nielsen grocery report 2012

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Copyright © 2012 The Nielsen Company. Confidential and proprietary.

Vietnam Grocery report 2012Copyright © 2012 The Nielsen Company. Confidential and proprietary.

GROCERY REPORT

Vietnam2012

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Vietnam Grocery report 2012

Market Channels Shoppers

MACRO-ECONOMIC OUTLOOK

|FMCG

OVERVIEW

RETAIL NOW&

THE FUTURE

BELT BUCKLING|

CONNECTED CONSUMERS

AGENDA

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MARKETMacro-economics Outlook

Will Vietnam GDP and CPI reach their 2012 targets?

Is the Vietnam retail industry still attractive?

FMCG Overview

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ACTUAL Q3’12

GDP 4.7%

CPI 7.%

GOVERNMENT PLAN 2012

GDP 6-6.5%

CPI ≤ 10%

A very tough 2012 with only slightly positive signs appearing in Q3’12, but still below expectations for the year.

CPI YOY

Source: Vietnam General Statistics Office

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▲14 %

▲ 6%

▲5%

▲50%

GasVND/12kg tank

Mogas 92VND/litre

… which is still fragile under pressure from the recent upward trend in fuel and utilities.

▲ Growth rate01/09/12 vs 01/01/12

Source: xangdau.net & http://www.petrolimex.com.vn/

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1st half 2012

1st half 2011

LABOUR STRUCTURE51.6 mil employees

GDP STRUCTURE1,252,577 bil.VND

2.81%

3.81%

5.57% Value growth rate vs. YA

Service continues to drive the growth of the economy, particularly being led by the Trade sector.


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NO. COMPANIES DISSOLVED OR CEASEDJan/2012-Apr/12

• Total volume: 17.735/ 647.627 companies• Change vs LY +9.5%

RETAIL-SERVICES SALESJan/2012-Aug/2012

• Total value: 1,517,721 bil.VND• Change vs LY: +17.9%

Growth is still there, but many companies are having problems.


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1

6

14

23

2008

2010

2011

2009

VIET NAMRank

Viet Nam retail drops out of top 30 countries of retail attractiveness by A.T Kearney. Inflation, high real estate price & interest and business procedure are still big concerns.

Source: A.T. Kearney

X 2012

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+467% 48%

3%2%

47%

68%20%

4%7%

Manufacturing& Processing

Real estate

Wholesale, Retail sale & Repairment

Other areas

01/01/11-20/08/11

01/01/12-20/08/12

Value growth rate vs. LY

However, retail sector is still attractive to foreign investors despite total FDI decreases.

Total FDI

+107%

+25%

-11%

-86%

NEW FOREIGN DIRECT INVESTMENT First 8 months 2012 vs 2011

Source: Foreign Investment Agency - Ministry of planning and investment

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Macro-economic Overview

After sky rocketing inflation in 2011,

how is Vietnam FMCG market

doing?

MARKETMacro-economics Outlook FMCG Overview

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FMCG volume sales growth bounces back – strongest for Beverage & Milk-base

Consumer confidence is still below 100

Cooling CCI rests stable at low level

FMCG volume growth trend resumes in light of cooling CPI though consumers are still concerned.

Source: Vietnam GSO and Nielsen Consumer Confidence Survey

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FMCG MARKET DYNAMICS REGIONAL SUMMARY Q3, 2012

Vietnam is still the fastest growing FMCG market.

Source: Nielsen Growth reporter Q3, 2012

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VALUE & VOLUME % CHANGE YAMAT JUL’12

23%11%FMCG (Inc. Beer)

15%-1 %Household Care

21%6 %

Milk Based Product

Personal Care

19%3%Food (excl Milk Base)

28 %15 %

Beverage (Inc. Beer)

18%7 %

Cigarette

18%4 %

ValueVolume

Source: Nielsen Retail Audit

Across most categories, particularly beverages.

