Nielsen_Vietnam Grocery Report_2011 Update

Vietnam Grocery Report

1

Copyright © 2011 The Nielsen Company. Confidential and proprietary.

Report2011 Update

Vietnam TodayNavigating the Current Landscape

Market Landscape

A Challenging 2011

Inflation

Value for Money Key for Consumers

2


Growth Opportunities

The Importance of the Three I’s: • Investment

• Identity

• Innovation

Market Landscape

A Challenging 2011

� Economic growth is moderating due to short-term macro and micro challenges

� Growth slows across categories

� Inflationary pressures have generated uncertainty in consumer, business

3

Copyright © 2011 The Nielsen Company. Confidential and proprietary.Copyright © 2011 The Nielsen Company. Confidential and proprietary.

� Inflationary pressures have generated uncertainty in consumer, business confidence

� Increasing stratification of consumers: Premium buyers maintain while the middle is squeezed

Challenges arose in late 2010 and bloomed in 201121 %

5 % 7 % 12 %

3 %

8 %

10 %

16 %

17 %29 %

3 %7 %

Retail Sales

Growth

GDP Growth Inflation Unemployment FDI Growth Trade Deficit

4


= indicates health; = indicates challenges

Source: 2011 Estimation by Vietnam government;

GDP Growth, Inflation, CIEC: 2008-2009;Vietnam GSO

2011 Growth Estimation

6.1% 15% <5%22.6% 10% 12%

09 1009 10 09 10 09 10 09 10 09 10

Gas retailers increased

prices by 4%Fuel prices increased

by 18%

Retail electricity prices

increased by 15%

ASIA

Average

106

Various economic shocks have affected consumer confidence

5


Source: Nielsen Consumer Confidence Online Survey Q1 – 2011

Press Articles

Vietnam’s retail market attractiveness has slid further

GRDI Rank

2008: 02

2009: 06

2010: 14

2011: 23

2011 GRI country attractiveness

6


Source: AT Kearney Analysis

*) Based on weighted score of market attractiveness, market saturation

and time pressure of top 30 countries

Still a high-growth FMCG market, but inflation has tempering effect

Regional Summary FMCG Growth Q1 2011

7


Source: Nielsen Retail Audit

Consumption slows in some categories. Are too many costs being

passed onto consumers?

Top 10 categories – 6 Cities TT

Value and Volume growth Q1 2011 vs. YAG

8



Inflation

Value for Money Key to Consumers

• As purchasing power is affected, “spend for necessities only” is now the consumer’s motto

• Consumers are becoming more driven by promotions

• Upsizing continues in Household, Personal Care and Food categories

9


• Upsizing continues in Household, Personal Care and Food categories

• Private Label is expected to become the next big consumer trend in the coming years

81% of people are cutting spending on Unnecessary items

10


Source: Nielsen Personal Finance Monitor – June 2011

*) Unnecessary items are subject to each respondent’s perceptions

Post-Tet 2011 price increases seem to have a big impact, but consumers

still spend on core items

7.5% 8.5%

23.0%

6.9%9.2%

7.6% 8.5% 9.5% 8.7% 8.8% 8.7% 8.2% 8.2% 8.9% 9.7%11.1% 11.8% 12.2% 12.3%

13.9%

17.5%

2006 Total

2007 Total

2008 Total

2009 Total

2010 Total

Jan 2010

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2011

Feb Mar Apr

Vietnam CPI: Annual & YOY

60%Household

purchasing power

11


$96% said prices

increase somewhat/ significantly

60%purchasing power

reduced somewhat/ significantly

Products for own consumption (entertainment, eating out…), but not

those for children & family

Impact

*Q.24 – 27; Tet 2011 = Feb’11

Source: GSO, Nielsen Omnibus March 2011

Consumer’s claims Business Leader’s opinions

44

51

59

Reduce number of

products per purchase

Choose to buy more

products on promotion

Reduce the number of

visiting shops

2

12

51

41

41

50

64

Buy bigger packs to save money

Trade down to cheaper products

Not buy some 'non-essentials'

Purchase more on promotion

Business leaders and consumers both expect more purchase on promotion in the near term

12


Q.33 - 16

Source: Nielsen Omnibus March 2011; Nielsen Business Barometer 1st H -2011

9

26

33

Choose the shops where

there are cheaper prices …

Buy more Vietnamese

goods

Visit shops/ grocery stores

near home to save cost …

products per purchase

22

10

31

41

27

32

32

Change channel to save money

Buy less / smaller packs of the

same products

Purchase more local/

Vietnamese brands

Buy bigger packs to save money

S1-2011

S2-2010

Vietnam has highest promotion sensitivity in Asia at 87%. More than half

of consumers seldom change stores but actively search for promotions

1621

139

5 4

50%

75%

100% Promotion rarely changes my

brand choice

Only buy promotions when I

already like the brand

Regularly buy different brands

because of promotions

87%

Vietnam Promotion Sensitivity

13


11 10

55 56

0%

25%

2009 2010

because of promotions

Seldom change stores but when

shopping, actively search for

promotions

Change stores based on best

promotions offered

Base: (2009 n=1466) (2010 n=1464)

