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GBA – March 5, 2012 Declining Consumer Nation?
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GBA – March 5, 2012
Declining Consumer Nation?
2011 – “Declining Consumer Nation?” agenda
Economic overview 2010-2011
Consumer confidence
Evolution of wealth
Branding trends
Retail de-evolution
The luxury goods myth
A shift & decline in advertising
Summary
2012 forecast
Ralf Matthaes
Regional Managing Director
2010 vs 2011 year in Review
GDP
Inflation
Trade deficit
Exports
Imports
FDI
Retail spend*
Ad spend
FMCG Value
FMCG Volume
Tourism
Consumer confidence
Source: GSO / TNS / Kantar Media * VN Retail Association – not sure if accurate
Measure
6.78%
11.75%
US$12.4 B
US$71.6 B
US$84.0 B
US$18.6 B
US$78.0 B
US$726 M
21%growth
9%
5.0 M
78 index
2010
5.89%
18.13%
US$9.6 B
US$96.4 B
US$105.8 B
US$10.9 B
US$95.0B
US$760 M
16%growth
1.4%
6.0 M
83 index
2011 Ralf
6.0%
10%
US$12-14 B
US$95 B
US$115 B
US$14B
US$?B
US$800 M
14%growth
0%
6.5 M
75 index
2012 est.
2009 – Revenue sources of income
Source: GSO
2011 GDP estimated at US $105 Billion USD
If exports continue to climb, this may mitigate the
declining FDI picture in Vietnam.
Base: GDP = US $94.84 Billion
Exports FDI
Consumer Confidence – 2010-2011
2011 Outlook - Consumer Confidence
Consumer confidence has seen a steady increase since 2010 to 83 points
Source: TNS Consumer Confidence Index
89
64
78 79
0
20
40
60
80
100
1 2 3 4 5
2008 2009 2010 01/2011 09/2011
89
64
78 76
0
20
40
60
80
100
1 2 3 4 5
83
79 78
64
89
Q: In the next 12 months would you think that the following will be better, the same or worse than they are now?
Consumer overview of Vietnam's next 12 months
Vietnamese consumer seem fairly buoyant with regards to Vietnam’s
overall outlook for the next 12 months, except for cost of living / dong
devaluation and pollution, which was consistent with 2009 / 2010.
Source: TNS VietCycle 2011 – Urban only
Will you spend More – Less – Same in 2012
Source: TNS VietCycle 2011 – Urban only
Almost 50% note spending less / month to the end of the year than
they spent in the 1st 7 months, with only 7% spending more.
The poor will spend more, as inflation rips into their wallets
Education
Health care products / services
Food & beverages products
Household utilities
House hold care products
Personal care products
Transportation
Communications
Entertainment & dining out
Personal equipment
Home appliances
On What will you spend More-Same-Less than 2011
Source: TNS VietCycle 2011 – Hanoi / HCMC
Education spend shows the strongest growth for 4 years running
Vietnamese are buying much less than in the past
due to inflation and a slowing economy
*Biggest categories: 24food and non-food categories with >60% penetration in first 6 months of the year = 60% of FMCG total market value
Source: Kantar Worldpanel Vietnam – Household Panel – Urban 4 key cities (HCMC, HANOI, DANANG, CANTHO)
CONSUMTION TRENDS AMONG HIGHEST PENETRATION
CATEGORIES*
15.8
14.2
8.9
9.2
18.8
1.4 SEM 1'10 vs SEM 1'09
SEM 1'11 vs SEM 1'10
AVG. VALUE
GROWTH
AVG. PRICE
GROWTH
AVG.
VOLUMEGR
OWTH
Urban Consumption of FMCG
2010
2010
2010
2011
2011
2011
Total Expenditure & Savings – HCMC & Hanoi
Source: TNS VietCycle – 1999-2011
83
86
88
91
81
84
81
17
14
12
9
19
16
19
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
1999
2001
2006
2008
2009
2010
2011
Total expenditure Saving
Savings
Until the global economic meltdown, Vietnamese savings
were dropping year on year. Now caution is the word.