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Half categories have medium volume growth of 5-10%; while 15% show higher growth of >10%

Price hike around 10% for most categories except for dishwashing liquid, gum, snack, milk powder, shampoo and biscuit whose price hike >15%

.

(YTD Jun’12 vs. YA)

Most categories pose volume growth of 5-10% with an exception to beverages, Baby Diaper and RTDM.


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TOP 10 MANUFACTURERS IN FMCG – 6 CITIES TT – VALUE % SHARE

TOP 10 MANUFACTURERS IN FMCG 6 Cities TT - Value % Share | Period Ending SEP12 | Share of Sum(PROD)

Top 10 Val for MAT TY | Total Mkt

Source: ACNielsen | Retail Index (<< Viet Nam >> ), data to SEP12

TOP 10 CATEGORIES IN FMCG – 6 CITIES TT – VALUE % SHARE

TOP 10 CATEGORIES IN FMCG 6 Cities TT - Value % Share | Period Ending SEP12 | Share of Sum(PROD)

Top 10 Val for MAT TY | Total Mkt

Source: ACNielsen | Retail Index (<< Viet Nam >> ), data to SEP12

The biggest categories are Beer, Cigarette, Milk and Beverage which benefit the dominant positions of the players in such fields.


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Increasing number of new launches in Value segment

New of new brands declines starting from early 2011


Manufacturers more reluctant to introduce new brands – and most of new brand launches are in Value pricing segment.

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PREMIUM SEGMENT CONTRIBUTION CHANGEYTD JUL 12 VS. YA

YTDLY YTDTY

Price segmentation based on price index at 6 Cities, YTDJul’11 [>120 Premium] [100-120 HiMid] [80-100 LowMid] [<80 Low]


Interestingly, Premium segment is either stable or increasing its share across categories.

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-3.0%

-3.0%

-4.0%

6.5%

3.4%

2.6%Biscuits

CSD

Shampoo

Consumers tend to trade up with reduction in price gap of “Premium” and

“Mainstream” products. Innovation is a contributor too

Price Gap ChangePremium vs. Mainstream

Premium Volume Change Driven by Price Gap Reduction

Source: Pricing Analytics Study, Vietnam 2011

Lower price gap between Premium and Mainstream contributes to the growth of Premium.

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The Now The Future

How fast is modern trade growing?

How is traditional trade trying to compete with modern trade?

What are modern trade retailers doing to attract and retain consumers?

CHANNELS

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85 94 96 89 57 63 49 22 6 46 44

RETAIL STORE DENSITY ANALYSIS(Number of stores per million population)

Modern Trade Contribution 2011

HK

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-

100

200

300

400

500

600

700

800

900

1,000

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

295 304

514

849

209 162 136

9 6 38 65

Grocery stores

Modern trade

Source: Nielsen Retail Census

Traditional Trade dominates in SEA but Modern Retailing is expanding its foot print. Vietnam has a big room to grow in terms of MT store density.

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TRADITIONAL TRADE MODERN TRADE

2011 Total 36 Cities

943 Modern trade outlets (+25%

vs 2010)

Store number- Nielsen Census

Value sales Contribution

30 Cities 4 Cities Hanoi HCM0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2009

2010

2011

Traditional trade is still the dominant channel in Vietnam while Modern trade speeds up opening store especially in Hanoi.

Notes: Modern Trade contribution ( inc. Saigon Co.op, exclude Metro)Based on 36 largest urban areas in Vietnam : 4 Cities includes Haiphong, Danang, Cantho and Nhatrang

Source: Nielsen Retail Census

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Market system development scheme 2011-2015: Investment of 2,782 bil.VND with 150.6 ha on developing 319 traditional market – tier I

• Preserving 56 markets• Upgrading 110 markets• Building 153 markets

“Wet market management skill training for the markets’ management boards”

“Sales skill training for small traders in wet markets”.

Ministry of Industry and Trade cooperate with University of Economics to organize:

Attempts to invest in improving wet markets and support small traders.

