Following our opening piece on Vietnam's macroeconomic outlook, this is the second article in our short series on Emerging Vietnam 2026, covering the Vietnamese consumer sector, based on a panel on the future of modern retail, a separate sharing session by HSC, and separate meetings with several of our portfolio companies at the conference.
The main discussion was moderated by HSC's Head of Consumer Research, Tran Huong My, with panelists from Nielsen IQ (NIQ) and our portfolio companies Masan Group (MSN) and Phu Nhuan Jewelry (PNJ). The consensus was that Vietnam's retail sales are growing at a healthy pace overall, but that growth is increasingly uneven: consumers are spending more on discretionary categories while becoming more careful in daily expenses.
Previously, in our VAD 2026 note in March, we described the sector entering a more resilient phase. Insights from the Emerging Vietnam conference add sharper detail to that view, and show how the parallel push to formalize Vietnam's retail sector is increasingly showing up in enforcement numbers, not only in new rules.
Vietnam's retail sales of goods and services grew 11.2% year-over-year (YoY) in the first five months of 2026 (5M26), but only about 6.1% after adjusting for inflation (National Statistics Office). On the panel, Nielsen IQ broke this figure down further. Fast-moving consumer goods (FMCG), the everyday grocery staples that make up the bulk of household spending, grew only 4.3% over the same period, with price increases accounting for 3.6 percentage points of that growth. Real volume growth in FMCG was close to flat, at around 1%. On the other hand, electronics and jewelry both posted growth of 20% to 50%, again driven mostly by higher prices per purchase rather than more units sold. This split in growth figures shows that Vietnamese consumers are not buying much more in the grocery aisle this year, but they are paying up in mom-essential categories associated with personal identity, well-being, and long-term value.
A negligible growth rate in consumer staples retail beneath a strong overall figure suggests that day-to-day purchasing power of households remains constrained, and that there is much room for domestic consumption, one of Vietnam's central economic drivers, to expand further. This distinction also matters for consumer companies because these trends carry different risk profiles. Revenue growth led by price can compress quickly if input costs ease or competitors offer discounts, while volume-driven growth reflects real demand that is harder to reverse. For the portfolio companies we discuss later in this article, distinguishing which of the two is driving earnings affects how durable that growth is likely to be.
In meetings with company management on the sidelines of the conference, several of our portfolio companies described a similar pattern from their own numbers, highlighting stronger growth in premium products than in everyday staples.
Phu Nhuan Jewelry (PNJ) offered the clearest example. On the panel, PNJ's Chief Marketing Officer described jewelry as less of a discretionary purchase and more a "spiritual necessity." This is tied to milestones such as weddings and family gifts, a type of spending Vietnamese consumers tend to protect even while cutting back elsewhere. PNJ management guided for profit growth of at least 30% YoY in the second quarter of 2026 (Q2/2026), even with retail sales expected to stay roughly flat, helped by lower marketing costs after heavier promotional spending in 2025. Even as demand for 24-karat gold jewelry softened in April and May on falling gold prices, the company reported sustained demand from VIP and affluent customers through the first half of the year.
At the same time, Mobile World Corporation (MWG)'s consumer electronics chain, Dien May Xanh (DMX), continues to benefit from device replacement and premium upgrades ahead of the next iPhone launch cycle. DMX management said higher average selling prices, rather than higher unit sales, are driving both revenue and profit growth, helped by a buy-now-pay-later financing model the company has built with partners over nearly a decade.
Even in a much lower price category, Masan Group (MSN)'s branded food and beverage arm, Masan Consumer (MCH), showed a similar split within a single product line. MCH management said its premium instant noodle brand, Omachi, continues to grow at double-digit rates and carries a gross margin above 50%, among the highest in the category globally. Its mass-market brand, Kokomi, by contrast, is being positioned to defend market share rather than drive growth. Management said heavy discounting is not its preferred way to grow, since it can delay purchases and weaken brand value over time.
