Vietnam's middle class set to double
Viet Nam News/Asia News Network
December 30, 2013, 12:01 am TWN
HO CHI MINH CITY -- The middle and affluent class (MAC) in Vietnam will double in size between now and 2020, from 12 million to 33 million consumers, a survey by the Boston Consulting Group (BSG) has found.
Aparna Bharadwaj, project leader at BCG, said MAC consumers in Vietnam, whose monthly income is 15 million dong (US$714), are not just growing in number, but also spreading out to other provinces and cities.
Companies need to increase their distribution systems to other provinces and cities instead of just focusing on big cities like Ha Noi and Ho Chi Minh City, she said.
About 80 percent of MAC consumers regularly shop for groceries in hypermarkets or supermarkets.
But traditional markets and modern trade formats will continue to compete for customers for many years.
These dueling channels will force companies to develop new skills to enable their products to develop in both channels.
With higher incomes, consumers tend to choose higher-value products, which open opportunities for high-end brands, she said.
The survey shows that by 2020, Vietnam's MAC population will be two-thirds the size of Thailand's MAC population. Average per capita income will rise from US$1,400 to US$3,400 a year.
Tuomas Rinne, partner and managing director of BCG, said along with Myanmar, Vietnamese consumers were among the most optimistic in the world, even more than their counterparts in China, India, Indonesia and other fast-growing emerging markets.
More than 90 percent of consumers in Vietnam expect to live better than their parents and expect their children to live better than themselves, he said.
Despite short-term worries about the economy, the majority of polled consumers believe that the situation will be better and 80 percent of them said they want to make more purchases than they did the year before.
The survey pointed out that Vietnamese consumers, of all incomes, enjoy the hunt for deals, discounts and promotions, more so than consumers in Thailand and Myanmar.
In order to project the growth of consumers and their spending in Vietnam, BCG's Centre for Consumer and Customer Insight analyzed population and income trends in nearly 1,400 areas and surveyed 2,000 urban consumers in the country.
BCG is a global management consulting firm and advisor on business strategy. It expanded its presence in Southeast Asia by opening a new office in Ho Chi Minh City last week, its fifth office in Southeast Asia and 79th in the world.