Source: Ministry of Industry and Trade Decision 012/2007/QĐ-BCT

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Average Frequency of Visits per Month

Base: All Respondents (2010 n=1500, 2011 n=1500)Ref: Q8

▲▼

Consumers are moving

from Wet Markets to Supermarkets

However, Supermarkets are increasingly preferred.

Source: Nielsen Shopper Trends 2012

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Health &Beauty Store

15

8

Supermarket

20

19

17

14

14

115

3

2

1

1

Minimart

85

44

46

5

ConvenienceStore

81

32

27

13

23

41/1-31/9/2012:

12+ new stores open

each month

B&B8

6

11

59

Supermarket

Retailers of all types are implementing their expansion plans.

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Preference from loyalty card

Increased promotion

frequencies

Difference with private label

New look by refreshing logo and department

brandingMembership Card, VIP Card…With special offers: Stored up points, special promotion prices

Coming with fresh, professional and friendly image

Focus on fresh & processed foods, household products, and garments.Heavily promoted through price and displays

On-going promotions, themed to match holidays and specific categories or special customers

Supermarkets implement a wide variety of programs to build loyalty and attract consumers.

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CHANNELS

What lessons will Vietnamese retailers learn from other Asian countries?

What will be the channel mix in the coming years?

The Now The Future

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Modern Trade Store No. by Format in Asia-Pacific (% annual growth)

Retailers continue to expand their store base across AP with total number of stores increasing by over 25,000. Convenience stores have the fastest growth rate.

Source: Nielsen Retail and Shopper Trend Asia Pacific 2012

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CVS

Fresh Meat & Vegetables

Fresh Coffee

Smoothies

Restaurant

Hot Served Snacks

Additional Product & Service in Convenience StoresAvailable in 2011

Bakery

Books & MagazinesMedia

IT & Stationary

Payment Service

Seasonal Products

Auto & Travel products

Direct Marketing

Home Appliances

RTE Meal

FOOD

NON-FOOD


Convenience in Thailand: Innovation through Non-FMCG range has also attracted the shoppers.

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Thematic promotions

Sup

plier Fairs

Weekly Promotions

Valentine’s DayValentine’s

New Year

Unilever Fair Fonterra Fair

Olay Promotion

Mother’s Day School Holiday

Bi weekly Shopping Calendar

Homecare Fair

Unilever Fair

Weekend Promotion


Minimarts in Indonesia: Thematic promotions and loyalty cards have helped the Mini-Marts succeed apart from the huge store base (+10,000 stores).

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Flashback 2005 Present Fast Forward 2022

Sh

op

pin

g D

esti

nat

ion

– M

ost

Oft

en

Super MarketsVery few & expensive – visit once per year for

curiosity

Grocery Stores

Wholesalers

Wet MarketsAll shoppers bought

daily food in Wet Markets

Metro

Convenience Stores /

Mini Markets

Super MarketsWet market is

thought to be swept out for its dirty and

untidy image. Supermarket

increase its network, thus increases in

the frequency

Super Markets

Wet Markets

Wet Markets

Super Markets

Convenience Stores

Wholesalers

WholesalersGrocery Stores

Grocery Stores

Convenience Stores

Metro MetroInn

ova

tio

n S

eeke

r an

d P

rud

ent

Sh

op

per

Co

nservative &

Valu

e Orien

ted S

ho

pp

er

The change is coming to Vietnam too, as evidenced by some shopper segments…

Source: Nielsen Shopper Focus Groups in HCM,HN 2012

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12/7/2012 1st HI-WAY supercenter

SUPERMARKETSSTORE

NUMBERBY (YEAR)

Co.op Mart + 8√100

20122015

Big C √ 24√ 29

20122013

Lotte Mart + 2 2012

Fivimart + 3 2012

Hiway √ 3√ 20

20132016

31/5/2012 1st FLC Mart

ANNOUNCED EXPANSION PLANS

Notes: (+) new stores. (√) in total

08/12/2011 1st MINISTOP CVS

07/2012 1st C EXPRESS CVS

CVS-MINIMARTS

STORE NUMBER

BY (YEAR)

