VIETNAM FOCUS: Nielsen Vietnam's Darin Williams offers insight into the market

Campaign: What is the general sentiment among Vietnamese consumers at the start of the new decade?

DW: Vietnamese consumers are generally optimistic, but are less so compared to a year ago, mainly due to fears of inflation and resultant price rises in foodstuff and petrol. Having said that, consumers have more disposable income compared to a year ago. They are increasingly becoming more sophisticated in their needs and are willing to spend disposable income on more differentiated product categories such as health and beauty and consumer electronics. In fact, Vietnamese are number one in Asia in terms of propensity to spend disposable income on consumer electronics.  

Campaign: What are some of the opportunities that Vietnam as a country can offer to brands intending to set up their operations?

DW: As a rapidly emerging economy, Vietnam is one of the most compelling markets for brands looking to make inroads into a relatively 'virgin' territory.  A stable political environment and 85 million people with increasingly more income to spend on discretionary products, particularly in the major cities, are just two key attractions.

Outside the major cities, the secondary cities are also growing and in the rural areas, where 70 per cent of Vietnamese live, consumption is growing rapidly. Additionally, the modern retail trade continues to develop and as such this channel can be a very good way to achieve larger-scale distribution for a new brand that has big ambitions in Vietnam.

Campaign: What kind of investment is being put in place by the government to enable it to attract businesses?

DW: Infrastructure is often cited by business leaders as a critical area the government needs to work on, particularly stable power and water supplies. To this end, the government has programmes in place to address these issues.  While these programmes, some of which have longer term impact, continue to gain good traction, the full benefits will become more apparent over time.  

Campaign: What are some of the challenges commonly faced by brands in Vietnam?

DW: Gaining and maintaining sufficient distribution beyond the key six cities can be a problem as there tends to be a great deal of smaller store churn outside the major metropolitan areas.

Another regional issue would be employing geographically-differentiated marketing strategies. For example, Hanoians tend to take longer to become comfortable with a brand, but when they do, they tend to be that brand’s most loyal customers.

Brand owners need to be more patient here, as the payoff may not be immediate. In contrast, there tends to be less brand loyalty here compared to Hanoi. We see more brand trials as consumers are generally more willing to shop around and try new things. While you may get more trials of your brand in Ho Chi Minh City, these may not necessarily lead to repeat purchases. So, understanding consumers’ shopping habits across the country is a key to success.       

Campaign: How do you view Vietnam with respect to other countries in SEA?

DW: Vietnam compares very favourably to its neighbours in Southeast Asia, and in certain areas has exceeded them. For example, it led Southeast Asia countries in terms of FMCG growth, with a sizzling 26 per cent increase in Q3 2010, and doubling the growth rate in Indonesia.  

The country is relatively stable, with few political or cultural clashes, and the environment is set up for businesses to grow and for Vietnamese to prosper (through employment opportunities). Vietnam has been a lower labour cost market within Asia but wages are rising quickly and this advantage will likely wane over the next few years. Vietnam is also just beginning to accelerate its domestic demand, and in this sense it has lagged behind some of its Southeast Asia neighbours. Given the level of investments from both foreign and domestic companies, we should see a significant increase in domestic demand for most goods and services going forwards.