Fast-moving consumer goods prices on the rise

The average prices of FMCG increased by 4.4% year-on-year, with those of food (+7.6%), beer (7.3%) and dairy products (+4.9%) going up the most.

Retailers and supermarket chains were asked by suppliers to hike prices, citing more expensive manufacturing costs and electricity and gas prices, the report said.

But falling demand meant steadily declining revenue growth for the industry.

"Consumption of most FMCG, except beverages and cigarettes, decreased in the first eight months of 2023," Dzung Nguyen, Nielsen IQ’s executive director of retail measurement services, said at the "Vietnam Business Outlook 2024" conference.

"Any growth in the industry only came from price hikes."

According to the study, in response to price hikes, 33% of consumers decided to buy less, 21% looked for cheaper brands, 16% bought bigger packs to save more, 16% took advantage of promotions, and 10% chose not to buy at all.

Among the 26,214 brands in Vietnam tracked by the market research firm, 60% suffered from negative growth after hiking prices.

"When businesses raise prices, they find out customers are not as loyal as they think," Dzung said.

Data from the General Statistics Office of Vietnam shows the consumer price index jumped by 3.59% year-on-year in October while core inflation rose at even faster 4.38%.

Bui Duy Khanh, director of capital market services at HSBC Vietnam, believed the inflation, while still manageable, was alarming.

"Recently inflation has been on the rise due to food and oil prices increasing. The target inflation rate of 4.5% for this year is achievable, but not without pressure."

He noted that businesses are likely to face challenges, the biggest being cost management.