In this episode of the BritCham Vietnam podcast, host Ben explores the rapidly growing consumer market in Vietnam with guest Ryan Molloy, founder and CEO of Redfern Digital. Ryan shares insights into the initial move of Redfern Digital from Leeds, UK, to China and eventually to Vietnam, driven by the desire to expand across Asia and tap into emerging market opportunities. The discussion covers the appeal of Vietnam for business expansion, highlighting its high growth potential, similarities with China's legal and marketing environment, and unexplored retail opportunities. Despite challenges like product registration and negotiation delays, opportunities in FMCG, especially in beauty, nutritional health, and mother and baby categories, are ripe for exploration. With e-commerce and modern trade evolving rapidly, Ryan advises British brands to consider Vietnam's growing middle class and untapped market potential while being mindful of the competition and pricing strategies.
For more information about the Britcham Chamber of Commerce Vietnam please visit www.britchamvn.com
In this episode of the BritCham Vietnam podcast, host Ben explores the rapidly growing consumer market in Vietnam with guest Ryan Molloy, founder and CEO of Redfern Digital. Ryan shares insights into the initial move of Redfern Digital from Leeds, UK, to China and eventually to Vietnam, driven by the desire to expand across Asia and tap into emerging market opportunities. The discussion covers the appeal of Vietnam for business expansion, highlighting its high growth potential, similarities with China's legal and marketing environment, and unexplored retail opportunities. Despite challenges like product registration and negotiation delays, opportunities in FMCG, especially in beauty, nutritional health, and mother and baby categories, are ripe for exploration. With e-commerce and modern trade evolving rapidly, Ryan advises British brands to consider Vietnam's growing middle class and untapped market potential while being mindful of the competition and pricing strategies.
For more information about the Britcham Chamber of Commerce Vietnam please visit www.britchamvn.com
Hello and welcome back to the BritJam Vietnam podcast. Today we're going to delve into the consumer market. It's a market, like many other sectors in Vietnam, that is growing rapidly, for many different reasons. Disposable income is increasing, more brands are seeing the opportunities, and the UK brands are no different. Today, we have the founder and CEO of Redfern Digital, Ryan Molloy, Redfern Digital are a brand management, marketing, e commerce and distribution company. So Ryan, welcome.
Ryan Malloy:Thank you Ben, thank you for having me.
Matt Ryland:Not at all, it's an absolute pleasure. I thought before we get into the kind of nitty gritty, of what's going on in Vietnam and what you're doing, a little bit of history and a little bit of background about yourself and Redfern would be a good way to start.
Ryan Malloy:originally from the UK, from Leeds in the north. I, moved to China in around 1998, 99 as a youngster. and essentially grew up in a place called Suzhou, just on the, near the East Coast. and yeah, I loved it, went back to the UK for university, and in the end decided, after quite a rainy day, walking home in London to, to go back to Asia. and, yeah, moved back to Suzhou, and then quickly on to Shanghai. I set up a business in Suzhou, but due to the geographical kind of location, there wasn't much going on for international business. So I very quickly moved to Shanghai, where I'd met a number of mentors, and then from there. within a couple of years, Redfern Digital was born. So we've been around now for around 10 years. I think it's coming up too. So quite some time, originally started in Shanghai, Hong Kong, and mostly for a China, focused business. But we'd said from the beginning that we wanted to expand across Asia to help businesses coming in just due to, the lack of transparency in all markets. And so we'd started in media marketing, back then it was much simpler, there wasn't as much, Facebook, Instagram was taking off in China, it was really only WeChat at the time, and, we then moved on into e commerce, became registered e commerce enabler, we built in a, a creative team. So Emily Jang, our creative director now for Global, came on as a business partner, and we essentially then from there, built out finally into the distribution. So it was like the last arm where we took on products itself. and then in 2017, we started running campaigns and work, for, around, wider Asia, but due to COVID and other reasons, we had done everything very remotely. So it's only recently we've started to be on the ground and other countries outside of China.
Matt Ryland:It's amazing how many rainy days it is where people decide that they could be somewhere else. But it's always interesting to hear. So you said that you're interested in expansion. Obviously, you've got a developed and a good business in China. So why Vietnam?