On the other side of the divide, Nielsen IQ's data presented at the panel showed consumers managing essential spending carefully rather than cutting it outright. More than half of surveyed households have reduced spending on eating out in favor of cooking at home, and many are buying larger pack sizes or shifting to cheaper alternatives within the same product category rather than buying less overall.
Our holding FPT Retail (FRT) experienced this trend at select stores within its Long Chau pharmacy chain, where customers are trading down to lower-priced alternatives rather than buying fewer healthcare products. We expect this to be a short-term shift given broader caution around essential spending, but it offers an important lens for reading demand data across the market: a lower average selling price is not the same as a smaller customer base. For a business built on volume and reach, such as Long Chau's long-term target of more than 3,000 stores, keeping the customer relationship intact matters more than near-term earnings.
In a sector-specific presentation, HSC Research's Tran Huong My reviewed how Vietnam's retail formalization efforts are now showing up in enforcement data. She cited a nationwide crackdown on counterfeit and unregistered goods, launched under Dispatch 38/CD-TTg in May 2026, which recorded more than 44,000 cases and over 1,500 criminal cases between January and April, alongside more than 2,000 e-commerce store shutdowns in a three-week span that same month. Separately, panelists noted that the count of traditional retail stores, the small, often unregistered shops that still account for most of Vietnam's grocery sales, has fallen from about 1.4 million to close to 1.2 million.
Modern trade and e-commerce still make up only around 14% of grocery retail, per HSC Research, against roughly a third of Vietnam's overall retail sales, leaving considerable room to grow before the market resembles more developed regional peers. HSC named four direct beneficiaries of this shift, and all four sit within our own portfolio: WinCommerce under MSN, Bach Hoa Xanh under MWG, Long Chau under FRT, and PNJ.
Each of these companies is capturing this shift differently. Bach Hoa Xanh posted sales growth of about 34% in Q1/2026, well ahead of the roughly 15% growth for modern trade overall and just 1% for the broader grocery market, helped in part by rising oil prices pushing more shoppers away from traditional wet markets. WinCommerce is approaching the same shift from the value end: its CFO told the panel that around three-quarters of new stores are opening in rural areas at 10% to 20% of urban rents, and HSC Research estimates the company will open 1,000 new stores in 2026, up from 763 in 2025. Long Chau continues to expand beyond a pharmacy model into vaccination centers and digital services, deepening customer touchpoints and relationships. PNJ is targeting more stores in smaller cities, with its Chief Marketing Officer noting that the arrival of premium brands like Starbucks signals rising local demand. Even with different approaches, these companies are converting the same regulatory tailwind into competitive advantages to gain market share from traditional retailers across the country.
Vietnam's consumer market may remain subdued in the near term, given elevated living costs and caution about daily spending, but the underlying demand backdrop is improving. As employment and incomes continue to rise, Vietnamese consumers will likely become more demanding, turning increasingly to brands they trust for authentic products and a consistent customer experience rather than choosing on price alone. PNJ's own management pointed to an early version of this shift, noting that branded jewelry retailers are gaining share from independent, unbranded stores as consumers increasingly favor established chains. We expect the same shift toward formal, branded retail now underway on the supply side to increasingly extend to the demand side as well.
This is why we do not read Vietnam's uneven retail growth as a pullback in the country's consumption story. Growth driven mostly by price today reflects consumers reallocating spending, protecting higher-value purchases while economizing carefully on daily essentials. Meanwhile, formalization is shifting market share toward compliant, well-capitalized retailers, supporting clearer earnings visibility and stronger balance sheets across the sector. Consumer companies that can capture this transition will be strong candidates to lead Vietnam's next market upcycle once trading activity picks up again.
The Kenno Vietnam Fund invests in fundamentally sound Vietnamese companies at attractive valuations that reflect their long-term earnings potential. Vietnam's consumer sector remains home to strong businesses that combine near-term earnings resilience with a long growth runway, as modern trade continues to take share from the informal economy. If you would like to learn more about the fund or our investment approach, feel free to reach out to us at IR@kenno.com. For more from Emerging Vietnam 2026, we invite you to explore previous articles in our blog section and stay tuned for more.