Vietnam Business Barometer Wave 7 Presentation deck opportunities & challenges Key issues faced by you & your peers • External economic & social impacts • Consumer behavior •

1

Copyright © 2010 The Nielsen Company. Confidential and proprietary.

Title of PresentationCopyright © 2011 The Nielsen Company. Confidential and Proprietary.

Wave 72nd Half 2012

2nd Half 2012

Executive insights

Research design

Growth Expectations

AEC opportunities & challenges

Key issues faced by you & your peers• External economic & social impacts• Consumer behavior• Corporate strategic direction & plans

Setting the scene• A snapshot into the

economic environment in Vietnam

Agenda

2nd Half 2012

Nielsen Vietnam Business Barometer– Senior Leaders of manufacturers in Vietnam

–October to November 2012

Nielsen Retail Audit Data– Data as of Q2 2012

Nielsen Global Consumer

Confidence Study– On-line survey around58 countries

–August 10 – September 7 2012

Macro Economic data– Vietnam Govt. Statistics Office– Media articles

Research Design

2nd Half 2012

Getting ahead of the changing consumer

Creating value-based pricing proposition

It’s about access to internet, not about the hardware

Growth of the middle class and opportunities

Inflation is less of an issue and now it’s down to competition and

expansion

Vietnam is still growing and in some cases world leading growth despite

poor recent PR – over 40% of companies performed better than expected1

2

3

4

5

Distribution is still king 6

We all know about AEC, but little action has been undertaken7

2nd Half 2012

Setting the Scene

2nd Half 2012

2nd Half 2012

YTD Aug 2012YTD Aug 2012

GDP 4.4%GDP 4.4%

CPI 12.2%

CPI 12.2%

GOVERNMENT PLAN 2012

GOVERNMENT PLAN 2012

GDP 6-6.5%

GDP 6-6.5%

CPI ≤ 10%

CPI ≤ 10%

12.2 13.3 13.9 17.5 19.8 20.8 22.2 23.0 22.4 21.6 19.8 18.1 17.3 16.4 14.2 10.5 8.3 6.9 5.4 5.0

Jan-11

Feb-11

Mar-11

Apr-11

May-11

Jun-11

Jul-11

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

A challenging 2012 but government forecasts are certainly improving and inflation has reduced as an issue

0

1

2

3

4

5

6

7

8

Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12

GDP YOY

CPI YOY

Source: Vietnam General Statistics Office

2nd Half 2012

1

6

14

23

2008

2010

2011

2009

VIETNAMVIETNAMVIETNAMVIETNAM

Ranking

Vietnam retail market drops out of top 30 countries for attractiveness by A.T Kearney. Inflation, high real estate price and business procedures are still big concerns.

Source: A.T. Kearny 2012 GRDI

Policy & Procedure

Human Resources

Quality of supply chain

Low purchasing power

Source: A.T. Kearney

2nd Half 2012

FMCG MARKET DYNAMICS REGIONAL SUMMARY Q2, 2012

Source: Nielsen Retail Audit

…but Vietnam is seeing phenomenal growth in the FMCG market compared to other markets

2nd Half 2012

Despite economic challenges, significantly more companies managed to beat their business target this year.

Q5: Looking back at your business’s performance from the beginning of the year until now, how well do you think your business has been doing compared to your overall targets?

7 9

17

18

38 17

32

58

31

31

17

17

20

28

1423

18

6

0%

20%

40%

60%

80%

100%

2010 2nd half 2011 1st half 2011 2nd half 2012 2nd half

Significantly better

Somewhat better

On par with target

Somewhat worse than target

Significantly worse than target

Business performance compared to overall target

Base: ALL RESPONDENTS

2nd Half 2012

Key Issues Faced by Your Peers

1. External Economic and Social impacts2. Consumer Behavior3. Corporate Strategic Direction & Plans

2nd Half 2012

External economic &

social impact

External Social and Economic Impact

Source: Nielsen Business Barometer

Base: Respondents in Auto, FMCG, Telco, Travel, Pharma -n=23

Q12: Which of the following issues concern you in terms of the impact they may have on your business? Rank the top three (3) issues that concern you where 1=most concerned, 2= second most concern and so on.2nd Half 2012

Significant shift in behavior is forcing us to be more mobile than ever before.