Ryan Malloy:so when we were looking at it, a key kind of engine room for what we're trying to do in Southeast Asia, we looked at Thailand, Malaysia, Indonesia, and Vietnam as the main regions. and what we found was that, from a legal perspective, Vietnam is very similar to China. So we You know from the get go understood how to set up the entity and all the other things that were required and the marketing laws are very similar. There's some differences, but there was that. Obviously as a country, Vietnam is going to have the highest growth wealth in the next five years in the world, right? So we saw Vietnam as a country that has a lot of growth and it's going somewhere, but it's really on the precipice of going to the next level. And so, we saw that as being a big opportunity for the brands that we work with. Most of the brands that we support are in FMCG. And when we were looking at Vietnam, it was like, how can we build a center where we can, yes, do what we do in media marketing and e commerce. but then also where we can understand the retail scene and then be able to then use that across other markets, in Southeast Asia. And the retail scene in Vietnam is really interesting and modern trade is just coming to a point now, whereas in some other markets like Thailand, it's a bit harder, right? So they've got four or five main distributors in the category and it's quite hard to penetrate into that. So Vietnam just, it seemed very greenfield. it's, when we'd come down here to do business in the past, it was, there's difficulties in doing business for sure, but it was very pleasant doing business, and geographically in terms of location, if you look at the manufacturing growth, the free trade agreements that Vietnam is putting in place, there's just a lot that's promising. I guess if you look at the five to 10 year term, compared to them other countries, right? And then if you look at, for example, at say Indonesia and other areas of Southeast Asia, there's logistical issues and there's still a lot of room for improvement when it comes to bureaucracy. So I think, yeah, Vietnam kind of ticked all of them boxes, for us in terms of, where do we want to center ourselves in Southeast Asia? And we looked at Singapore as having most of the team there. But it just felt that's what everyone looks to do, right? And also because we're in distribution, we need to be close to the retailers. We need to be on the ground. and yeah, that was, it seemed like the kind of the right decision to make.
Matt Ryland:So you're talking that is going to make me skip forward to a couple of questions. in advance, you talked about, uh, the retail setup and actually how it works. We did a wider piece recently with Brick Jam, a webinar about retail and you were talking about some really interesting stats and, how The retail sector is developing with regards to technology, the different platforms and actually, how people are shopping. Can you expand a little bit on, how that is working and the impact on, on, on, on retail in Vietnam?
Ryan Malloy:I guess the opportunity with the challenge is right now, if you look at e-commerce and Vietnam, it's at around 8%, 9% of total retail, and it's increasing very quickly. You've also then got TikTok, like social commerce, which as a proportion of e-commerce is now about 25%, and that's within one year. so you have a very fast changing landscape, a lot of growth, but even looking at them numbers, the reality is that around 90 percent of Sales are still offline, right? And of that, around 20 percent of them offline sales are modern trade. And then you've got this kind of gray area of 80%, which is general trade. And so traditionally, brands have had a container sold into Vietnam and they'll be pushed into general trade and discounted. And it's a one container market. And so what we're seeing now, though, it's developing. And so essentially with all of the platforms we're seeing shopping come to for example, with online become much more stable. We're seeing social commerce allow for newer brands to gain market share very quickly. And we're seeing modern trade taking a larger share of that. So if you look at nutritional health, if you're able to work with the likes of, say, Medicare, Pharmacity, and some of the larger pharmacy chains in Vietnam, pharmacy takes around, say, 80 percent of the category for nutritional health. You're you're three quarters of the way there to developing offline reach. So it's this balance when you're working with retail of understanding what online platforms, Shopee, Lazada, and TikTok, where you're going to play with them and how you're going to develop with them. But then also for consumers that are still into that kind of convenient buying, how do you work with convenience stores like CVS and how do you then build out into specialty stores, right? Which are still, they have their own applications. they have their own way of selling. So. it's complicated market, but it's in some ways quite straightforward, right? Because the retail discussions are very direct with them. Retailers, usually you start with one, then you move into the next one. You should be careful of your pricing and make sure that you're fair with every single one. But it's, I think, the transparency is something that we don't see in other markets in Southeast Asia. It's a bit harder to work with retailers on that level. and yeah, I think for most brands, it's they'll come in, you need to first look at how you work with offline, because even though it's only 10%, for some other categories, it goes up to 15, 20%, right? And it is continuing to grow. It's not going to stop. So trying to build out that element and then look at, okay, how can we work with different retailers? I think for offline to support what you're doing as well on online direct to consumer. That's the strategy we've been working through with brands and modern trade before was so small that it was quite hard, right? but as we're seeing Watson's and Guardian and all of these brands expand their presence here, there's a lot of opportunity for brands to then sell into them as well and have that have the best of both worlds, really.
