“Consumer Staples Giants” Vinamilk and Masan Are Poised to Sustain Growth Momentum in the Latter Half of the Year

According to Kantar Worldpanel, most essential consumer goods sectors witnessed negative growth in the first half of 2024 due to stagnant consumer sentiment.

However, Rồng Việt Securities (VDSC) assessed that the giants in Vietnam’s essential consumer goods industry still achieved逆 market growth in revenue. Typically, Vinamilk (code: VNM) recorded a 5.7% growth compared to the same period, and Masan Consumer Holdings (code: MCH) grew by 11.6% year-on-year. This is attributed to their effective advertising strategies and intensified promotions at agencies, as well as expanded coverage, thereby supporting the market share of essential goods both domestically and overseas.

Specifically, for VNM, the strategy of “renewing packaging” & “conducting multiple advertising campaigns” since the end of 2023 has paid off in the first half of 2024. VNM also ramped up promotions at retail outlets and agencies to enhance competitiveness and contribute to market share growth.

Regarding MCH, the company succeeded in attracting more customers, equivalent to a higher penetration rate among the population related to the use of Masan products, thanks to the wider coverage of the Winmart system and some positive sales policies (more marketing/promotion budgets) that MSN implemented to stimulate inventory at each sales point.

According to VDSC statistics, the ratio of Selling expenses and Management expenses/Net revenue of these two companies has increased in the past few quarters.

Sustaining growth but lacking breakthrough

Assessing the outlook for the second half, VDSC believes that the giants in the essential goods industry are in a favorable position to maintain their growth momentum.

According to the VDSC analysis team, domestic consumption will improve compared to the same period thanks to the salary reform policy and the lag effect of monetary policy. In addition, the good recovery in production and import-export activities in the first half of the year has boosted confidence in consumption in the latter half of 2024.

According to the Resolution of the 7th Session, the National Assembly officially approved an increase in the basic salary level from VND 1.8 million/month to VND 2.34 million/month (up 30%) from July 1, 2024. The budget scale for the salary reform program in 2024 is estimated at about 1.2% of total retail sales of goods and services and 0.7% of current GDP in 2023.

Although the interest rate floor has crept up again, the average lending interest rate will still be lower than the same period last year in the second half of 2024. Therefore, consumption and consumer credit can still benefit somewhat from this factor.

“However, it should be noted that overall consumption in the latter part of the year still faces bottlenecks that hinder high growth. Typically, weak purchasing power in major markets (US, Europe) directly affects the industrial production of FDI enterprises, thereby affecting jobs and incomes. On the other hand, the stagnant real estate market also hinders consumption,” the report also stated.

In conclusion, VDSC assessed that the domestic revenue growth of giants like VNM and MSN would generally struggle to achieve a breakthrough (double-digit) level.