Vietnam Grocery Report

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

Vietnam Today
Navigating the Current Landscape

Market Landscape
A Challenging 2011

Inflation
Value for Money Key for Consumers

Growth Opportunities
The Importance of the Three I’s:
• • • Investment Identity Innovation 2

Copyright © 2011 The Nielsen Company. Confidential and proprietary.

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 confidence

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

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Copyright © 2011 The Nielsen Company. Confidential and proprietary.

Challenges arose in late 2010 and bloomed in 2011

Retail Sales Growth

GDP Growth

Inflation

Unemployment

FDI Growth

Trade Deficit

29 %

12 %

21 %

16 %

17 %

7%

09

10

09

10

09

10

09

10

09

10

09

2011 Growth Estimation
22.6% 6.1% 15% <5% 10% 12%
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= indicates health; = indicates challenges

Source: 2011 Estimation by Vietnam government; GDP Growth, Inflation, CIEC: 2008-2009;Vietnam GSO Copyright © 2011 The Nielsen Company. Confidential and proprietary.

10 %
10

5%

7%

3%

3%

8%

Confidential and proprietary. .Various economic shocks have affected consumer confidence Retail electricity prices increased by 15% Fuel prices increased by 18% Gas retailers increased prices by 4% ASIA Average 106 5 Source: Nielsen Consumer Confidence Online Survey Q1 – 2011 Press Articles Copyright © 2011 The Nielsen Company.

Vietnam’s retail market attractiveness has slid further GRDI Rank 2008: 02 2009: 06 2010: 14 2011: 23 2011 GRI country attractiveness 6 *) Based on weighted score of market attractiveness. market saturation and time pressure of top 30 countries Source: AT Kearney Analysis Copyright © 2011 The Nielsen Company. Confidential and proprietary. .

but inflation has tempering effect Regional Summary FMCG Growth Q1 2011 7 Source: Nielsen Retail Audit Copyright © 2011 The Nielsen Company.Still a high-growth FMCG market. Confidential and proprietary. .

Confidential and proprietary. YAG 8 Source: Nielsen Retail Audit Copyright © 2011 The Nielsen Company.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.

. Personal Care and Food categories • • • Private Label is expected to become the next big consumer trend in the coming years 9 Copyright © 2011 The Nielsen Company. “spend for necessities only” is now the consumer’s motto Consumers are becoming more driven by promotions Upsizing continues in Household.Inflation Value for Money Key to Consumers • As purchasing power is affected. Confidential and proprietary.

81% of people are cutting spending on Unnecessary items 10 *) Unnecessary items are subject to each respondent’s perceptions Source: Nielsen Personal Finance Monitor – June 2011 Copyright © 2011 The Nielsen Company. Confidential and proprietary. .

0% Vietnam CPI: Annual & YOY 7.9% 7.5% 2006 2007 2008 2009 2010 Total Total Total Total Total Jan 2010 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2011 Feb Mar Apr significantly 96% said prices increase somewhat/ significantly *Q.7% 8. but consumers still spend on core items 23.5% 6. Confidential and proprietary.Post-Tet 2011 price increases seem to have a big impact.9% 17.3% 13.1% 11.8% 8.9% 9.6% 8. Nielsen Omnibus March 2011 Copyright © 2011 The Nielsen Company.2% 12. .2% 9.5% 8.8% 12.5% 8. Tet 2011 = Feb’11 Products for own consumption (entertainment. eating out…). but not those for children & family Impact $ Household purchasing power reduced somewhat/ 60% 11 Source: GSO.7% 8.5% 11.24 – 27.2% 8.7% 9.2% 8.