Total expenditure
The Evolution of Viet-Wealth
1988
1998
2005
2008
2011-2012
2009
289
402 440
552
725
835
1,024
1,125
1,3001,266
1,300
0
200
400
600
800
1,000
1,200
1,400
1995 2000 2002 2004 2006 2007 2008 2009 2010 2011
Est.
2012
Est.
Vietnam’s GDP doubled between 1995 & 2005 & again between 2005 - 2011
GDP per capita evolution – USD
Source: GSOVN 1995 -2010
In USD
Income Doubled
Income Doubled
33
29
21
10
5
3 A
B
C
D
E
F
1999
Evolution Declared Monthly Household income - Urban
Source: TNS VietCycle 2011 – Hanoi, HCMC, Danang Can Tho only
A = 13.5 – 15.0
B = 6.5 – 13.5
C = 4.5 – 6.5
D = 3.0 – 4.5
E = 2.0 – 3.0
F = less than 2.0
VND Million
A+ = 15.0 Plus
21
46
9
3
9
10
1
A+
A
B
C
D
E
F
2011
B
1.6mil
1.4mil
3.4mil
1.4mil
500
200
7.4mil
16 Mill
Population
Wow, holy &*^%$#&* = what a difference 12 years make
Gross National Income - 2009-2010 (USD)
National Purchase Power Parody (USD)
Vietnam has surpassed
Indonesia and should
surpass the Philippines
in the next 5 years
Due to constant inflationary pressure Vietnam
lacks behind in terms of PPP in South Asia
Source: TNS South Asia network
Branding trends
I worry about my health more than ever before - 89%
I worry more today about food safety – 95%
Key urban FMCG trends
I prefer to beverages I can drink
from the container - 72%
I prepare food the require little
preparation - 63% agree
I buy products of good quality, even if more expensive –
90%
Higher price products means higher quality – 55%
HEALTH
CONVENIENCE
SOPHISTICATION
Source: Kantar Worldpanel
Discounted price Free gift with
purchase
Sweepstake/Lucky
draw prizes
Get free
product/sample
with multiple
purchase
Monetary gift
Most preferred promotion (%)
Source: TNS VietCycle 2011 – Urban only
As the economy slows and inflation soar, discounted
prices are the preferred promotions
Influencers & promotions - We agree
I often try new products
before my friends do
My family members usually
influence my selection of
brands
I am more likely to buy
brands for which
promotional offers are
available
Source: TNS VietCycle 2011 – Urban only
Family still strongly influences brand selection, as does promotions
Brand loyalty– we are less loyal
I stick with my main brand it is tried
and trusted I switch brands a lot just to try
Source: TNS VietCycle 2011 – Urban only
Over the years consumer have become less
loyal to brands, but need a reason to switch
The origin of brands
The country of origin is
more important than the
brand name
Vietnamese brands are
as good as international
brands
I prefer local Vietnamese
brands
Source: TNS VietCycle 2011 – Urban only
Vietnamese brands have caught up to International
brands in the minds and wallets of consumers
Top 5 of 2011
Top of Mind foreign brand awareness
Top 5 of 2008
Foreign brands are dominated by Technology and Japanese brands
Source: TNS VietCycle 2011 – Urban only
Top of mind Vietnamese brand awareness
Top 5 of 2008 Top 5 of 2011
Vietnamese brands are dominated by FMCG brands. Honda & Unilever’s
OMO have ingrained themselves as “VIET BRANDS” into consumers psyche
Source: TNS VietCycle 2011 – Urban only
Retail De-evolution?