Co.opFood + 30√ 150

20122015

Satrafoods + 20 2013

TTGD Foods + 2-3 annually

Circle K > 40 2012

Shop & Go √ 100 2012

Family Mart + 27√ 43

2012

Ministop + 30 2012

…and backed up by the continuous retailer expansion

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Belt Buckling

SHOPPERS

Connected Consumers

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Concerns

Discretionary spending

THE ECONOMY

(19%)

JOB SECURITY (18%)

INCREASING

UTILITY BILL

(12%)

HEALTH

(8%)

INCREASING

FOOD PRICE

(7%)

66%Saving 32%

Holiday

29%New

technol-ogies

28%New

clothes

28%Out of home

entertainment

27% Home impro-veme

nt

↓ | vs. 34%*↑ | vs. 18%*

↓| vs. 35%*

= | vs. 30%*

↓ | vs. 37%*↑ | vs. 60%*

*: ↑↓ vs. YA | vs. APAC average

How to utilize spare cash after covering essential living expenses?

Source: Nielsen Global Consumer Confidence Index Q2’2012 – Vietnam

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temptationsuperfluous

Core selling grocery products sales rise

Consumers are tightening their belts. The recessionary mindset shifts consumer thinking from Nice to Have to

Need to Have

Support on compulsory expenditures:

gasoline, gas/electricity, water, insurance, rent…

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Base: All Supermarket shoppers (n = 1500)

Weekly

Every 2 weeks

0%

0%

36%

64%

59%

39%

1%

1%

Less often

Every month

Every 2 weeks

Weekly

2011 2012

Every month

Less often

SHOPPING FREQUENCYTOP 4 IMPACTS ON GROCERY PURCHASE CHOICE

Compared with a year ago, how much impact has each of the following had on your choice of

Grocery Purchases in the last 12 months?

Source: Nielsen Shopper Trends Study 2012

Hardship continues, consumers reduce shopping frequency and are much impacted by price.

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20

22

36

37

37

66

41

Buy more on ‘Promotion’

Buy more Vietnamese brands

Buy bigger pack sizes

Buy cheaper brands

Change shopping channels to save money

Buy more of smaller pack sizes

Buy more of Private Label brands

How do you change your shopping habits to adapt to the price increases?

%

La

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Change in Volume of consumption

Change in Pack size purchased

Change in Brand purchased

More amount

Less amount

Same amount

Big pack

Small pack

Same pack

Cheaper brand

Expensive brand

Same brand

CONSUMER REACTION TO PRICE INCREASE

CHANGES IN CONSUMER BEHAVIOR ACROSS CATEGORIES IN INFLATIONARY PERIOD

Source: Consumer Omnibus Vietnam, Sept 2011

To adapt, consumer are having more economic reactions which vary a lot (i.e. consuming same but larger packs, downgrading as well).

38



Gas reward programs

Will you be the 1st to step into this game?

To react, retailers & manufacturers offer diversified promotions.

39



« staying at home more often »

Shopping patterns can emerge with consumer nesting

Out Of Home entertainment & restaurants

Home cookingFriendliness !

TV-viewing rising

-+

++

CocooningIn both products and Entertainment!

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47 %40 %

Beer can

VALUE & VOLUME % CHANGE YAMAT JUL’12

ValueVolume

Meal Maker285%318%

1.6% vs. 1.5%

2.6% vs. 2.1%

% CHANNEL GROWTH VS. YA

Off vs. On

2011:713,416 vs. 522,394 stores


Nesting consumers are heading back to their house.

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Walmart partners with manufacturers on “family meals for less.”

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Vietnam Grocery report 2012Source: YouTube.com/user/ShopRiteStores

ShopRite cooking on YouTube; monthly recipes featuring store brands.