Source: Nielsen Shopper Trend 2010

Food and Beverage categories have seen the sharpest price increases…

+ 20% + 11 to 19% + 1 to 9% 0%

Average Price Index of FMCG Categories – YTD Apr’11 vs. YTD Apr’10

14



Unit price index: unit price of Top items contributing 50% per category value

and existing over last 13 periods in 6 cities.

… and consumers are more open to change their shopping behavior in

categories with higher pricesFood

Dairy

Product

Beverages

Do shopping behavior changed due to price increase?

15


*) Q.29; Base : 300 (all respondent)

Dairy

Product

Personal

Care

HH

Care

Source: Nielsen Omnibus March 2011

8 1619

7

30 31

72 79 86

54

38 3781

39

78

40 5072 59 84

2929

27

3022

815

125

26 17

8 8 7

61

18

Substitute to other products

Consume less - less expensive brands

Consume less - same brands

Consume less - more expensive brands

Same amount - smaller pack size

Same amount - larger pack size

Consumers are likely to stay with their brand in several categories, either

consuming less or trading off the amount by buying bigger pack sizes

%

Beverages Food Dairy Personal Care HH Care

16


1112 14

28

8 16

6

19

1017

30 3139

Carbonated Soft Drink

Ready-To-Drink Tea

Energy Drink

Instant Coffee

Instant Noodle

Cooking Oil

Liquid Milk (UHT)

Infant Form

ula (*)

Adult Milk (*)

Shampoo

Bar Soap

Facial Cleanser

Toothpaste

Toothbrush

Laundry Product

Household Cleaner

Same amount - more expensive brands

Same amount - cheaper brands

Consume more

Source: Nielsen Omnibus March 2011

*) Q.29B; Small base-read with cautions for Infant Formula & Adult Mik

Value for money: Upsizing is the key trend in Food, Household Care and Personal Care categories

MSG-Boullion (Big >=900g)

Laundry (Big >=3kg)

Shampoo (Big >500ml)

Fish Sauce (Big > 750 ml)

17


36 cities TT, data ending Marl11


Upgrading trend continues in some Personal Care and Home Care categories

Deodorant Fabric SoftenerMoisturizer

18


Pricing segments based on average price index vs. category average


PRICE

Price of private label is 15 – 30%

lower compared to brands

Private Label Awareness

Key Private Label Categories

Private labels are gaining ground, especially for Food, Paper Products, Household and Personal Care

19


Source: Nielsen Shopper Trend 2010

Vietnamese consumers are generally open to private label products

20


Source: Nielsen Global Online Survey Q3’2010,

Nielsen Shopper Trend 2011, Press Article

75%Associate store image with private labelquality

73%Believe private label quality is just as good as quality of leading

brands

Growth Opportunities

The three “I’s”– Investment, Identity, Innovation

• Investment – the rural market accounts for 47% FMCG value with limitless potential to be unlocked. Modern trade contributes ¼ of total FMCG value with increasing importance across categories.

• Identity – the brand power of “Vietnamese products” – backed by local

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• Identity – the brand power of “Vietnamese products” – backed by local manufacturers’ activation and strong consumer preference.

• Innovation – Market is getting complex with new and inventive products. Those that meet consumers’ key need-states in new ways will likely stand out.

Opportunity:

Investment

Vietnam’s Rural Consumers

22


Business leaders temper growth expectations, still see market

opportunities

20

3024

18

25%+

20% - less than 25%

15% - less than 20%

10% - less than 15%

Expected company growth rate in next 12 months

45

76

72

Increased consumer demand in

your existing categories/ industry

Expansion to secondary cities/ rural

areas

Expansion to modern trade channel

Expansion to new categories/

Key factors contributing to expected company growth

91%

23


Source: Nielsen Business Barometer 1H - 2011

26

73

12

21

28

24

2010 2nd half 2011 1st half

10% - less than 15%

5% - less than 10%

Less than 5%

12

14

31

43

Expansion to new categories/ industries

Increased marketing expenses

Improved business conditions in Vietnam overall

Improved business conditions in your industry overall

Reaching rural consumers is the next big opportunity

FMCG % turnover

Total population

Annual Average Income Per Capita – USD

400

800

1,200

177%

158%

24


Sales of FMCG

categories such as

Laundry and

Toothpaste

Source: Nielsen Retail Audit, GSO

0

400

2002 2004 2006 2008

Urban Rural

Rural Vietnamese save a substantial portion of their income

North West / North East

North:

462,000 VND

Central:

How Much Per Month?