Matt Ryland:want to pick up on something you said there, because when I've been talking to lots of different companies cross sector, one of the, one of the pieces of feedback I get is that, price point is a big thing for UK companies. because we are seen as expensive. Are you finding that from a brand product perspective?
Ryan Malloy:It is an issue, um, because as I said, we're still at the very beginning stage of this growth that we're seeing in Vietnam, right? so brands that are in the super premium or very premium area, I don't think Vietnam is yet a market for them to really start looking at, or if they do, they're really planting the seed for the next. eight to 10 years. for most brands, what we say is, look, you can go in at a premium level, but you need to be competing with another foreign brands that's within that category, right? So if you can compete on price with the top three to five, then that market is worth going to. The other thing with pricing is that, looking at margins. So retailers look for anything between 30 to 40%. and so then you've got 10 percent logistics, you've got 10 percent tax. So for most brands, it's not only can I meet the price point, but do I have the margin, with the distributor I'm working with and for the brand and the cost of goods to be able to look at that layered, sale into market. and so that's, I think really important. But if we look at a case like for example, Sensodyne, they did very well. so it's GSK, I believe the behind them. And so when they came into Vietnam, they did something quite interesting. I've never seen this in any of the market. They actually came in at a lower price and they've increased year on year. which is quite bizarre, right? Usually you're going at a high price point. You don't want to bring down brand value, but they knew that the product would do well. They'd seen initial testing that consumers would liken to it. And so they first grew the consumer base. They grew that awareness and trust and were able to increase the price because as we see over the next number of years, consumer spending, purchasing power is going to increase. And so if you can capture a market share in Vietnam, it's really going to pay its dividends over the years. And so that's how they've addressed it. I think with some brands, taking that route can be sometimes hard because you do have to capture that market share to be able to justify that increase. but if not, it's looking at, okay, if we can work with. 10 percent of the population this year and sell into them that can afford it the next year, that same 10 percent is going to be 20%. And I think looking that incrementally over the next five years does help with the price point because it is right now still relatively sensitive when it comes to pricing. Yeah.
Matt Ryland:with the statistic that 36 million more people are going to go into middle class over the next 10 years, it's, there is, disposable income is increasing. So let's move away from the technical side and the pricing side of it. You talked that most of your, most of your brands are FMCG. So how does your brand portfolio look and are you looking at specifying in any particular part of FMCG or do you have a varied portfolio?
