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Title of Presentation
Copyright Copyright 2011 2010 The The Nielsen Nielsen Company. Company. Confidential Confidential and and Proprietary. proprietary.
Agenda
AEC opportunities & challenges Growth Expectations Key issues faced by you & your peers
External economic & social impacts Consumer behavior Corporate strategic direction & plans
Research Design
Nielsen Vietnam Business Barometer
Senior Leaders of manufacturers in Vietnam
October to November 2012
5 6 7
Its about access to internet, not about the hardware Distribution is still king We all know about AEC, but little action has been undertaken
A challenging 2012 but government forecasts are certainly improving and inflation has reduced as an issue
GDP YOY
8 7
GDP 66.5%
CPI 10%
6 5 4 3
GDP 4.4%
CPI 12.2%
2 1 0 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12
22.2 23.0 22.4 21.6 19.8 18.1 17.5 19.8 20.8 13.9 13.3 12.2 Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec11 11 11 11 11 11 11 11 11 11 11 11
8.3
6.9
5.4
5.0
CPI YOY
Source: Vietnam General Statistics Office
2nd Half 2012
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.
VIETNAM Ranking
1 6 14 23
Human Quality of Resources supply chain Source: A.T. Kearny 2012 GRDI
but Vietnam is seeing phenomenal growth in the FMCG market compared to other markets
FMCG MARKET DYNAMICS REGIONAL SUMMARY Q2, 2012
Despite economic challenges, significantly more companies managed to beat their business target this year.
Business performance compared to overall target
100% 28 80% 6 18 17
Somewhat better
14 23
Significantly better
60%
17 31 58
20
40%
32
31
Somewhat worse than target
20% 17 18 0% 7
38
17
Significantly worse than target
2010 2nd half 2011 1st half 2011 2nd half 2012 2nd half
2nd Half 2012 Q5: Looking back at your businesss performance from the beginning of the year until now, how well do you think your business has been doing compared to your overall targets?
Base: ALL RESPONDENTS
External economic & social External Social and impact Economic Impact
Significant shift in behavior is forcing us to be more mobile than ever before. 2011 1st half
1) Inflation (68%) 2) VND devaluation (68%) 3) Ability to pass on price increase (50%) 4) Competitive pressure/ activity/ growth (32%) 5) Low GDP growth (14%) 6) Logistical challenges (10%)
8) Logistic challenges(17%)
Q12: Which of the following issues concern you in terms of the impact they Source: Nielsen Business Barometer may have on your business? Rank the top three (3) issues that concern Base: Respondents in Auto, FMCG, you where 1=most concerned, 2= second most concern and so on. Telco, Travel, Pharma -n=23
3) Job security
5) VND devaluation
5) Health
Base: All Sample
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...
2nd
Half 2012
Source: Nielsen Business Barometer & Global Consumer Confidence survey Q312
Weekly
63%
Spend less on new clothes 63% Delay upgrading technology (e.g. PC) 53%
59%
Every 2 weeks
36%
2011
Source: Nielsen Shopper Trends Study 2012 Base: All Supermarket shoppers (n = 1500)
2012
85% of consumers worldwide say that rising food prices are impacting their choice of grocery purchases
Source: Nielsen Global Shopping Report August 2012
Copyright 2012 The Nielsen Company. Confidential and proprietary.
17
Economy is a key concern in developed and developing countries with Vietnam high on food prices
Developed Asia
2011- Q4 2012- Q1 Utility Bills Utility Bills
Developing Asia
2011- Q4 2012- Q1 Economy Economy TH
AUS
2011- Q4
SK
2011- Q4 2012- Q1
2012- Q1
PH
2011- Q4
Economy Economy
TW
2012- Q1
APAC
2011- Q4 2012- Q1
Economy Economy
MY
2011- Q4
HK
2012- Q1
2011- Q4
2011- Q4 Economy Economy
Economy Economy
2012- Q1
IND
2012- Q1
SG
2012- Q1
2011- Q4 2012- Q1
VN
18
Two extreme trends observed in Thailand in 2011: Value for Money and Premiumization
More economy segment, local brands with lower price points attracting consumers
Premiumization
Consumers are willing to trade up to products with value-added benefits and the right proposition eg. health/ wellness
Affordable Premium
Premium products made more affordable through new innovations/ variant strategy to encourage consumers to trade up
19
and this trend exists in Vietnam with different shopping behavior depending on the category
Milk
Tobacco
27%: Change
channel to save money
32%: Change
channel to save money
Q16b.Over the next 6- 12 months, how do you anticipate Vietnamese consumers will change their purchasing behavior towards each category below?
Business leaders in multinational companies are concerned that the buy Vietnamese trend will impose negative impact on their business.
25
80%
20
Significantly improve our business
20
60%
25 13 60
40%
20%
38
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? 2nd Half 2012
Mobile phones will overtake PCs as the most common Web access devices by 2015
Source: Gartner
Copyright 2012 The Nielsen Company. Confidential and proprietary.