75%

How Many Households Save? Where Does it go?

Keep at home: 87%

Buy gold: 7%

Savings Account: 6%

25


Central:

377,000 VND

South:

571,000 VND

75%

Monthly Average Saving

Amount – Mean score

HCM 1,373,180 VND

Hanoi 992,834 VND

•Source: Nielsen Rural Syndicated 2010

Foreign currency: 2%

Buy insurance: 2%

Opportunities seen in categories where penetration is still low

100 100 100 100 100 99 97 96 9488 87 86 85

8175 74 71 71 69

59 5954

46 46 45 44

35

24

15 13 116

0

20

40

60

80

100

DETERGENT

DISH WASHING LIQUID

FISH SAUCE

INSTANT NOODLES

SANITARY NAPKINS

BISCUITS + SNACKS

FABRIC ENHANCER/ SOFTENER

BOUILLON GRANULES

CIGARETTES

RTD MILK+FLAVORED MILK

COFFEE (IN-HOME CONSUMPTION)

HAIR CONDITIONER

COFFEE (OOH CAFE)

FRUIT JUICES

HOUSEHOLD CLEANER

FACIAL CARE

DEODORANT

TONIC FOOD DRINK

INFANT CEREAL

Total Rural Vietnam – Used in past year

26


0

DETERGENT

DISH WASHING LIQUID

SHAMPOO

TOOTHPASTE

FISH SAUCE

MSG

INSTANT NOODLES

COOKING OIL

SANITARY NAPKINS

CSD

BEER

COLD/FLU

BISCUITS + SNACKS

RTD TEA

FABRIC ENHANCER/ SOFTENER

BOUILLON GRANULES

CIGARETTES

SOY SAUCE

RTD MILK+FLAVORED MILK

COFFEE (IN-HOME CONSUMPTION)

HAIR CONDITIONER

COFFEE (OOH CAFE)

MOBILE PHONES

FRUIT JUICES

HOUSEHOLD CLEANER

VITAMINS (ADULT)

FACIAL CARE

DEODORANT

TONIC FOOD DRINK

INFANT MILK

DIAPERS

INFANT CEREAL

•Source: Nielsen Rural Syndicated 2010

Base: All respondents (n=4200)

Opportunity:

Investment

Modern Trade

27


Modern Trade: increasing in number of stores and importance

Modern Trade (exclude Metro – Cash & Carry)

Store Numbers ACV Contribution

National : 752 → 826 National : 11% → 13%

28


Source: Nielsen Retail Census 2009 and 2010

Higher contribution to monthly grocery purchase categories like

Food, Household and Personal Care

29


Total Ho Chi Minh + Hanoi; Data ending Apr 2011; MT exclude Saigon Coop


Market is dominated by local players, with more presence from

international players

50

16 322

15

7

15

13 14 13 5

STORE NUMBER OF KEY PLAYERS UPDATED TO APRIL 2011

30


5

3

21

2

101

44

Super Market

Food store

Convenient store

Source: Nielsen Retail Census 2010

There is still scope to develop for Modern Trade Vietnam benchmarked to other

Asian countries

64%

88%

53%

63%

70%

HCMC

66%

Share of trade for Modern Trade channel

31


China Malaysia Thailand Indonesia Vietnam

46%

13%16%

37%

China

Shanghai

Malaysia

Kuala Lumpur

Thailand

Bangkok Vietnam

Hanoi HCMC

Indonesia

Jakarta Greater43%

Source: Nielsen Retail Census 2010

Opportunity:

Identity

Vietnamese Brand

32


HCMC Ha Noi

I would probably purchase more Vietnamese goods

I would definitely purchase more Vietnamese goods

62% 49%

28% 34%

90% 83%

Consumers’ perception of local goods changes for the better,

representing a solid growth opportunity

33


I’ve already been purchasing more Vietnamese goods

more Vietnamese goods

Not sure if I would purchase more Vietnamese goods

28% 34%

8%

2%

2%

14%*

Source: Vietnamese Goods Trend Nielsen Study 2011

* Significantly higher

Local goods are appreciated for a variety of reasons

HCMC Ha NoiConsumer’s association

toward Vietnamese Goods

Reasonable price

Wide variety

Is the brand suitable for me

Trustworthy brand

39%

35%

35%

25%

32%

54% *

42%

35%

Reasonable price

Good/acceptable quality (equal/nearly

equal to imported goods)