Nielsen Business Barometer 1st H -2011 Copyright © 2011 The Nielsen Company. Confidential and proprietary.16 Source: Nielsen Omnibus March 2011.Business leaders and consumers both expect more purchase on promotion in the near term Consumer’s claims Reduce the number of visiting shops Business Leader’s opinions 59 51 Trade down to cheaper products Purchase more on promotion Not buy some 'non-essentials' 2 41 41 64 51 50 12 41 Choose to buy more products on promotion Reduce number of products per purchase Visit shops/ grocery stores near home to save cost… Buy more Vietnamese goods Choose the shops where there are cheaper prices… 44 Buy bigger packs to save money 33 26 9 Purchase more local/ Vietnamese brands Buy less / smaller packs of the same products Change channel to save money 32 31 32 10 27 22 S1-2011 S2-2010 12 Q. .33 .

Confidential and proprietary. . actively search for promotions 11 10 2010 (2010 n=1464) 0% 2009 Base: (2009 n=1466) Change stores based on best promotions offered 13 Source: Nielsen Shopper Trend 2010 Copyright © 2011 The Nielsen Company.Vietnam has highest promotion sensitivity in Asia at 87%. More than half of consumers seldom change stores but actively search for promotions Vietnam Promotion Sensitivity 100% 5 13 75% 16 4 9 21 Promotion rarely changes my brand choice 87% Only buy promotions when I already like the brand 50% 55 25% 56 Regularly buy different brands because of promotions Seldom change stores but when shopping.

Confidential and proprietary.Food and Beverage categories have seen the sharpest price increases… Average Price Index of FMCG Categories – YTD Apr’11 vs. Source: Nielsen Retail Audit Copyright © 2011 The Nielsen Company. YTD Apr’10 + 20% + 11 to 19% + 1 to 9% 0% 14 Unit price index: unit price of Top items contributing 50% per category value and existing over last 13 periods in 6 cities. .

Base : 300 (all respondent) Source: Nielsen Omnibus March 2011 Copyright © 2011 The Nielsen Company.… and consumers are more open to change their shopping behavior in categories with higher prices Do shopping behavior changed due to price increase? Beverages HH Care Personal Care Dairy Food Product 15 *) Q. .29. Confidential and proprietary.

Consumers are likely to stay with their brand in several categories. Confidential and proprietary.same brands Consume less . .larger pack size Same amount .29B.less expensive brands 50 72 59 84 29 29 Consume less .cheaper brands 11 12 Ready-To-Drink Tea Instant Coffee Cooking Oil Instant Noodle 28 14 Shampoo Adult Milk (*) Bar Soap 6 Liquid Milk (UHT) Infant Formula (*) 10 Facial Cleanser 17 Toothbrush Toothpaste Household Cleaner Laundry Product Carbonated Soft Drink Energy Drink Consume more 16 *) Q. either consuming less or trading off the amount by buying bigger pack sizes Beverages Food 8 30 27 7 22 61 40 72 79 86 54 8 16 39 19 Dairy 8 18 Personal Care 15 12 5 HH Care 26 17 % 8 Substitute to other products Consume less .more expensive brands Same amount .more expensive brands Same amount . Small base-read with cautions for Infant Formula & Adult Mik Source: Nielsen Omnibus March 2011 Copyright © 2011 The Nielsen Company.smaller pack size 38 37 81 78 7 30 31 Same amount .

Confidential and proprietary.Value for money: Upsizing is the key trend in Food. data ending Marl11 Source: Nielsen Retail Audit Copyright © 2011 The Nielsen Company. . Household Care and Personal Care categories Fish Sauce (Big > 750 ml) MSG-Boullion (Big >=900g) Laundry (Big >=3kg) Shampoo (Big >500ml) 17 36 cities TT.

category average Source: Nielsen Retail Audit Copyright © 2011 The Nielsen Company.Upgrading trend continues in some Personal Care and Home Care categories Moisturizer Deodorant Fabric Softener 18 Pricing segments based on average price index vs. Confidential and proprietary. .

