VDSC confident about growth in F&B industry

Despite experiencing the effects of Covid-19, fast-moving consumer goods (FMCG) manufacturers still posted handy growth last year.

Viet Dragon Securities (VDSC) has forecast that growth in the revenues of FMCG producers will peak in the third quarter of 2022 thanks to outdoor entertainment, restaurants, and tourism reopening since the beginning of the year.

According to Kantar World Panel, in the fourth quarter of 2021, total consumption growth in FMCG in both urban and rural areas of Vietnam was 3.9 per cent and 5.2 per cent, respectively, compared to 3.5 per cent in Thailand.

BMI, meanwhile, expects that total spending of Vietnamese households will see an uptrend in the 2022-2025 period. Additionally, thanks to lower prices compared to imports, domestic suppliers of FMCG such as MSN, KDC, DBC, and Nova Consumer will be among those to profit the most as consumption increases.

FMCG suppliers posted growth in revenue and profit last year despite Covid-19. Sales growth is therefore expected to reach a new high this year before normalizing in 2023. Those with diverse product portfolios in major FMCG categories, like MSN and KDC, will see more spending from consumers.

Nevertheless, input costs are rising, caused by disruptions to global supply chains and the Russia - Ukraine conflict, which is putting pressure on the profits of FMCG manufacturers. Although the Ministry of Industry and Trade (MoIT) has allowed them to raise prices, this cannot fully compensate for surging input costs. Net profit may post lower growth than revenue for 2022.

However, VDSC expects that companies with a closed value chain and a diverse product portfolio will easily mitigate the negative impact of cost spikes. With stronger revenue growth and economies of scale at FMCG giants, profit growth is more than likely for 2022.