1) Competitive pressure /activity / growth (57%)

2) Inflation (48%)

3) Low GDP growth (35%)

6) Ability to pass on price increase (26%)

4) Labor force skill shortage (35%)

8) Logistic challenges(17%)

5) VND devaluation (26%)

7) Global economic crisis (22%)

2012 2nd half

1) Inflation (68%)



6) Logistical challenges (10%)

4) Competitive pressure/ activity/ growth (32%)

8) Wage growth (9%)


7) Petrol Prices (9%)

2011 1st half 2011 2nd half

1) Inflation (59%)


7) Labor force skill shortage (18%)

4) Global Economic Crisis (24%)

2) Competitive pressure/ activity/ growth (41%)



5) Wages growth (24%)

2nd Half 2012

Source: Nielsen Business Barometer & Global Consumer Confidence survey

Q3’12

Which of the following issues concern you in terms of the impact they may have on your business? Rank the top three issues that concern you where 1=most concern, 2=second most concern, etc...

Top 5 supplier / manufacturer concerns Top 5 consumer concerns

5) Health

2) The economy

3) Job security

4) Increasing fuel prices

1) Increasing utility bills (gas, electricity, water...)$

$

3) Low GDP growth

4) Labor force skill shortage

1) Competitive pressure/ activity/ growth

2) Inflation

5) VND devaluation

Base: All Sample

Base: Respondents in Auto, FMCG, Telco, Travel, Pharma

But are our concerns aligned with consumers?

2nd Half 2012

Consumer behavior

ConsumerBehavior

Consumer BehaviorConsumer Behavior

2nd Half 2012

Source: Nielsen Shopper Trends Study 2012

Base: All Supermarket shoppers (n = 1500)

Weekly

Every 2 weeks

36%

64%

59%

39%

2011 2012

Shopping frequency

Source: Nielsen Global Consumer Confidence Survey, Q2 2012 (n=438)

Actions to save on household expenses

Save on gas & electricity 70%

Cut down OOH entertainment

63%

Spend less on new clothes 63%

Delay upgrading technology (e.g. PC…) 53%

Cut down telephone bill 51%

Hardship continues, forcing consumers to further manage expenses

17


85% of consumers

worldwide say that

rising food prices are

impacting their choice of

grocery purchases

Source: Nielsen Global Shopping Report – August 2012

18


AUS

SK

TW

HK

SG

2011- Q4

2012- Q1

Utility Bills

Utility Bills

2011- Q4 Job Security

2012- Q1 Economy

2011- Q4 Economy

2012- Q1 Economy

2011- Q4 Economy

2012- Q1 Economy

TH2011- Q4 Economy

2012- Q1 Economy

PH2011- Q4 Job Security

2012- Q1 Job Security

MY2011- Q4 Economy

2012- Q1 Economy

IND

VN2011- Q4 Food Prices

2012- Q1 Food Prices

2011- Q4 Economy

2012- Q1 Economy

2011- Q4 Economy

2012- Q1 Economy

Economy is a key concern in developed and developing

countries with Vietnam high on “food prices”

What Are Your Top Concerns in the next 12

Months?

Developed Asia Developing Asia

2011- Q4 Economy

2012- Q1 Economy

Source: Nielsen Consumer Confidence Survey

APAC

19


Thailand

consumer

trend

Value for

Money

Two extreme trends observed in Thailand in

2011: Value for Money and Premiumization

Premiumization

Affordable

Premium

More economy segment, local brands with

lower price points attracting consumers

Consumers are willing to trade up to

products with value-added benefits and the

right proposition – eg. health/ wellness

Premium products made more affordable

through new innovations/ variant strategy

to encourage consumers to trade up

2nd Half 2012

Household care Personal care Food & beverage Milk

Q16b.Over the next 6- 12 months, how do you anticipate Vietnamese consumers will change their purchasing behavior towards each category below?

Tobacco

55%: Buy bigger

packs to save money

50%: Purchase more

on promotion

36%: Trade down to

cheaper products

32%: Change

channel to save money

41%: Purchase more

on promotion

27%: Buy bigger

packs to save money

27%: Change channel

to save money

36%: Change channel

to save money

36%: Purchase more on

promotion

32%: Buy bigger packs

to save money

27%: Purchase more

local/ Vnese brands

41%: Purchase more

on promotion

27%: Buy bigger

packs to save money

27%: Change

channel to save money

27%: Purchase more

local/ Vnese brands

27%: Not buy some

'non-essentials'

23%: Buy less /

smaller packs of the

same products

23%: Change channel

to save money

…and this trend exists in Vietnam with different shopping behavior depending on the category

2nd Half 2012

38

60

13

2025

25 20

0%

20%

40%

60%

80%

100%

2012 2nd half-

Total

2012 2nd half-

Multinational

companies

Significantly improve our business

Somewhat improve our business

Do not impact our business

Somewhat deteriorate our business

Significantly deteriorate our business

Q16a: To what extent do you think the consumer trend of “Purchasing more local/ Vietnamese brands” will impact your business in the next 12 months?

