Dec 17, 2013. The middle and affluent class (MAC) in Viet Nam will double in size between 2014 and 2020, from 12 million to 33 million. MAC consumers, whose income is from VND15 million (US$714) or more a month, are also spreading out to other provinces and cities.
By 2020, Vietnam’s average per capita income will rise from $1,400 to $3,400 a year.
The Boston Consutlting Group (BCG) Center for Consumer and Customer Insight (CCCI) recently surveyed more than 3,000 urban consumers in Vietnam and Myanmar. The analysis provides a granular forecast of consumption, by product category, in both countries.
By combining consumer research with income forecasts, the CCCI study provides a perspective into where companies should target their efforts based on their product portfolio and how quickly those markets will develop. This analysis affords a more nuanced view of consumers and consumption than traditional consumer research. For example, many models set an arbitrary floor for the consuming segment that is adjusted by country based on cost of living or purchasing-power parity. The CCCI methodology, in contrast, sets the income floor on the basis of when actual spending starts to take off for a wide array of goods and services.
By 2020, Vietnam’s MAC population will be two-thirds the size of Thailand’s MAC population. Average per capita income will rise from about $1,400 to $3,400 per year. It’s no wonder McDonald’s announced recently that it would join KFC, Starbucks, Pizza Hut, and Burger King in opening stores in Vietnam.
But between now and 2020, several sizable groupings of MAC consumers will crop up along the 1,200-kilometer-long spine that connects these provinces, the country’s largest. As a result, Ho Chi Minh and Hanoi provinces will account for only about one-third of MAC consumers by 2020, and a company will need to have a presence in nearly twice as many locations as it does today to achieve comparable coverage. (See Exhibit 3.)
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.
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 Viet Nam, BCG’s Centre for Consumer and Customer Insight analysed population and income trends in nearly 1,400 areas and surveyed 2,000 urban consumers in the country.
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Vietnam and Myanmar: Southeast Asia’s New Growth Frontiers, Boston Consulting Group, Dec 17, 2013