What is FMCG? Overview and Trends of the Fast Moving Consumer Goods Industry

Asia accounts for more than 1/3 of total global FMCG sales, led by China, India, Indonesia, Vietnam, Philippines; leading the world in FMCG e-commerce, with the strong development of platforms such as: Tmall, JD, Shopee, Lazada, TikTok Shop. In which, Vietnam is considered a strong growth market in the Southeast Asian region.

This article by Bizzi will provide a comprehensive view of FMCG, from definition, characteristics to trends and opportunities.

What is FMCG? Detailed definition and outstanding features of the industry

FMCG stands for Fast Moving Consumer Goods (Fast Moving Consumer Goods) or also known as: CPG (Consumer Packaged Goods) – Consumer packaged goods.

Features of FMCG products:

• Short product life cycle: Usually measured in days, weeks or months to a year, and needs to be consumed quickly.

• Low cost: Suitable for average income and accessible to most consumers.

• High buyback rate: Consumers shop frequently and consistently.

• Large sales volume: Focus on sales volume rather than individual product profit.

• The profit margin on each product is relatively low, but the cumulative profit is significant. due to large sales volume.

• Are essential goods in people's daily lives.

• Level of competition: The market is large, the distribution system is complex, and consumer tastes are constantly changing.
• High marketing and advertising costs.

What are the FMCG products?

Below is a classification of typical items in the FMCG (Fast-Moving Consumer Goods) industry – helping you easily visualize the scale and diversity of this industry:

• Fast Moving Consumer Goods (FMCG):
  • Food (Edible): Milk and dairy products, nutritional drinks, beverages (alcoholic and non-alcoholic), processed foods, fruits, vegetables, meat, fish, frozen foods, snacks.
  • Non-food: Personal care products (shampoo, toothpaste, shower gel), cigarettes, detergents (dishwashing liquid, laundry detergent), household goods, decorative items.
  • Fast-Moving Consumer Electronics: Phones, headphones, MP3s (classified as FMCG due to rapid replacement cycle).
• Compared to Slow Moving Consumer Goods (SMCG): Products purchased once and used for a long time (e.g. motorbikes, cars, clothing, shoes, luxury goods, household electronics).

Customers and Distribution Systems in the FMCG Industry

Below is a detailed analysis of Customers and distribution systems in the FMCG industry, especially suitable for the Vietnamese market and the Asian region:

• What are the direct customers of FMCG businesses?

It is not the end consumer, but the distribution intermediaries such as Distributors (NPP), agents, and retail outlets (stores, supermarkets, convenience stores, sales booths).

• Distribution system characteristics:
  • Multi-level and widespread distribution network to ensure products reach consumers easily.
  • Main distribution channels:
    • Traditional Channel (GT): Grocery store, market stall.
    • Modern Channel (MT): Supermarket, convenience store, shopping mall.
    • Key Account Channel: School canteens, hospitals, entertainment areas, hotels.
    • Online distribution channel: E-commerce platforms (Shopee, Lazada, Tiki, Sendo), social networks (Facebook, Zalo, Instagram, YouTube), webshop.
    • Omnichannel distribution channel: Distribute both online and offline.
  • Participants: Manufacturer, distributor, final consumer.
  • Typical distribution models: 2 level model, 3 level model.

Trends driving the FMCG market in Vietnam

FMCG brands not only “sell” online, but also use e-commerce as a channel to build brand experiences (shop interface, livestream, exclusive online packaging, etc.). Below are the prominent trends that are driving the FMCG market in Vietnam – compiled from reports by Nielsen, Kantar, Deloitte and market practices:

• Increasing FMCG consumption demand among middle and upper class: Customers are willing to pay for higher-end products, care about quality, brand, beautiful packaging and especially health (safe food, health/beauty care).
• Consumers are more concerned about the environment: Prioritize organic products, locally sourced, plant-based foods (vegetarian, eat clean), boycott products with plastic packaging or animal testing.
• Health becomes an important purchasing criterion: Look for healthier alternatives (low-salt, low-fat, sugar-free products, plant-based milks, naturally raised meats).
• Strong growth of FMCG in rural areas (Rural Urbanization): The number of retail stores and supermarkets increased, and companies focused on meeting the concerns of household customers.
• Declining brand “loyalty”: Small and micro brands gain market share by adapting quickly and capturing trends (e.g. Gen Z limited edition products). The trend of building private brands and D2C (Direct-to-Consumer) models is growing.
• Gradually switch to safe consumption at home: Especially after the COVID-19 pandemic, the trend of cooking at home increased, boosting the demand for packaged products, clean food, dairy products, and essential items.
• Product personalization: Businesses leverage customer data to deliver tailored, diverse, and flexible products and services.
• Innovative Packaging: Attract consumer attention, protect products and reduce waste.
• Brand engagement and connection: Build and maintain customer loyalty through social media and direct interactions.

What are the challenges facing FMCG companies?

The FMCG industry has low barriers to entry, so it is easy for many competitors in the same industry (domestic + international). Brands must compete on price, promotion, market coverage, distribution channels, and even brand. In many segments, consumers easily switch brands and are not loyal if there is no clear difference.

Below are the major challenges that FMCG companies are and will continue to face, especially in the Vietnamese market and the Asian region:

• Fear of shopping outside: Traditional (GT) and modern (MT) channels have not fully recovered after the pandemic due to people's fear, affecting direct consumption.
• Weather effects: Storms and floods can have a major impact on household incomes and retail businesses in some areas.
• Prioritize essential products first: Incomes are gradually recovering but spending is more cautious, focusing on essential products rather than luxuries.
• Fierce competition in product display strategies and promotions.
• Strict in inventory management due to short product life cycle.
• Manage sales team in the market and efficient sales routing.