Ryan Malloy:portfolio? So it's changing all the time. So we agreed initially we'd come in and we'd focus on beauty, nutritional health and mother and baby. and it's, we've actually ended up doing more in food and beverage at this point, this moment in time. and the reason around that being mostly regulatory, I guess you could say difficulties getting product into market and the time that takes, but, we, and then again, with mother and baby, we found that the demands, the demand is so high for mother and baby products, especially with it being the year of the dragon. And there's a baby boom this year that, a lot of brands in that category are already eyeing up P& M and have partners. and so for us finding one, it's actually been harder than we thought. our main categories though is really anything that's outside. We don't do anything in fresh, right? anything that's, got under six months shelf life, we struggle. But right now we're working in like seltzers, so alcohol and beverages. nutritional health is, quite greenfield at the moment. So if we look at everything, we're doing gummies and capsules and, collagen, things like that. I think anything in nutritional health towards beauty. Vietnam is a really good category to be in. And then we're also looking at hair care. We've got one brand in hair care we're bringing to market, and then skin care as well. So other beauty products, I think FMCG, at the right price point within the beauty, nutritional health, mother and baby category is really something that we're looking at. that can be, can, can pay dividends for brands and for food and beverage, there's even more to that. But the issue right now is with Horeca, right? With restaurants and cafes, there's a lot on that scene, but it's quite hard to navigate and sell into all of them because it's so fragmented. So that's what we've found to be slightly more difficult. And then if you're trying to sell online, food and beverage is still very offline driven. and so that's been one of the difficulties, but we have found that, producing, so taking, brand concepts, from other countries, right? Having the IP of the brand, agreeing with them to manufacture in Vietnam and then sell here has actually been something that's worked really well. and so that's something that brands can also look at because the manufacturing capabilities in food and beverage is developing very quickly, and innovation as well, in Vietnam. So I think, yeah, but still they're the major categories. If we look at luxury, there's still some time to go, I think, until it really develops, and then into kind of other categories like apparel, Vietnam already has a very strong manufacturing base in apparel as well, there's competition there of, do you have a strong enough brand internationally to really to build on for Vietnam where the consumers will already be aware of your brand. If that's the case, and I think apparel is a good category, but again, it's very different, right? So we've stuck with that kind of FMCG beauty, nutritional health, and then mother and baby food and beverage. Yeah. I'm
Matt Ryland:I will speak to you about what moisturizer I should be using. We can't do this kind of podcast without talking about opportunities and challenges. you've touched on some of them, but let's talk more specifically. what do you see as the kind of main challenges to, to, to your business and likewise the opportunities?
Ryan Malloy:I think, number one, and this is an opportunity and it's a challenge. It's a challenge and an opportunity because if we look at other regions, So registration, product registration, it can't even be done in a lot of countries where it takes three to four years. we've found that the kind of the administrative side of, signing with blue pens and, it's a signature correct. And there's a slight difference here. and documentation that's needed internationally, has meant that product registration has taken longer than we had anticipated for a lot of brands. So it's for us over the last couple of years now, where we've been talking to these brands and getting to the point of, okay, we're ready to go. we have seen delays in, in, in launching, and we're wanting to scale to distribute around 20 brands within the end of this year. So we're not going to hit that target. And unfortunately that's due to the difficulties in registration. That being said though, it's still, four to six months to get a product in. It's not. the end of the world. and it's not overly expensive, but I think that's been one of the difficult difficulties we've faced. I think the other one is just, the speed of trying to get things done. there's like a level of patience that you need to have. And we've had situations where we've almost given up on, on a particular product we're pushing. We found it quite hard. And then the last minute we found, oh, wow, we suddenly got into a hotel chain, right? So it's interesting how, kind of negotiations. People will walk away from the table and you think there's nothing coming from that. Then four months, the phone rings and you have a deal with them. So I find that's one thing in Vietnam I found to be a challenge. and then also getting to the point of signing deals as well. has been quite, has sometimes taken some time. So I think, yeah, time, product registration. they're the main major challenges. Yeah, that we've seen.
Matt Ryland:So looking forwards, you talked about how people are buying, the kind of products that you're using. Where do you see the next 5, 10 years? what's your expectation for how things are going to develop?