Impact of local brands on business

Business leaders in multinational companies are concerned that the ‘buy Vietnamese’ trend will impose negative impact on their business.

2nd Half 2012

Corporate Strategic Direction and Plan

23


Mobile phones will overtake PCs as the most common

Web access devices by 2015

Source: Gartner

24


1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Mobile phone penetration in Vietnam has increased

dramatically in the last few years; this has also spurred internet

access – via mobile networkVietnam

Philippines

Indonesia

Malaysia

Thailand

Source: World Bank

No. of cellphones (per 100 people)

3G

2nd Half 2012

Spending on Above- The- Line and Below- The- Line activities compared with total spending

BTL activities

Q12a & b. Please give an estimate of how much your company spends on Above-The-Line and Below-The-Line activities compared with total spending.

4

9

23

66<10%

10-20%

>20%

Do not spend

ATL activities

60

23

3

14

<10%

10-20%

>20%

Do not spend

Most businesses spend less than 10% of their total budget on ATL and BTL activities.

2nd Half 2012

As a result we are seeing an increasing investment towards internet spending

Q14: For the last 6 months, which of the following media channels has your company utilized for advertising? As a breakdown amongst all of the media channels you chose, please provide an estimated % to the extent your company has spent on those channels for the last 6 months?

2011 2nd half

N=55 N=35

2012 2nd half2011 1st half

N=33

Base: All Respondents EXCEPT Media respondents

11

10

7

5

5

42

14

%

%

%

%

%

%

%

TVC

Point-of-Sale-Materials (POSM)

In-store banners/posters

Newspaper / Magazine (print)

Outdoor posters / Billboard

Internet

Others

11

8

6

5

4

20

16

%

%

%

%

%

%

%

Internet

TVC


Others




16

9

9

9

5

30

21

%

%

%

%

%

%

%

TVC


Internet

Others




2nd Half 2012

Apart from the traditional forms of media, Online and Mobile advertising continues to gain more attention.

Q15: Over the next 6- 12 months, how do you anticipate your company's spending on the following media channels for advertising?

31

6

41

2819

66

13

53

3

3

16

6

6

6

3

6

16

16

41

27

59

25

9

31

19

31

136

56

31

613

613

28

47

0%

20%

40%

60%

80%

100%

TVC Point-of-Sale-

Materials

Outdoor posters In-store

banners/posters

News

paper/Magazine

(print)

Radio Internet Mobile Phone

Increasesignificantly

IncreaseSomewhat

Remain the same

Reducesomewhat

Reducesignificantly

No spending onthis channel

T2B (increase): 37% 60% 19% 37% 13% 6% 69% 31%

B2B (decrease): 16% 6% 0% 6% 9% 3% 9% 16%

Base: All Respondents EXCEPT Media respondents

2nd Half 2012

Growth Expectations

2nd Half 2012

Mixed outlook towards business conditions in Vietnam, with more than one third feeling less optimistic about the conditions in the next 6-12 months.

Q7,: Over the next 6 to 12 months, do you believe that business conditions in Vietnam & your industry are more likely to improve or deteriorate?

2 5 310

21

28 37

43

4836

34

38

2926

7 2

30

0%

20%

40%

60%

80%

100%


Improved significantly

Improved somewhat

Remained the same

Deteriorated somewhat

Deteriorated significantly


Expectations on business conditions

2nd Half 2012

Nevertheless, more than two thirds of business leaders still look forward to double-digit growth.

Q11: What do you think your company growth rate will be for the next 12 months?

Expected company growth rate

2 616 117

3

1617

1221

171428

10 2020

1411

3024

26 20

2 2 3

24

18

0%

20%

40%

60%

80%

100%


Don't know

25%+

20% - less than 25%

15% - less than 20%

10% - less than 15%

5% - less than 10%

Less than 5%


2nd Half 2012

Organic growth continues to be the driver of most of our success, but how long is this sustainable?

Q11b: What do you think are the 3 key factors of growth for your company for the next 12 months?

