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CONSUMER 2026 - WINNER TAKES ALL

2026 OVERVIEW

Goods and services retail sales grew by 9.0% YoY in 11M-2025, extending the post-2024 recovery but remaining below pre-COVID levels (11-12% YoY) due to weak consumer confidence. In 2026, purchasing power is expected to gradually improve, with a “rebound from the trough” in 2H driven by: (1) spillover effects from public and private investment into household income and employment; (2) continued consumer-supportive policies; (3) normalization among segments “adversely affected by the 2025 policy changes” - small merchant and household businesses; and (4) positive wealth effects from equities and real estate. This outlook aligns with the Government’s target of achieving over 11.0% growth in total retail sales during the 2026–2030 period. Against this backdrop, leading companiesin sectorssuch as grocery retail, electronics, pharmaceuticals, jewelry, and food & beverage manufacturing are likely to furtherstrengthen their market positions and outperform industry growth. Key drivers include strong market share, solid financial health, and effective cost optimization capabilities. Our top picks in line with these trends include MWG and MSN (grocery retail),DGW (consumer electronics)

2026 HIGHLIGHTS

Retail – Revenue and profit growth of modern retail chains is set to accelerate as consumer spending continues to shift from traditional to modern channels. Policy measures since late 2025 such as e-invoicing and stricter controls on counterfeit and smuggled goods, have reinforced this trend, favoring large-scale retailers like MWG (Bach Hoa Xanh), MSN (WinMart), FRT (Long Chau), and PNJ (jewelry).

F&B manufacturing – While not among our top picks given relatively modest revenue and earnings growth amid the ongoing transition between GT and MT, the sector aligns with a value-oriented investment approach. Most players are expected to see profit recovery in 2026 and are trading below their three-year average P/E multiples. Companies are actively: (1) restructuring distribution systems to reduce reliance on wholesale channels (less standardized processes), while strengthening direct distribution to retail points (agents, GT and MT groceries); and (2) continuing product innovation strategies in packaging and flavors initiated in 2025. Revenue and profit growth will depend on execution efficiency of these strategies but it is generally expected to remain in the single-digit range given already high market share levels.

Distribution – DGW stands out as the sole representative in this segment, having identified a new “growth beacon” by staying true to its core success formula: diversifying across distribution categories and brand portfolios. This strategy targets emerging growth waves, including home appliances (Xiaomi, Philips), AI servers, and IoT devices, underpinned by disciplined cost management and stable margins across multiple economic cycles.

2026 RISKS

The entry of large foreign manufacturing and retail players, accompanied by sizable investments within the year, could intensify competition across key segments. Financial transactionssuch as divestments or IPO at both group and subsidiary levels may drive short-term stock price appreciation, potentially increasing volatility.