Ryan Malloy:So our media business is doing very well. So we do distribution, but then also the service side of our business is doing well. So for brands that have entered, we find that within the first couple of years, three years, they scale quite quickly, right? If they have good distribution, they know the retailers, they know, understand the easy game here. they're doing well. And so we're finding that media budgets are incrementally going up year on year. So for us, that's been quite good and that shows a strong market. It shows that there's a willingness to advertise in the market and that there are sales on the other side of that. So I think, that's going to be, a big opportunity. I think e commerce will continue to be more and more important. The issue is right now, if you look at e commerce enablers in Vietnam, I think there's no more than 30, right? So there's not much in terms of resources around supporting themselves online, right? And when we've looked at the models of how we'll help brands, it's also been quite difficult because you have to get the products in first before you can help them with e commerce. And that's always been the chicken and egg scenario. So I think e commerce will develop, but it needs more brands. If we look at, for example, cosmetics, there's only, I think, 580 cosmetic brands. on Shopee and the whole of Vietnam, right? If you look at that in China, I think there's over 20, 000. So it's, there's still a lot more room for growth and opportunity. And I think for brands entering, it's going to get harder if you wait five years, right? Because that's going to be when all the brands have entered. and I think so, if we look at what's coming, I think, there'll be a lot more brands that are starting to enter. I think that we're going to see a bit of a shake up as we see purchasing power increasing where people will trade up to higher value items, better hair care products, better nutritional health products. I think we'll see the luxury sector starting to open up even more. and I think that, we'll also see an increase in convenience, sales or on demand sales, right? already in Vietnam, I was very shocked when I first came how quickly you can get things delivered on Shopee, right? most countries, one day is quite nice, downtown Ho Chi Minh, you can get in three hours, right? I think that on demand support that Grab can have and delivery is going to lead to an even a newer type of e commerce that I think that will be beneficial for a lot of brands, especially in the F& B space. So I think that's going to come into play. And then a lot of the free trade agreements that are in place now are going to start to kind of show, opportunities for a number of countries and brands as well, especially like for the UK, there's one in place. And I think, a lot of them get to their lowest levels in two, three years. I think it is. I can't remember from. from top of my head, but, that's going to, I think, open up a lot of trade. So I think all of these are like indicators of everything going in the right direction. Yeah.
Matt Ryland:you touched on a really interesting point and it's a conversation that, that I do have a lot about, is the market ready? and when, when do I come in? I talked to a lot of companies from the UK looking at coming into Vietnam. and one thing that we've seen and happens here is that things may take a long time and be talked about, which is one of the frustrations, but then suddenly it can just happen. And if you're not in market, you miss it. So I think, and that I guess goes to the company's appetite for risk. but I think it's particularly relevant in, in, in the consumer market because it does take time. so that's, yeah, it's an interesting situation. I guess just to close, would be your advice, to British brands, who are thinking about Vietnam?
Ryan Malloy:I think, Do some research. Do a bit of digging. I think look at, is the price point there? check if consumers have interest in your product category. If the fit's right, I think that's really important. I think definitely explore the market. I think, there's 100 million people, consumers, and growing. willing to buy products. the amount of people, as you'd mentioned, previously Matt going into the middle class and this kind of, growth and wealth, development of modern trade. I, it's all going in the right direction. I think that if brands don't look now, like one of the major things that brands will say to me is, Oh, we're going to look at Vietnam right after we've looked at China and Thailand. right? And it's kind of like, this is a market where the opportunity is here and it's not saturated, whereas their markets are quite difficult, right? They've become hard. You need decent, especially China, you needed quite a decent budget and a lot of time and effort and resources to go into that market now, whereas Vietnam is still at that forefront of being able to, it's quite greenfield. And but in five years it'll be harder. Right? Registration costs might have gone up, retailers won't be as, keen to take on new products, that'll have figured out what works and they'll have a, a selection to choose from. So I think, have a look, do the research, don't enter if it doesn't make sense. There are some brands where it's just, look, you're too expensive, or there's just not, this flavor doesn't suit for Vietnam, this function doesn't work. But if it, if there is a fit, if the price is there, then I think look for the right partners, at least start to get, product registration in place. Trademarks are the first to file as well. Country is Vietnam for trademarks, so make sure you get that in place. And I think really look at, within the next year, how do you enter. And looking at which channels do we need to tick off? And if in the first year, if, sales are 000, it might not be the biggest market, but, it's taking share in a market that is definitely, over the years with that growth going to turn into a 10, 15, 20 million business. If it's not, it shouldn't look to have to,
Matt Ryland:It's about patience, which is not the easiest thing in business, but there we are. Ryan Malloy, thank you very much. It's been a really interesting chat. Thank you for your time. Greatly appreciated. Thank you very much for listening to the BritCham Vietnam podcast. Don't forget if you need more information or want to find out anything else, please visit BritChamVN. com. See you next time. Thank you.