Expected 3 key factors of company growth

3

9

26

44

53

79

74

Increased consumer demand in your existing categories/

industry

Expansion to secondary cities/ rural areas

Expansion to new categories/ industries

Increased marketing expenses

Expansion to modern trade channel

Mergers and acquisitions

Increased exports to overseas markets

21

21

23

36

50

79

52

2011 2nd half 2012 2nd half


Increased consumer demand in your existing categories/ industry

Expansion to secondary cities/ rural areas

Expansion to new categories/ industries

Increased marketing expenses


Expansion to modern trade channel

Increased exports to overseas markets

2nd Half 2012

ASEAN Economic Community ( AEC)

2nd Half 2012

Asia continues to be the growth engine

4.3%LATAM

6.5%Asia Pacific3.8%

East Europe

3.5%MEAP

1.7%

West Europe

2.4%

North America

Average annual GDP growth rates in emerging markets from 2011 to 2016 is

50% higher than developed markets

Source: IMF Sept 2011, World Economic Outlook Report

2nd Half 2012

By the end of this decade the middle class in Asia will equal the middle class in

Europe & North America

35


Over the past ten years the middle class consumer represents

the fastest growth in household expenditures

Gro

wth

in H

ou

seh

old

Co

nsu

mp

tio

n

Exp

en

dit

ure

s1

Sources: Nielsen Analysis, World Bank World Development Indicators (average 1999-2008),

3.9%

5.4%

2.7%High Income

Middle Income

Low Income

5.3 trillion US$ in new consumption

Consumer Class• Up-scaling lifestyles

• Discretionary spending

Subsistence living• Core staples

• Infrastructure technology

Capital Class• Investments products

• Higher end goods

…and Vietnam is set to see an enormous rise in its middle class consumer segment and spending

95million in

2030

VIETNAM

8 million in 2012

Middle class*

44million in

2020

* OECD Development Centre (middle class defined as households with daily expenditures between US$ 10 and US$ 100 per person)

Consumption*

$940billion in

2030

$46 billion in

2012

$310billion in

2020

2nd Half 2012

Whilst getting excited about export and investment opportunities upon joining the AEC, companies are obviously concerned about increased competition pressures.

1. More international competition (30%)

2. FDI shifts to other markets (16%)

3. Weaker languages skills (English is

main language) (9%)

4. Migration of labour (9%)

5. Migration of labor to outside VN(4%)

Benefits for Vietnamese companies

Challenges for Vietnamese companies

1. Exporting opportunities (21%)

2. More transparency (15%)

3. More domestic /international

investment opportunities (14%)

4. Knowledge transfer(14%)

5. More FDI (6%)

What do you think will be the biggest benefits & the biggest challenges for Vietnamese companies once Vietnam joins the AEC?

2nd Half 2012

The biggest threat to Vietnamese products/service

Q27. Which member country do you consider to be the biggest threat to Vietnamese products/services? Q28. Why did you select this country?

100%: Competitive pricing

33%:Strong country branding

33%: Strong international branding

33%: Lower labor cost


42%: High product quality

33%:Strong distribution chain

Thailand(43%)

Myanmar(9%)

Indonesia(34%)


53%:High product quality

27%: Strong country branding

27%: Strong international branding

Thailand, Indonesia and Myanmar are considered the top three biggest threats to Vietnamese products and services.

2nd Half 2012

Business actions from now until 2015 AEC Integration

Q32. What actions have your company/will your company take from now until the 2015 AEC integration?

31

29

29

14

6

37

40

11

Train human resources

Increase consumer demand in your existing categories/ industry

Expand to new categories/ industries

Expand to secondary cities/ rural areas

Increase marketing expenses

Expand to modern trade channel

Increase exports to overseas markets


In the lead to AEC integration, companies have implemented plans around upgrading labor skills and strengthening business competitiveness domestically.

2nd Half 2012

Key observationsWhat does it mean for you?

41


What does it mean for you?

Vietnam

AEC

Middle class

Price as Value

Getting the message to consumers

Managing Growth

42


Creating new business models

Nielsen Vietnam

Dabao Nielsen Top to Top Meeting

2nd Half 2012

Stay connected to Nielsen Vietnam

www.facebook.com/vietnamnielsen

www.twitter.com/nielsenvietnam

vn.nielsen.com

Vietnam Business Barometer Wave 7 Presentation deck opportunities & challenges Key issues faced by you & your peers • External economic & social impacts • Consumer behavior •

Documents