influence the average speed. Vietnam has over 30 million 3G subscribers. Recently, two major carriers, Viettel and VinaPhone became licensed to launch 4G services in the country. This is in line with the government’s plan that wants 95 percent of the population to use 3G or 4G services by 2020.


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