However, based on analysis data in recent years, it can be seen that consumers are increasingly More trust in domestic brands, especially when the brand:

• Understanding Vietnamese tastes and habits
• Reasonable price
• Focus on quality & innovation

Many Vietnamese brands are examples of successful development in the FMCG sector, such as: Vinamilk, Masan, TH True Milk, Lix, Skinna, Rohto Vietnam...

What skills are needed to work in FMCG?

Working in the FMCG (Fast Moving Consumer Goods) industry requires dynamism, quick adaptation and strategic thinking. Here are the most important skills you need to develop a career in this field:

• Creative: Important factor to continuously innovate products, marketing campaigns, packaging design.
• Good adaptability and quick learning: Quickly grasp changes, market trends and work flexibly.
• Sharp business mind: Understand products, brands, business roadmap; ability to advise and handle customer inquiries; analyze customer insights.
• Understanding brand value: Communicate product benefits and value.
• Management skills: Inventory management, transportation, production planning, projects.
• Marketing and advertising skills: Attract customers, capture the market.
• Communication skills: Interact with colleagues, customers, partners, negotiate.
• Pressure resistance: Faced with fast pace of work and sales pressure.

Types of jobs and career opportunities in the FMCG industry

In the FMCG (Fast Moving Consumer Goods) industry, there are many diverse career opportunities ranging from marketing, sales, manufacturing, supply chain to data analytics and e-commerce. Here is an overview of the common types of jobs and career development opportunities in this field:

• Types of work:
  • Sales Manager: Manage business operations, develop customer base, optimize service/product quality.
  • Brand Manager: Orientation, development and promotion of product brands.
  • Consumer health and safety management: Ensure production processes meet food safety standards, building a friendly and safe brand.
  • Procurement Analyst/Procurement Analyst: Market analysis, purchasing data, business performance control, low cost sourcing while ensuring quality.
  • Digital Marketing Specialist: Promote products, build breakthrough advertising campaigns in the digital age.
  • Other locations: HR, accounting, supply chain management.
• Career opportunities: The industry is diverse, dynamic, encourages creativity and has many opportunities for development and advancement.

What is the distribution channel development strategy and technology solutions for the FMCG industry?

Distribution channel development strategy and application of technology solutions are factors. survival in the FMCG industry – where competition is fierce, demand is constantly changing and the turnover of goods is extremely fast. Below is a detailed analysis of:

Developing multi-channel distribution (Omnichannel)

FMCG uses multi-channel distribution system to ensure product wide coverage, reach consumers quickly, at the right time, at the right price.

Connect directly with agents/points of sale:

• Businesses are paying more attention to retail outlets and end consumers for accurate information and efficient production planning.
• Build close relationships with points of sale, upgrade to loyal customers.
• Use technology platforms to connect online, reduce intermediaries, and streamline the sales process.

Applying technology solutions in optimizing operations and management

FMCG is currently undergoing a strong digital transformation to increase operational speed, control costs and enhance the buyer-seller experience. The ERP system integrated with DMS is considered a growth-promoting solution for the FMCG industry with its characteristics of fast consumption, multi-layered distribution network, high order frequency, and dense promotion/reward programs. 

Among the popular technology applications on the market today, Bizzi is an automated electronic invoice processing platform, very suitable for FMCG businesses with a large volume of input invoices each month from hundreds of suppliers, distributors, factories... Bizzi application is a smart solution to help managers control overall, unify data from the point of sale to the purchasing - accounting department.

Suppose an FMCG company has a network of 300+ agents and 50+ raw material suppliers. Before using Bizzi, invoice consolidation and manual reconciliation took 5-7 days/month. After implementing Bizzi, all invoices are automated - reduced to only 1-2 days, and data is also ready to export to accounting files or serve audits immediately.

So, what are the outstanding features of Bizzi in managing FMCG businesses?

• Auto load bill origin from tax portal or supplier email
• Automatically extract data from PDF/XML invoices
• Smart comparison between invoice, contract, warehouse receipt
• Direct connection to ERP software (SAP, Oracle, MISA, Bravo…)
• Export accounting and auditing reports quickly and accurately
  

What are the benefits of applying technology solutions like Bizzi to business operations in general and in the FMCG sector?

• Save time processing invoices up to 80%
• Reduce the risk of errors and fraud in input invoices
• Standardize accounting processes, especially when there are many branches and agents.
• Increase accounting department productivity, reduce personnel costs
  

Conclude

Understanding the nature and characteristics of the FMCG industry is the first step to help businesses build a foundation for long-term development. Although the FMCG market has great potential, it requires businesses to constantly innovate, optimize costs, improve data capacity and respond quickly to the market. 

It can be seen that the trend: “Local brand – global mindset” is the path to sustainable development for many Vietnamese enterprises. Brands that understand consumers well – control distribution channels well – effectively combine online and offline will have the advantage.

In general, taking advantage of the development of AI and applying technology software will contribute to creating a connection between market data - operations - finance, tracking sales performance and profits by region, increasing transparency, eliminating manual operations, and being suitable for the characteristics of the FMCG industry. Technology solutions such as Bizzi are an indispensable part to help FMCG businesses optimize operations, improve efficiency and adapt to market trends.

If your business is looking to learn about software or wants to design based on your needs, contact us for immediate consultation:

• Schedule a demo: https://bizzi.vn/dat-lich-demo/
• Link to register for a trial of Bizzi products: https://bizzi.vn/dang-ky-dung-thu/