2011…Vietnam
# 23 Global destinations for most attractive emerging
Retail markets
A slide of 11 places since 2010 and 6 more since 2009 and 6 more since 2008
A.T. Kearney
© Kantar Worldpanel
15
20
61
62
15
12
9
6
2005
MAT Q2 2011
Modern Trade Street Shops Market Other Channels
Total FMCG excluding gift Source: Kantar Worldpanel – Total FMCG – Household Panel - 4 key Urban cities (HCMC, HANOI, DANANG, CANTHO)
CHANNELS VALUE SHARE ON FMCG TRADITIONAL TRADE IS STILL DOMINATING THE VIETNAMESE RETAIL
LANDSCAPE BUT MODERN TRADE CONTINUOUSLY GAIN GROUNDS
26
© Kantar Worldpanel
Spend loyalty
12% 16% (2007) (MAT Q2/2011)
per year
Source: Kantar Worldpanel – Total FMCG – Household Panel - 4 key Urban cities (HCMC, HANOI, DANANG, CANTHO)
TURNING HYPER-SUPER MORE URBAN SHOPPERS VISIT HYPER-SUPERMARKETS NOWADAYS
AND DEVELOP THEIR PURCHASE HABITS
32
41
Monthly Penetration in
Hyper-Super (%)
1216
Average Visits per year in
Hyper-Super
76
125
Average Spend per visit in
Hyper-Super
2007 MAT Q2/11 2007 MAT Q2/11 2007 MAT Q2/11
27
Frequency
The Luxury Myth
30
% of populations which have bought luxury items
in last 12 months
14
*Luxury item here is defined as valued over VND 10,000,000
2011
10
Source: TNS VietCycle 2011 – Urban only
Slow growth indicates that luxury is still
well out of reach for most consumers
2008
31
What does Luxury mean to Vietnamese consumers
Q: Which of the following statements describe what is luxury to you?
Source: TNS VietCycle 2011 – Urban only
Luxury is mostly associated with price and quality, which
varies somewhat from more developed countries where,
exclusivity and decrement are key drivers
32
How we define luxury
Dining out at 5-star
restaurants/hotels
Travelling for
pleasure abroad Playing golf
Shopping at
boutique venues
Living in a high-end
apartment
Staying at 5-star
hotels/resorts
Having membership
to VIP club
Q: Which of the following activities do you consider to be luxury?
Source: TNS VietCycle 2011 – Urban only
5 star hotels / restaurants / overseas travel and Golf are seen as key luxury activities
However boutique shopping and overseas leisure travel are gaining preference
33
Top 5 Top of Mind luxury brands
Q: When thinking of luxury brands, what brand comes to mind first?
Source: TNS VietCycle 2011 – Urban only
Someone who owns luxury brands…
…Or is….
A shift & decline in advertising
2010 vs 2011 Ad spend breakdown
Source: TNS - Kantar Media 2011
MEDIA TYPE Cost
TV 283,166,942
RADIO 613,793
NEWSPAPERS 33,101,965
MAGAZINES 21,122,459
Jan-Jun 2011 $338,005,159
Total spend in A-T-L advertising in 2011 was US $761 Million,
or a slight increase of 3% from 2010.
Jan – June 2011
Newspapers
10.3%
Internet
3.5%
Magazine
6.2% Radio
0.2%
TV
79.7%
Source: TNS Digital life 2011
Vietnam (Global)
Digital Media consumption has surpassed Press in 2011
% using at least once a day
(54)
(32)
(61)
(14)
(36)
95%
42%
40%
22%
6
TV
Digital
Newspaper
Radio
Magazine
The Essence of Vietnamese Media
TV
NEWSPAPERS
INTERNET
can’t live without
61%
31%
9%
70%
19%
9%
HCMC HANOI
Source: TNS VietCycle 2011 – Urban only
TV still is a must have and the most trusted media
source in Vietnam, though less in Hanoi
TV
NEWSPAPERS
INTERNET
will use more in the future
39%
46%
11%
53%
30%
12%
HCMC HANOI
Base: Males and Females aged 15-54 across all 4 major cities (Ho Chi Minh City, Hanoi, Da Nang and Can Tho) Source: Kantar Media MHS – Week 1-52, 2011
Reach of Media - 2010
Past Week Reach (%)
Youth are heavy surfers and will become the
mainstay of internet advertising in the future
0
20
40
60
80
100
15-19 20-24 25-29 30-34 35-39 40+
TV
Internet
Newspaper
Radio
Magazine