Confidential and proprietary.Private labels are gaining ground. especially for Food. Household and Personal Care Key Private Label Categories PRICE Price of private label is 15 – 30% lower compared to brands Private Label Awareness 19 Source: Nielsen Shopper Trend 2010 Copyright © 2011 The Nielsen Company. Paper Products. .

Nielsen Shopper Trend 2011. . Confidential and proprietary. Press Article Copyright © 2011 The Nielsen Company.Vietnamese consumers are generally open to private label products 73% Believe private label quality is just as good as quality of leading brands 75% Associate store image with private label quality 20 Source: Nielsen Global Online Survey Q3’2010.

Innovation • Investment – the rural market accounts for 47% FMCG value with limitless potential to be unlocked. Confidential and proprietary. Modern trade contributes ¼ of total FMCG value with increasing importance across categories.Growth Opportunities The three “I’s”– Investment. . Those that meet consumers’ key need-states in new ways will likely stand out. • Innovation – Market is getting complex with new and inventive products. 21 Copyright © 2011 The Nielsen Company. Identity. • Identity – the brand power of “Vietnamese products” – backed by local manufacturers’ activation and strong consumer preference.

Opportunity: Investment Vietnam’s Rural Consumers 22 Copyright © 2011 The Nielsen Company. Confidential and proprietary. .

less than 15% 43 24 28 5% . . Confidential and proprietary.less than 20% 10% .Business leaders temper growth expectations.less than 10% Less than 5% Increased marketing expenses Improved business conditions in Vietnam overall Improved business conditions in your industry overall 31 21 12 7 2 2010 2nd half 3 6 2011 1st half 14 12 23 Source: Nielsen Business Barometer 1H .less than 25% 18 72 20 15% .2011 Copyright © 2011 The Nielsen Company. still see market opportunities Expected company growth rate in next 12 months Key factors contributing to expected company growth Increased consumer demand in your existing categories/ industry Expansion to secondary cities/ rural areas Expansion to modern trade channel Expansion to new categories/ industries 45 76 91% 30 24 25%+ 20% .

.Reaching rural consumers is the next big opportunity Annual Average Income Per Capita – USD Total population 1. Confidential and proprietary. GSO Copyright © 2011 The Nielsen Company.200 158% 800 FMCG % turnover 400 177% Sales of FMCG categories such as Laundry and Toothpaste 0 2002 2004 Urban 2006 Rural 2008 24 Source: Nielsen Retail Audit.

000 VND Buy insurance: 2% 25 •Source: Nielsen Rural Syndicated 2010 Copyright © 2011 The Nielsen Company.180 VND 992.000 VND Buy gold: 7% 75% Monthly Average Saving Amount – Mean score HCM Hanoi 1. Confidential and proprietary.373. .000 VND Savings Account: 6% Foreign currency: 2% South: 571.Rural Vietnamese save a substantial portion of their income How Many Households Save? How Much Per Month? North West / North East Where Does it go? Keep at home: 87% North: 462.834 VND Central: 377.

100 20 40 60 80 DETERGENT DISH WASHING LIQUID SHAMPOO TOOTHPASTE FISH SAUCE MSG INSTANT NOODLES COOKING OIL SANITARY NAPKINS CSD BEER COLD/FLU BISCUITS + SNACKS 81 RTD TEA FABRIC ENHANCER/ SOFTENER BOUILLON GRANULES CIGARETTES SOY SAUCE RTD MILK+FLAVORED MILK COFFEE (IN-HOME CONSUMPTION) HAIR CONDITIONER COFFEE (OOH CAFE) 0 100 100 100 100 100 99 97 96 94 88 87 86 85 75 74 71 71 69 Total Rural Vietnam – Used in past year Opportunities seen in categories where penetration is still low Base: All respondents (n=4200) 59 59 54 MOBILE PHONES FRUIT JUICES HOUSEHOLD CLEANER 46 46 45 44 VITAMINS (ADULT) 35 FACIAL CARE 24 DEODORANT TONIC FOOD DRINK INFANT MILK DIAPERS 15 13 11 26 Copyright © 2011 The Nielsen Company. •Source: Nielsen Rural Syndicated 2010 INFANT CEREAL 6 . Confidential and proprietary.

