HO CHI MINH CITY: Consumers in Vietnam and Myanmar are among the most optimistic in the world while a fast-growing middle and affluent class in both countries offers openings for brands to increase consumption and encourage trading up, a new report has said. Vietnam and Myanmar: Southeast Asia's New Growth Frontiers
, from Boston Consulting Group, examined the social and economic developments that are making this part of Southeast Asia an increasingly attractive proposition for brands.
Consumers in both countries were overwhelmingly confident that not only would they have a better life than their parents had (96% in Myanmar and 92% in Vietnam), but also that their children's lives would be better than their own (95% and 93% respectively).
Comparable figures for other countries in the region were rather lower – 78% and 69% in China, for example, and 58% and 60% in neighbouring Thailand.
More pertinently, purchasing power is increasing, as the report saw the middle and affluent class (MAC) almost trebling in Vietnam between 2012 and 2020, from 12m to 33m. The change was less dramatic in Mynamar's case but MAC numbers were still expected to double from 5m to 10m.
"Companies that invest in Vietnam and Myanmar now have an opportunity to build businesses, brands, and momentum early in the development of these formerly closed economies," Douglas Jackson, a BCG partner and co-author of the report, told CFO Innovation Asia
BCG's Center for Consumer and Customer Insight (CCCI) also surveyed more than 3,000 urban consumers in Vietnam and Myanmar to develop an understanding of channel preferences, attitudes, and behaviours. Combining these with income forecasts, CCCI created a series of consumption curves showing the income levels at which purchasing takes off for individual products.
Thus, the average per capita monthly income in Vietnam in 2012 was $110, but CCCI identified an income of $190 as the point at which spending on items such as soap, shampoo, detergents and soft drinks would begin to move sharply upwards.
In Mynamar the average monthly income was $64 with an income of $120 seen as the tipping point for consumption.
BCG's research also found that while Vietnamese consumers were open to buying on credit – 43% would do so for essential items – just 5% owned a credit card. This may also have been a factor in the low prevalence of online shopping. Just 16% of MAC consumers shopped online although 43% of the population were active internet users.
"If Vietnam is a here-and-now opportunity, Myanmar is a more long-term play," said Tuomas Rinne, BCG partner and co-author of the report.
"The market is still developing, so there is time to learn and be focused in your strategy," he added.
Data sourced from BCG, CFO Innovation Asia; additional content by Warc staff