amcham tns 2012 consumer overview 101012

AMCHAM – October 10 -11, 2012

Recession & Growth Opportunity

Recession & Growth Opportunities

Ralf Matthaes

Regional Managing Director

Economics 101 – 2012 overview

Consumer confidence

Lessons from the past

Cause of optimism

4 key growth opportunities

Education

Healthcare

FMCG

On-line

Summary

Ralf Matthaes

Regional Managing Director

Cambodia / Laos / Myanmar / Vietnam

2012 Overview

BAD - OK - GOOD

FDI = US $9.5 Billion @ Q.3

28%

Source: Saigon Times weekly

GSO

71,726

Bankruptcies = 53,000 @ Q.2

Source: GSO

Also causing high unemployment

especially amongst young

2008 – 2012 Consumer Confidence Index

Source: TNS CCIP – 2008 – 2012 urban only

Bad Debt = US $ ? Billion

The State Bank of Vietnam reported that as the end of March this year

Vietnam's bad debts ratio amounted US $9.6 billion U.S = 8.6% total

outstanding credit.

Fitch Ratings and other independent economic survey organizations

estimate = 14% or 13.3 billion U.S. dollars.

This is over 150 percent of the total capital of the entire Vietnamese

banking sector of 230 trillion VND or over 11 trillion U.S. dollars.

Vietnam’s 100 largest state enterprises are indebted about US $50

billion, or more than one third of GDP. Source: Reuters

Source: news.xinhuanet.com/english/indepth/2012-07/.../c_131728627.htm

GDP = 4.73% @ Q.3

6.78%

5.89%

4.73%

2010 2011 2012

Source: GSO

Slow down of GDP growth actually has positive effects

Exports = US $83.8 Billion @ Q.3

18.9%

Source: GSO

Vietnam’s best economic storey

Trade Deficit = US $0.1 Billion @ Q.3

Source: GSO

Trade balance 1st time

in 20 plus years

Inflation = 9.96% @ Q.3

45%

Critical element to future growth and success

Source: GSO

Advertising spend half year = 20% growth @ Q.2

Million

Source: TNS Kantar Media

Still strong signs of growth

# of Tourists = 13% growth @ Q.3

Source: GSO

Overseas Money Remittance = US $6.3 Billion @ Q.2

Source: GSO

Economic indices scorecard

Good = 6

Bad = 4

OK = 1

Consumer Confidence – 2011-2012

Consumer overview of Vietnam's next 12 months Q: In the next 12 months would you think that the following will be better, the same or worse than they are now?

Confidence has dropped substantially in the past 12 months


2012 = 68

Job Security is Falling

Do you think your present job is safe, or do you think there’s a chance you may become unemployed?


Job security is falling, driving consumer caution

Consumers savings

Roughly how much of your monthly income do you save?

++


Not only savings but the percentage consumer are saving has risen sharply

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Lessons from

the past

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Looks familiar ?

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Stuck to their values

Continued investment into R&D

which enabled speedier

recoveries

Took advantage to strengthen

against weaker rivals

Lessons from the past – successful brands

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Invested into rewarding loyalty

Identified and focused on

faster growing segments

Took advantage of the lowered

‘introductory’ costs for

successful new launches

Lessons from the past – successful brands

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Those in the middle were squeezed

Cost cutting through cutting back on

quality eroded brand equity

Price promos almost never the

answer

And those who did NOT …

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Key to remember...

Recessions do not hit every one the same

Some companies thrive, some die…

Some major success stories have been products of recessions

New launches

Cause for optimism

Investor sentiment

World economy is still in the dumps and looking for growth opportunities

57% of US companies wish to expand their business in SEA

75% note Vietnam as their #1 destination for expansion in SEA Source: AMCHAM Singapore Survey -June / July - Base = 356

As China begins to feel the pressure of a slide in exports and inflation….

Vietnam as part of the China Plus 1 policy will make Vietnam more

attractive for foreign investment

As inflation reduces and the banking system is straightened out, Vietnam

will receive more and new FDI

1st time since 2008 – there are more positives than negatives on

horizon

47

46

37

32

32

27

25

25

24

24

20

46

43

55

52

54

56

52

58

55

59

65

7

12

8

15

14

16

23

17

21

17

15

Education

Health care products/services

Food & beverages products

Personal care products

Household utilities

House hold care products

Entertainment & dining out

Mobile, Laptop, Devices

Home appliances

Transportation

Communications

More Same Less

Consumers spending in the near future?

Given the economic situation, will you be spending, less, the same, or more on each

of the following items?


Some sectors continue to see growth, whilst other continue to decline

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Education

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Size of the Pie : # of students in Vietnam

*Source: http://www.moet.gov.vn

Under 6 years old - 3.6 million

6 to 18 years old - 14.8 million

College & University - 1.5 million

College & vocational - 1.3 million

Total 21.2 million

32% or urbanites speak a foreign language

of those 91% speak English, 6% Chinese, 3% French…

over 60,000 Vietnamese studying overseas

Foreign language education

Trans-national education still a ways off for most families.

Education considering for children’s future (%):

Hanoi (18%)

Education demand Which of the following educational programs are you seriously considering for your children?

Base: n= 1,000 (total).

Source: TNS VietCycle Education 2011

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Source: TNS VietCycle Education 2011. Q73

Base: n= 1,045 (Total).

Education destinations

The USA is the preferred destination for overseas studies

Which country would you like your child’s degree to be under?