Confidential and proprietary. .Opportunity: Investment Modern Trade 27 Copyright © 2011 The Nielsen Company.

Modern Trade: increasing in number of stores and importance Modern Trade (exclude Metro – Cash & Carry) Store Numbers National : 752 → 826 ACV Contribution National : 11% → 13% 28 Source: Nielsen Retail Census 2009 and 2010 Copyright © 2011 The Nielsen Company. Confidential and proprietary. .

Confidential and proprietary. . MT exclude Saigon Coop Source: Nielsen Retail Audit Copyright © 2011 The Nielsen Company. Household and Personal Care 29 Total Ho Chi Minh + Hanoi.Higher contribution to monthly grocery purchase categories like Food. Data ending Apr 2011.

Market is dominated by local players. with more presence from international players STORE NUMBER OF KEY PLAYERS UPDATED TO APRIL 2011 50 16 13 22 14 3 7 15 15 13 5 2 21 5 Super Market 101 44 3 Food store Convenient store 30 Source: Nielsen Retail Census 2010 Copyright © 2011 The Nielsen Company. Confidential and proprietary. .

Confidential and proprietary.There is still scope to develop for Modern Trade Vietnam benchmarked to other Asian countries Share of trade for Modern Trade channel 88% 70% 64% 53% 63% Kuala Lumpur 43% Jakarta Greater Vietnam Hanoi 16% 46% 37% Indonesia Shanghai Malaysia Bangkok Thailand China 13% China Malaysia Thailand Indonesia Vietnam HCMC 31 66% Source: Nielsen Retail Census 2010 Copyright © 2011 The Nielsen Company. .

.Opportunity: Identity Vietnamese Brand 32 Copyright © 2011 The Nielsen Company. Confidential and proprietary.

representing a solid growth opportunity HCMC I would probably purchase more Vietnamese goods I would definitely purchase more Vietnamese goods Not sure if I would purchase more Vietnamese goods Ha Noi 62% 90% 28% 49% 83% 34% 8% 2% 2% I’ve already been purchasing more Vietnamese goods * Significantly higher 14%* 33 Source: Vietnamese Goods Trend Nielsen Study 2011 Copyright © 2011 The Nielsen Company.Consumers’ perception of local goods changes for the better. Confidential and proprietary. .

Local goods are appreciated for a variety of reasons HCMC Ha Noi Consumer’s association toward Vietnamese Goods Reasonable price Good for health (compared to Chinese products) Suit Vietnamese’ s features like taste. Confidential and proprietary. Base: All respondents (n= 300). . Q. skin.28a Source: Vietnamese Goods Trend Nielsen Study 2011 Copyright © 2011 The Nielsen Company. hair … Popular. used by a lot of people Good/acceptable quality (equal/nearly equal to imported goods) Trustworthy Reasonable price Wide variety Is the brand suitable for me Trustworthy brand Attractive promotion Attractive packaging Good quality 39% 35% 35% 25% 25% 22% 20% 18% 17% 13% 32% 54% * 42% 35% 52% * 38% * 26% 52% * 30% * 26% * Wide range of products Good guarantee Safe ingredients Premium brand 34 * Significantly higher.

