How is the 4th COVID-19 wave impacting consumer spending?

Larger impacted area by the 4th Covid-19 wave could accelerate customer stockpiling at a higher level compared to last year's level. Photo: Quoc Tuan

VDSC expected demand for essential foods, focusing on basic FMCGs and packaged foods would surge in 2H-FY21 amid the strict social distancing under Directive 16.

Increase in essentials spending 

Deloitte’s 2020 survey showed, 84% and 70% of consumers will increase their household spending for fresh foods and packaged foods, respectively in case COVID-19’s wave resurges. VDSC expected these changes in consumer behavior would be even stronger in 2H-FY21 as the 4th COVID-19 wave is more intense and social distancing is stricter than that of the 1st COVID-19 wave. 

Larger impacted area by the 4th COVID-19 wave, spreading in the Southern and Ha Noi, will accelerate customer stockpiling at a higher level compared to last year's level. On the contrary, nearly 40% and at least 69% of consumers will tighten their spending budget for consumer electronics and personal entertainment respectively in case COVID-19’s wave resurges.

Fresh foods and FMCGs stockpiling

Given the application of Directive 16 in Ho Chi Minh City since early July 2021, FMCGs spending value of four key cities in Vietnam has increased dramatically and is reaching the peak of the 1st Covid-19 wave. Noticeably, FMCG spending value in the 4th COVID-19 wave took only one week to nearly reach the 1st wave’s peak as people are limit ed the accessibility to frequently buy FMCGs when traditional markets are closed in the current social distancing period. VDSC forecasted that the current impact of the COVID-19 outbreak would cause a longer social distancing than that of last year, boosting fresh foods and FMCGs stockpiling to the historical level ever in 3Q-FY21.

Spending value share by products lines is showing the same trends with those of the 1st COVID-19 wave. Spending value for packaged foods soared rapidly to break the 1st COVID-19 wave peak. On the contrary, spending on personal care and beverages keeps stable, but spending value shares are declining due to the shift of customer spending priority to more essential products (packaged foods).

Although increasing in the 1st COVID-19 wave, spending value for dairy products is decreasing in the first two weeks of July 2021 due to the shutdown of traditional markets in Ho Chi Minh City, the largest domestic dairy sales channel of dairy companies. However, VDSC expected total dairy spending would not drop dramatically as spending via modern trade channels has strongly increased, contributing over 50% to total dairy spending, to cushion partially the spending drop via traditional markets in four key cities.