23
Mobile phone penetration in Vietnam has increased dramatically in the last few years; this has also spurred internet access via mobile network
Vietnam Malaysia No. of cellphones (per 100 people) Thailand Indonesia Philippines
3G
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
24
Most businesses spend less than 10% of their total budget on ATL and BTL activities.
Spending on Above- The- Line and Below- The- Line activities compared with total spending
ATL activities
<10% 10-20% >20% Do not spend 3 14 23 60
BTL activities
<10% 10-20% >20% Do not spend
4 9 23 66
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.
2nd Half 2012
Internet TVC Newspaper / Magazine (print) Others In-store banners/posters Outdoor posters / Billboard Point-of-SaleMaterials (POSM)
20 % 16 % 11% 8% 6% 5% 4%
30 % 21% 16 % 9% 9% 9% 5%
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? 2nd Half 2012
Base: All Respondents EXCEPT Media respondents
Apart from the traditional forms of media, Online and Mobile advertising continues to gain more attention.
T2B (increase): B2B (decrease):
37% 16%
60% 6%
19% 0%
37% 6%
13% 9%
6% 3%
69% 9%
31% 16%
100%
13
6 19 31
13
6 25
13 31
Increase significantly Increase Somewhat
80%
31 47 16
3
41 27 59 56
60%
16
40%
16 6
28 66
Reduce somewhat
20%
41 31 28
6 3
19
Radio
53
6 3
13
Internet Mobile Phone
0%
TVC
6 6
Q15: Over the next 6- 12 months, how do you anticipate your company's spending on the following media channels for advertising? 2nd Half 2012
Base: All Respondents EXCEPT Media respondents
Growth Expectations
Mixed outlook towards business conditions in Vietnam, with more than one third feeling less optimistic about the conditions in the next 6-12 months.
7 30 38
2 29 26
Improved significantly
80%
Improved somewhat
60%
34 36 48
40%
43
20%
Deteriorated somewhat
37
Deteriorated significantly
0%
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? 2nd Half 2012
Base: ALL RESPONDENTS
Nevertheless, more than two thirds of business leaders still look forward to double-digit growth.
2 30 24
2 26
3 20 11
Don't know 25%+ 20% - less than 25%
80%
18
60%
14 10 20
20 24 28
15% - less than 20% 10% - less than 15% 5% - less than 10%
40%
17 16 16
14 17 11
20%
21 12 7 2 3 6
Less than 5%
0%
Q11: What do you think your company growth rate will be for the next 12 months? 2nd Half 2012
Base: ALL RESPONDENTS
Organic growth continues to be the driver of most of our success, but how long is this sustainable?
Expected 3 key factors of company growth
74
50
26
21
21
Q11b: What do you think are the 3 key factors of growth for your company for the next 12 months? 2nd Half 2012
Base: ALL RESPONDENTS
2.4%
LATAM
1.7%
MEAP
3.8%
3.5%
6.5%
4.3%
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
By the end of this decade the middle class in Asia will equal the middle class in Europe & North America
Over the past ten years the middle class consumer represents the fastest growth in household expenditures
5.3 trillion US$ in new consumption
Sources: Nielsen Analysis, World Bank World Development Indicators (average 1999-2008),
35
Copyright 2012 The Nielsen Company. Confidential and proprietary.
and Vietnam is set to see an enormous rise in its middle class consumer segment and spending
VIETNAM
Middle class*
8
million in 2012
44
million in 2020
95
million in 2030
Consumption*
$46
billion in 2012
$310
billion in 2020
$940
billion in 2030
* OECD Development Centre (middle class defined as households with daily expenditures between US$ 10 and US$ 100 per person)
Whilst getting excited about export and investment opportunities upon joining the AEC, companies are obviously concerned about increased competition pressures.
What do you think will be the biggest benefits & the biggest challenges for Vietnamese companies once Vietnam joins the AEC? 2nd Half 2012
Thailand, Indonesia and Myanmar are considered the top three biggest threats to Vietnamese products and services.
The biggest threat to Vietnamese products/service
Myanmar (9%)
100%: Competitive pricing 33%:Strong country branding 33%: Strong international branding 33%: Lower labor cost
Indonesia (34%)
100%: Competitive pricing 42%: High product quality 33%:Strong distribution chain
Thailand (43%)
80%: Competitive pricing 53%:High product quality 27%: Strong country branding 27%: Strong international branding
Q27. Which member country do you consider to be the biggest threat to Vietnamese products/services? Q28. Why did you select this country? 2nd Half 2012
In the lead to AEC integration, companies have implemented plans around upgrading labor skills and strengthening business competitiveness domestically.
Business actions from now until 2015 AEC Integration
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 Mergers and acquisitions
40 37 31 29 29 14 11 6
Q32. What actions have your company/will your company take from now until the 2015 AEC integration? 2nd Half 2012
Managing Growth
Price as Value
41
Copyright 2012 The Nielsen Company. Confidential and proprietary.
42
Copyright 2012 The Nielsen Company. Confidential and proprietary.
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