Q....27 Source: Vietnamese Goods Trend Nielsen Study 2011 Copyright © 2011 The Nielsen Company.If label says ‘Made in Vietnam’ it can be viewed as a local brand. Base: All respondents (n= 300). . instruction.) (53%) * the logo of "High quality Vietnamese goods" on the label (46%) the logo of "High quality Vietnamese goods" on label (82%) * the note "Made in Vietnam" on the label (78%) * Vietnamese brand name (57%) 100% Vietnamese manufacturer (44%) 35 * Significantly higher. despite international origins "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%) Vietnamese brand name (56%) Vietnamese labeling (ingredients. Confidential and proprietary.

alcoholic beverage 1% 18%* 81% 4% 4% 92%* Personal care products 9% 20%* 71% 8% 17% 75% Confectionery 9% 34% 57% 19%* 24% 57% Milk/ Dairy products 21% 25% 54% 15% 17% 67% Alcoholics 20% 31%* 49% 13% 24% 63% * 36 * Significantly higher. . Confidential and proprietary.…which explains such a strong preference for Vietnamese goods across FMCG categories HCMC Ha Noi Prefer Vietnamese goods Prefer International goods Top Box No preference Household care products 1% 10% 89% 4% 7% 89% Non. Base: All respondents (n= 300).29 Source: Vietnamese Goods Trend Nielsen Study Copyright © 2011 The Nielsen Company. Q.

.Opportunity: Innovation Product/Marketing Innovations 37 Copyright © 2011 The Nielsen Company. Confidential and proprietary.

000 2.000 0 New Variants in Last 2 MATs 1.346 Personal Care 662 Food & Milk 147 Beverage Food Personal Care MAT LY Household Care MAT TY Beverage 143 Household Care 38 MAT 2YA Data ending April 2011 Source: Nielsen Retail Audit Copyright © 2011 The Nielsen Company. .000 6.Categories are becoming complex with more new products Active SKUs – MAT 3 Year Trends 10.000 4. Confidential and proprietary.000 8.

.Innovation helps products stand out in a crowded landscape New Combination New Technology New Conveniences Ikun Carbondinated RTD Tea Minute Maid Nutri Boost Milk-based Juice Close-Up Hot and Icy toothpaste Sunsilk Co-creations Nano Complex Knorr Gia vi Hoan Chinh Mixed ingredients Extra chewing gums Microgranules Chinsu Toi Ot Prepared fish sauce P/S White Now Comfort Sang Tao Flower & Fruit Sense Blue foam for instant white teeth Downy 1 Lan Xa One wash 39 Source: Nielsen Retail Audit Copyright © 2011 The Nielsen Company. Confidential and proprietary.

. Confidential and proprietary. Nielsen Retail Audit Copyright © 2011 The Nielsen Company.‘Good-for-heath’ products with natural ingredients across food and personal care are preferred by consumers Vietnamese consumers listed Health as their top priority Vfresh Fruit Juice TH True Milk Nam Ngu Fish Sauce: Naturally good Truly natural Clean fish sauce Lifebouy Body Soap Natural bitter melon Kotex Panty liners Green Tea extract 40 Source: Nielsen Omnibus March 2011.

. Confidential and proprietary.Going “green.” environmentally friendly products and initiatives are an emerging trend for manufacturers and retailers alike 2011 Green consumption month in CO.OP Mart Coca-Cola Live Positively Campaign 41 Source: Press articles Copyright © 2011 The Nielsen Company.

Food for Thought How to navigate through the short-term challenges shortand gain in the long-term? long- 42 Copyright © 2011 The Nielsen Company. Confidential and proprietary. .

Food for Thought • In the face of current economic conditions. . it is critical to understand what VALUE means to consumers Large pack sizes Promotion Pricing • Continue to invest to secure long-term growth future for your brands: Expansion to secondary/ rural areas Expansion to modern trade channel ‘Vietnamize’ your brands Brand portfolio 43 Copyright © 2011 The Nielsen Company. Confidential and proprietary.

Nielsen Vietnam 44 Copyright © 2011 The Nielsen Company. Dabao Nielsen Top to Top Meeting . Confidential and proprietary.

.com/nielsenvietnam www. Confidential and proprietary.nielsen.com/nielsenvietnam 45 Copyright © 2011 The Nielsen Company.com www.Stay connected to Nielsen Vietnam vn.facebook.twitter.

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