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US dominates in all regions, especially in the South

HCMC

Hanoi

Da Nang

Can Tho

Source: TNS VietCycle Education 2011.

Base: n= 1,045 (Total), 289 (HCMC), 319 (Hanoi), 235 (Danang), 202 (Cantho)

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One fourth of parents is willing to enroll their children in

international schools.

Base: n= 1,090 (Total), 308 (HCMC), 329 (Hanoi), 239 (Danang), 214 (Cantho)

I Parents preference - Local vs International school Would you consider enrolling your children in an international school in Vietnam?


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Reputation ranking of international schools by HCMC parents

01

Australian

International

School

02

American

International

School

03

American

School of

Vietnam

04

International

School of

HCMC

05

Saigon South

International

School

07 ACG

International

School

Vietnam

08

ABC

International

School

09

Renaissance

06

British

International

School

International schools perceived to be the most

reputable (%):


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36

Healthcare

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Spending on healthcare is miniscule in comparison

to overall spending.

MONTHLY HOUSEHOLD SPENDING ON

HEALTHCARE*

Source: TNS VietCycle Healthcare 2011. Base: n= 2,000 (total).

Estimated annual spend

=

US $3- 4 Billion

How much does your household spend on the following functions in a typical month?

Growing at over

20% / yr

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51

50

Top-2-box agreement

“My pharmacist's recommendation is just as good as my doctors‘”

Attitudes to health – top-2-box agreement (%)

Source: TNS VietCycle Healthcare 2011.


Chronic disease

sufferers

Even chronic disease sufferers rely heavily on recommendations

from pharmacists.

TOTAL

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Percentage of overall drugs purchased that were prescription medicine (past

30 days) (%)

Prescribed vs. OTC

Source: TNS VietCycle Healthcare 2011. Q99 Of the amount you spent on medicine, what percent of

this was spent of prescription drugs? Base: n= 951 (total).

22% prescribed medicine purchased

in past 30 days

78% Over the counter

medicine purchased in

past 30 days

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Prevalence and frequency of general pain

Head pain Flu symptoms Fatigue

67% 51% 55%

1.6 times per

month

2.6 times per

month 0.7 times per

month

Frequency of suffering from general symptoms

Source: TNS VietCycle Healthcare 2011. Q80 Which of the following symptoms do you sometimes suffer from?


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Source: TNS VietCycle Healthcare 2011. Q83


Almost 1 in 5 consumers aged 20-65 suffer from at

least one form of chronic disease

Which of the following chronic diseases do you suffer from?

Prevalence of chronic disease sufferers

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Key demographic of sufferers

1720

38

31

23

Total Female Older Housewives SEC EF

Source: TNS VietCycle Healthcare 2011.


Older females, housewives, from lower SEC’s show the

highest prevalence of chronic disease

Which of the following chronic diseases do you suffer from?

Source: TNS VietCycle 2011.

Monthly household spend

47% of all spend is still spent on Food

Groceries = 32%

Eat / drink out = 15%

Total = 47%

Most frequented modern retail outlets

Source: VietCycle 2011

Base: HCMC & Hanoi

Nationally Big C followed by Metro are the most frequented outlets

Note low penetration of high end venues

46

Value Growth of Modern vs other trade channels

2008-09 2009-10 2010-11 2011-12 1st half

Building brands for

the

consumer

Digital media is the second largest media

behind television

Daily users (%)

Source: TNS Digital life 2012

As the value of purchases increases, the amount of

research both off and particularly online also

increases


Internet

Penetration 30% 32% 8%

Go online daily

Are brand fans on SN

Write about brands online

Research brands online

% of internet users

that:

% of internet users

that:

% of internet users

that:

Vietnam’s consumers generally go online

frequently and research brands regularly

Global Vietnam India

8.8%

2.0%

10.7%

12.3%


Driving Growth Online

67% of Vietnam’s online

users access the Internet every

day...

31% have accessed via mobile

in the last month

Once online, they are very engaged.

Having a digital strategy prepared to

capture consumers as they adopt is

the key to capitalize

A mobile component is a critical

aspect of this strategy


Online reviews can influence brands and more than half of

expect companies to contact them thereafter

% Agree

(%)


Activate Your Brand Online

56% of online writers talk

about their brand experience

63% seek advice on brand

usage and other related aspects

Ensure ample content is

available on brand networks on

product usage, benefits and

other related information

commonly asked by consumers

– regularly update this and

engage members of the brand

community


Dealing with the negatives

42% online readers feel a

single negative review can

impact on a consumer’s

purchase decision

Advocacy is very

important and can have a

significant role in the purchase

decision.

Be aware of what is being said

about your brand (but

remember not to intrude too

strongly)


LS

Growth Summary

Fundamentals of banking system / Bad Debt / State-Owned-Enterprises

must be reformed and fixed quickly….

Exports may be slow due to global softening of demand

FDI may be slow to return - must entice by assurances / low cost of

entry

Consumer confidence slow to return – unemployment, inflation and

bankruptcies must be curtailed

Key growth opportunities exist in Education / Healthcare / F&B / On-line

Invest in consumer loyalty and guarantee both quality and core values

57 Source: TNS Vietnam

The bottom-line

We have yet to hit rock bottom.

However, there are positive signs that

some of the macro issues plaguing

Vietnam are on the mend

58 Source: TNS Vietnam

www.tnsvietnam.vn

amcham tns 2012 consumer overview 101012

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