Good for health (compared to Chinese

products)

34


Attractive promotion

Attractive packaging

Good quality

Good guarantee

Safe ingredients

Premium brand

25%

22%

20%

18%

17%

13%

52% *

38% *

26%

52% *

30% *

26% *

* Significantly higher; Base: All respondents (n= 300); Q.28a

Trustworthy

Wide range of products

Popular, used by a lot of people

Suit Vietnamese’ s features like

taste, skin, hair…


"Made in Vietnam"

on the label

The logo of "High

quality Vietnamese

goods" on the label

Vietnamese

brand name

the note "Made in Vietnam"

on the label (64%)

the logo of "High quality Vietnamese

goods" on label (82%) *

If label says ‘Made in Vietnam’ it can be viewed as a local brand, despite international origins

35


* Significantly higher; Base: All respondents (n= 300); Q.27

on the label (64%)

Vietnamese brand name (56%)

Vietnamese labeling

(ingredients, instruction,...) (53%) *

the logo of "High quality Vietnamese

goods" on the label (46%)

goods" on label (82%) *

the note "Made in Vietnam" on the label

(78%) *

Vietnamese brand name (57%)

100% Vietnamese manufacturer (44%)


…which explains such a strong preference for Vietnamese goods across FMCG categories

Household care products

Non- alcoholic beverage

Personal care products

Top Box

4% 4% 92%*1% 18%* 81%

1% 10% 89% 4% 7% 89%

Prefer Vietnamese goods

Prefer International goods

No preference

HCMC Ha Noi

36


Personal care products

Confectionery

Milk/ Dairy products

Alcoholics

9% 34% 57% 19%* 24% 57%

20% 31%* 49% 13% 24% 63% *

21% 25% 54% 15% 17% 67%

9% 20%* 71% 8% 17% 75%

* Significantly higher; Base: All respondents (n= 300); Q.29

Source: Vietnamese Goods Trend Nielsen Study

Opportunity:

Innovation

Product/Marketing Innovations

37


Categories are becoming complex with more new products

1,346

Personal Care

662

Food & Milk4,000

6,000

8,000

10,000

Active SKUs – MAT 3 Year Trends New Variants in Last 2 MATs

38



147

Beverage

143

Household Care

0

2,000

Food Personal Care Household

Care

Beverage

MAT 2YA MAT LY MAT TY

Data ending April 2011

Innovation helps products stand out in a crowded landscape

New Technology

Sunsilk Co-creations

Nano Complex

Extra chewing gums

New Conveniences

Knorr Gia vi Hoan Chinh

Mixed ingredients

Chinsu Toi Ot

Minute Maid Nutri Boost

Milk-based Juice

Ikun

Carbondinated RTD Tea

New Combination

39



Microgranules Prepared fish sauce

Downy 1 Lan Xa

One wash

P/S White Now

Blue foam for

instant white teeth

Close-Up

Hot and Icy toothpaste

Comfort Sang Tao

Flower & Fruit Sense

‘Good-for-heath’ products with natural ingredients across food and personal care are preferred by consumers

Vietnamese consumers listed Health as their top priority

Nam Ngu Fish Sauce:Vfresh Fruit Juice TH True Milk

40


Source: Nielsen Omnibus March 2011, Nielsen Retail Audit

Kotex Panty liners

Green Tea extract

Nam Ngu Fish Sauce:

Clean fish sauce

Vfresh Fruit Juice

Naturally good

TH True Milk

Truly natural

Lifebouy Body Soap

Natural bitter melon

Going “green,” environmentally friendly products and initiatives are an emerging trend for manufacturers and retailers alike

2011 Green consumption month in CO.OP Mart

41


Coca-Cola Live Positively Campaign

Source: Press articles

Food for ThoughtFood for Thought

How to navigate through the shortHow to navigate through the short--term challenges term challenges and gain in the longand gain in the long--term? term?

42

Copyright © 2011 The Nielsen Company. Confidential and proprietary.Copyright © 2011 The Nielsen Company. Confidential and proprietary.Copyright © 2011 The Nielsen Company. Confidential and proprietary.

• In the face of current economic conditions, it is critical to understand

what VALUEVALUE means to consumers

Promotion PricingLarge pack

sizes

Food for Thought

• Continue to invest to secure long-term growth future for your brands:

43


Expansion

to

secondary/

rural areas

Expansion to

modern trade

channel

‘Vietnamize’

your brands

Brand

portfolio

• Continue to invest to secure long-term growth future for your brands:

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Nielsen_Vietnam Grocery Report_2011 Update

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