Vietnam market background – a few stats

June 2012 – Vietnam is a pretty crowded place! It has a population of more than 91 million people with a growth rate just over 1% per annum and a projected official population of 100 million by 2025.

Reporting their first half results for 2012, APB’s chief executive Roland Pirmez said that “The key drivers of business are population, GDP and urbanisation.”

Vietnam, where APB earns nearly half of its profits, certainly seems to fit the bill. 

Very Young, Large & Growing Population

  • >91 million consumers
  • population growth >1% p.a. to achieve an estimated 100 million by 2025
  • median age in Vietnam 27.8 years, vs. 35.5 years in China 
  • 70% population <40 years old
  • 31 million people between the ages 20-40
  • 35% of population <20 years old 
  • one million turning 18 every year

Fast growing wealth and disposable incomes.

  • Vietnam has one of the world’s fastest growing economies with GDP growth averaging 7% from 2002 – 2011.
  • According to the World Bank, per capita GDP doubled in the six years from 2005 – 2010.

However, the global recession has hurt Vietnam’s export-oriented economy, with GDP in 2009-11 growing less than the 7% per annum average. Looking towards recovery, in 2010, year-on-year exports increased by more than 25% and by more than 33% in 2011.

Source: CIA World Factbook

Real private consumption growth has been rising steadily in Vietnam and has been supported by rising employment, growing real incomes and a rising tide of foreign worker remittances.

As a result, national retail sales growth has recently accelerated rapidly, and is today worth almost US100 billion.

Source - Vietnam General Statistics Office (GSO)

Note however, that the recent growth rates are somewhat exaggerated due to the effects of inflation. At an extreme case, if price increases are included, the growth for 2011 would represent only 4.7%, representing the lowest growth rate in the past four years, according to the GSO.

Despite its recent relegations on their annual “Most Attractive Emerging Market Retail Destinations” report, AT Kearney still appear to have a certain confidence for Vietnam, recently estimating that the country’s total retail revenue will increase by 23% per annum until 2014.

Unequal regional development

Economic growth in Vietnam is uneven between regions, leading to large-scale rural-urban migration.

Unequal regional development means that the consumer markets in major cities such as Hanoi and Ho Chi Minh City are the largest and fastest growing due to their higher disposable incomes and lower unemployment as compared to the national average.

Currently, only about 30% of the population live in urban areas and yet they account for more than 50% of FMCG sales.

Nevertheless, capturing share in the rural market is increasingly being viewed as essential for business growth.

Highly connected by mobile phones

The type of phone that you use in Vietnam has a lot to say about your social aspirations.  It’s one of our “three needs” (high visibility, high risk, status items),  along with the motorbike that you drive and the beer that you drink.

According to the CIA “World Factbook”, Vietnam was estimated to have 154 million mobile (cellular) phone subscribers in 2010. This put them at seventh place globally and notably, one place ahead of Japan which has a population almost 40% larger.

Source: United Nations Statistics Division

Also in 2010, they had 98 million mobile phones, which put them in tenth place globally.

Source: http://www.indexmundi.com/g/r.aspx?c=vm&v=105

One implication of these numbers is that some people have more than one phone and certainly more than one subscription.
An opportunity or a challenge for marketers?

Highly connected by the internet:

According to http://www.internetworldstats.com/top20.htm Vietnam had 30 million internet users, Q1 2012. This put them in 18th place globally and 6th in Asia.

Source: United Nations Statistics Division

Summary:

Vietnam is changing fast!

Its economy has suffered recently as a result of the GFC but the social and economic changes resulting from the rapid growth in wealth, over the last two decades, have fundamentally altered the expectations and aspirations of the Vietnamese.

In a country where until relatively recently uniformity ruled and it was frowned upon to overtly display wealth, products that reflect wealth and status are becoming ever more popular.

This “Vietnam market background” is our first in a series of articles about Vietnam and its beverage industry.  We look forward to sharing more with you in the near future.

For any additional information, please feel free to contact us directly.

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