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Vietnamese using more premium products as incomes rise

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With significantly improved income, Vietnamese consumers are not only buying more goods, but also spending more money on premium products.

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Vietnamese are using more premium products


Premium products have selling prices at least 20 percent higher than other products of the same kinds in the market.

The Vietnam Consumer Confidence Index released by Nielsen, a market analysis firm, has been increasing since 2012, reaching 117 in the second quarter of 2017. This is a record high and puts Vietnam among the five countries with the highest indexes in the world.

A report, also by Nielsen, in late 2016 showed that Vietnam had the highest percentage of consumers in South East Asia who believe their personal financial situation will improve in the future (81 percent). 

Vietnam’s GDP growth rate has been one of the highest in the world for many years. Vietnam ranked fourth among 15 countries with high population in terms of GDP per capita, at 10 percent per annum, in 2007-2016.

Nielsen found that from September 2014 – September 2016, the high-end FMCG (fast moving consumer goods) market segment grew rapidly in both urban and rural areas with growth rates of 37-42 percent in HCM City, Hanoi, Da Nang, Can Tho, Hai Phong and Nha Trang.

The beer market is a typical example. According to Heineken Vietnam, the high-end market segment expanded from 16 percent in 2011 to 21 percent in 2015, while the market segment for low or mid end consumers fell from 14 percent in 2011 to 8 percent in 2015. 

This explains why premium and affordable premium product lines such as Saigon Special and Tiger gained satisfactory growth rates in recent years.

The trend can also be seen in other industries. The 2016 report by Nielsen showed that 40 percent of polled consumers said they planned to buy more luxury electronics, cosmetics, clothes, meat and seafood, while 30 percent targeted high-end dairy products, hair care and entertainment products.

Meanwhile, Michael Kokalari, chief economist of VinaCapital, said at an event held by LBC (Leading Bussiness Club) in HCM City, that the Vietnamese middle class, which accounts for 20 percent and will be one-third of the total population in 3-4 years, is a ‘gold mine’ for goods and service manufacturers and suppliers.

Regarding Vietnam’s economic growth, the economist predicted that GDP growth rate would be 6.6 percent in 2018.

Vietnam is expected to achieve GDP growth of 6.81 percent in 2017, surpassing the Government’s target of 6.7 percent.


Source:  VietNamNet

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