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• price positioning• simple and innovative Promotions • new value added initiatives

Rising interest in

Value-seeking

In the current climate, consumers and shoppers are re-appraising their store, brand and format choices with new lenses.

Consumer Value ≠ PriceConsumer Value = Benefits/Price

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Shampoo36 Cities TT Enh - Volume % Share | Period Ending MAR12 | Share of Total Category

Source: ACNielsen | Retail Index (<< Viet Nam >> ), data to MAR12

Shampoo36 Cities TT Enh - Volume % Share | Period Ending MAR12 | Share of Total Category

Source: ACNielsen | Retail Index (<< Viet Nam >> ), data to MAR12

Shampoo36 Cities TT Enh - Volume % Share | Period Ending FEB12 | Share of Total Category

Source: ACNielsen | Retail Index (<< Viet Nam >> ), data to FEB12

Shampoo36 Cities TT Enh - Volume % Share | Period Ending FEB12 | Share of Total Category


Sources: RA, Price Tier market: 6 Cities TT Enh, Pack size market: 36 Cities Enh TT + RuralData ended Mar’12

Shampoo36 Cities TT - Purchases % Shr | Period Ending JAN12 | Share of Total Category

Source: ACNielsen | Retail Index (<< Viet Nam >> ), data to JAN12

VOLUME SHARE OF PACK-SIZE RANGES – GT URBAN

Shampoo Fabclean DWL HCLSmall Pack <400ml <3kg =<1000L =<500mlBig Pack >= 400ml >=3kg >1L >500ml

VOLUME SHARE OF PRICE TIER RANGESQuick Retrievals

6 Cities Enh - Volume % Share | Period Ending FEB12 | Share of Total Category


Quick Retrievals6 Cities Enh - Volume % Share | Period Ending FEB12 | Share of Total Category









Consumers also seek value through up-trading to more premium products and or buying big packs or pouch to save money.

45



Taste changing Cigarette

Perfume Fabric Softener

Ecobags

Organic products

Milk Beverage

No fried Instant Noodle

Laundry Liquid

Innovation themes…

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Belt Buckling

SHOPPERS

Connected Consumers

47



Speed of action

Offers flexibilityImage/Buzz

What’s Next: Consumers are more and more

Connected**End of 2012: Every 5 Vietnamese consumers, there will be 1 smartphone

and Tablet users will increase from 2% to 5%

2015: Mobile phones will overtake PCs as the most common web access

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59

49

59

70

12

27

47

48

53

72

11

6

Conduct product research online

Look up product information online

Read a grocery retailer's circular/flyer online

Compare prices for a grocery product online

Browse a manufacturer's website for a grocerycategory

Look for deals online

Look for coupons from an online coupon site

Purchase a product online

Provide feedback about a grocery category throughsocial media (wrote a review, blogged)

Use a digital shopping list

Other

None of the above

Thinking about Household Grocery Shopping, which of the following activities have you done in the last month on any online connected device?*

92% of Vietnamese consumers are more likely to

trust recommendations from people they know*

63% are more likely to trustconsumer opinion posted online**

Sources: * Global Trust in advertising Q3 2011 **Nielsen Global Digital Shopping –Q1 2012

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Marketing return on investment*

Advertisers’ spending - % Chg YTD – Global Average**

Sources: *Nielsen Advanced Analytics Consulting - 2009**Nielsen Global Ad View Pulse Lite Q1 2012

To stay in the game, manufacturers keep an eye on internet advertisements.

50



Collective Buying Power Sharing Experiences

Reviews Ratings

Recommendations Referrals

Sharing Ideas

Forums, Social Q&A

50

Building demand by connecting consumers (with each other and with brand).

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Shopper

Cocooning

Need to Have

Connected

Home Cooking

Home Entertainment

products

Proximity

Innovation

Flexibility of offer

Opportunities

Value-seeking

Private Label

Price

M-commerce

E-Promo

Buzz

Speed of actions

Change and adapt… Now!

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Thank you!

nielsen grocery report 2012

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