1. CATERING TO THE NEW ECONOMIC POWERHOUSE IN VIETNAM – MILLENNIALS
Vietnam’s Millennials are changing the landscape of consumerism. These 18-35 year old’s exhibit
different purchase behavior and require different marketing strategies to harness their interest in
your products and services and above all their ever growing disposable incomes.
FMCG growth
2018 witnessed the first year in over 25 years that Fast Moving Consumer Goods (FMCG) volumes
experienced decline in urban Vietnam, at 0.1 percent negative growth and only a mild 2.4% value
growth, driven mostly by Inflation. FMCG growth in Rural Vietnam was more positive with a 5.5% value
growth and 3.2% volume growth.
FMCG VALUE & VOLUME GROWTH %
Kantar WorldPanel – January-November 2018
However, FMCG marketers need not panic just yet, as there are several growing trends which shed a
healthier picture in the FMCG Millennial market.
FMCG purchases are typically measured by what is purchased and consumed inside the home and does
not include out of home consumption, where Millennials are flexing their economic muscle.
Infocus Mekong Research’s 2019 Consumer Confidence Index is still very positive at 91 points out of an
index on 120 points, only 1 point below 2018, meaning that consumers are still upbeat and willing to
spend, but are spending their hard earned Dong differently than their non Millennial contemporaries.
Millennial consumers shop very differently and look more for Brand experience than other consumers
and place a high value on the entire experience and convenience of spending money, than non-
millennials, whose key focus has been on best vale for money and bands that are “good enough”.
What is a millennial?
Millennials, also known as Generation Y or the Net Generation, are the demographic cohort that directly
follows Generation X, consisting of individuals born between 1982 and 2004. Millennials grew up in an
electronics-filled and increasingly online and socially-networked world. They are the generation that has
received the most marketing attention. Having been raised under the mantra "follow your dreams" and
being told they were special, they tend to be confident.
2. In Vietnam, though similar to Global Millennials, they are typically younger and defined by Vietnam’s
turbulent history and the arrival of the internet and mass media. Thus, a typical Millennial in Vietnam
was born ten years after the Reunification of Vietnam and defined by the arrival of the internet in
December of 1997, making Vietnam’s Millennials aged 18 to 35 years of age, but with very similar traits
as their Global brethren.
Prevailing Trends
The major difference between millennials and older consumers can best be summed up as; Consumers
who care more about personalization of goods and services, with a keen eye on brand experience and
enhancement, convenience and health who are all digital natives and are much more brand astute and
savvy than older consumers.
Millennials almost always research their purchases on-line before any purchase. They compare, research
on-line, visits stores, to try, then ultimately buy on-line to save money and gain convenience.
These consumers enjoy and want their freedom and independence, and hence tend to go out much
more in terms of dining and eating out, stepping out of the yoke of parental control. This is partially
what is driving the reduction of FMCG in-home volume consumption, as they buy less to consume at
home and more as they are on the go. Just visit any of Vietnam’s coffee shops, fast food outlets and
convenience stores, to see the high volume traffic. Circle K, as way of example experienced double digit
growth in 2018, and outlets such as Jollibee are also seeing phenomenal growth due to this trend of out
of home consumption.
Millennials are the drivers of everything Digital. 90% own a smartphone and over 60% own laptops,
desktops, tablets and even smart watches. 78% made at least one purchase on-line in the last 30 days,
highlighting a mega Millennial trend, on-line shopping. Most on-line platforms are thriving in terms of
growth, but still hindered by supply chain issues and the limited use of electronic payment, but growth
for some is in the triple digits. This further adds to the reduction of the traditional FMCG market growth
as digital purchases are impacting both Modern trade and Traditional trade growth. Ironically, of the US
$3 Billion plus e-commerce market, some categories are already outselling modern and traditional
trade.
ON-LINE VS OFF-LINE CATEGORIES PENETRATION
IFM Market Place Survey
3. Banks and insurance companies in Vietnam have realized this digital trend explosion and are all offering
Omni-Channel payment and purchase options, further catering to these tech savvy consumers.
In terms of product and service brand selection, Millennials choose brands and services that offer;
personalization, such as being able to design your own running shoes, Apps, which you can program
with your preferred content and all must offer, convenience, such as free delivery, have a health
platform and are eco-friendly. These are the new parameters of Brand selection and should evolve even
further in the next few years.
Another key trend is switching from local Vietnamese brands to International brands. This especially
holds true for the Food and Beverage Categories, due to recent food safety and hygiene issues of some
local brands. This is further exacerbated by the perception that Vietnamese brands should be cheaper to
produce, creating the perception that Vietnamese brands should be cheaper than International brands
and hence consumers select International brands, as they are perceived to have better quality and
assurances, even at a slightly higher price.
FMCG Company tactics and strategies
Many FMCG companies have been quick to realize these changes. Nowhere can this been seen more
prominently than the growth of digital advertising spend, which in a short 5 years has growth from
about US $30 Million to an estimated US $300 Million in 2018. Though only accounting for some 17% of
total advertising spend, it does bare witness that FMCG’s are fishing where the fish are, on-line.
Almost all major FMCG’s advertise on Facebook, Google and even have their own fan pages and blogs
for consumers to add and share experiences. This is one area where proper targeting and knowing
exactly who your Millennial digital native is, becomes crucial, to ensure you are measuring the impact of
your digital campaigns to better understand your R.o.I, which Infocus can help with via our partner
Miaozhen systems.
Many FMCG’s have embraced gaming to bring their messages to these young consumers. As all are
digital and grew up with Gaming, many companies are attracting consumers by gamifying their
messages to generate brand awareness and consideration.
As Vietnam’s tech boom continues, many companies are reaching consumer with Digital promotions,
using QR codes to deliver discounts and vouchers to drive business. This again allows for immediate
access and reduces cost, as paper and procedures are minimalized.
Vietnam has become the land of Apps. There are over 4,000 apps available daily to download. Apps
allow FMCG’s the power of gaining invaluable information about their consumers, while driving their
communications and allowing to better target their consumers with algorithm preferences, making
consumer choice so much easier.
FMCG’s are also embracing Market place platforms, such as Shopee, Sendo and Lazada. These market
places offer free delivery and ultimately convenience, further driving sales and reducing reliance on
store presence, which is becoming more and more cost prohibitive.
4. The usage of Social media has skyrocketed, from the obvious (Facebook, Google, Zalo, etc) to the new,
Instagram, Viber, Facetime. FMCG’s are placing themselves at the forefront of where Millennials spend
most of their time, on-line and via their smartphones. This allows for continuous brand building in an
ever more fragmented media market.
Finally, many FMCG’s have brought technology to the retail environment, where smartphone targeted
ad campaigns tell a consumer where the best deals are and what discounts can be had.
Considering that smart technology has only been in Vietnam for 7 years or so, it is amazing how fast the
digital advertising age has transformed the FMCG landscape and will continue to do so.
Winning Millennials
So, to ensure the continued growth of FMCG from Millennials, it is critical to offer; a strong on-line
presence, Apps, gamification, smart tech retail messaging, on-line promotions, and most importantly
content and products or services which meet these consumers expectations which are; personalization,
convenience, a healthy platform, eco-friendliness and a sense of belonging and an ability to share.
If these can be achieved, the last challenge for success is to ensure you know how to specifically target
these millennials, which is all about; knowing your target audience and their preferred medial channels
and which categories they prefer for which media channels, and what time to engage them.
Ralf Matthaes
Founder / Managing Director
Infocus Mekong Research
