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1

10 prevailing 2013 consumer trends

Ralf Matthaes

Regional Managing Director

Cambodia | Laos | Myanmar | Vietnam

January 23, 2013 CanCham Crystal Ball

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What happened in 2012?

2

TNS Worldbank HSBC Caravelle Vinacapital KCS

At the annual Can Cham Crystal Ball event speakers were asked their opinion of the year ahead for 2012 results below

How did your organization fair?

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Crystal Ball 2012 prediction

Key word is caution - wait & see

Consumer spend will be down

Value for money is key as is quality & USP

Major reforms required;

Inflation / devaluation Finance system SoE Debt FDI appeal

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THE GOOD, THE BAD, THE UGLY

2012 macro economic overview

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The Ugly

Source: GSO

Bankruptcies = 53,000 @ Q.2 Almost double of 2011

Bankruptcies FDI (US Billion)

18.6

14.7

13

2010 2011 2012

39,000

49,000

53,000

(est 100,000 full

yr)

2010 2011 Q.2 - 2012

Without new FDI Vietnam

will lose its luster

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The Ugly

Source: TNS CCIP 2008 2012 urban only

Consumer confidence has dropped due to domestic economic woes

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. Vietnams 100 largest state enterprises are indebted about US $50 billion, or more than one third of GDP. Source: Reuters

Bad debt will cause havoc in the near future

Consumer Confidence (%) Bad Debt

89

64

78 79

68

56

0

20

40

60

80

100

2008 2009 2010 2011 2012 2013

? ? ?

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GDP Growth - Bador Good?

6.78%

5.89%

5.03%

2010 2011 2012

Source: GSO

GDP = 5.03% slow down of growth actually has positive effects

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The Good

Source: GSO

Exports are Vietnams saving grace grew again = 19%

Trade Deficit = US $0.1 Billion @

Q.3, balanced 1st time in 20 years

71.6

96.4

114.6

2010 2011 2012

12.4

9.6

0.3

2010 2011 2012

Exports (US Billion) Trade Deficit (US Billion)

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The Good

Inflation = 9.21% which is critical for future growth and success

Source: GSO

Advertising spend looks to grow at 25%

11.75%

18.13%

9.21%

2010 2011 2012

726M

760M

700M

2010 2011 Q3.2012

Inflation (%) ATL Ad Spend (US Million)

Exceed US

$900 Million

YE estimate

Source: Kantar Media

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The Good

Source: GSO

Tourism grew at 9%, down from 19% growth

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

Million Million

Tourism (Million) Overseas remittance (US Billion)

5.0

6.0

6.65

2010 2011 2012

8.26

9

6.3

2010 2011 Q2.2012

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2012 Economic indices scorecard

Ugly = 4 - fewer bad but really bad

Bad = 1 - GDP slow down necessary

Good = 6 - 1st time since 2008 more good then bad

2012 was worse than 2011

For some it was disastrous

For others bountiful

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10 Prevailing 2013

Consumer Trends

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The Ugly

Source: TNS CCIP 2008 2012 urban only

Consumer confidence has dropped due to domestic economic woes

Consumer Confidence (%)

89

64

78 79

68

56

0

20

40

60

80

100

2008 2009 2010 2011 2012 2013

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Recession impact

SEC differences are stark

Education, life stage impact views & involvement

A-B: relatively safe & stable in the storm, yet conscious of whats happening around/ to poorer people

D-E :are doing it tough; its really tough in E- managing a family on 3 million VND a month

too much stress, the worry

always sticks in

my mind, we

dont even have time to feel

happy or

relaxed

I dont feel much different. I

dont feel the impact of

economic crisis

on me

vs

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Is your present job is safe or not?

68

63

20

32

12

5

Aug-12

Jan-13

Present job is safe

Chance of unemployment

Don't know

Employment fears on

the rise leading to

more caution, less

spend

Source: TNS 2013 VCCI Urban only

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5

6

4

5

2

2

45

38

25

29

12

17

34

30

41

35

48

38

14

23

26

30

33

32

1

3

4

2

6

3 8

25

12

11

9

6

3

40

39

34

40

15

24

24

29

34

18

48

26

8

17

18

24

22

30

2

3

3

8

9

4

1

1

13

Value of the Vietnamese

dong

Employment

The cost of living

Vietnam's economy

My personal standard of

living

Foreign investment

Far worse A little worse Same A little better Far better DK

Forecast in the next 12 months -Economic indicators

16

2013 Consumer Confidence index = 56

2012 Consumer Confidence index = 68

Source: TNS 2013 VCCI Urban only

Consumer confidence index has dropped a massive 12 points in just 6

months, driven by consumer fears across most indices - not reassuring

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Recessionary

living

adjustments

Energy

efficiency

Distraction as

entertainment

Authenticity

matters

The mobile

device as the

everything hub

3 of the 12 global trends in Vietnam

Simple

pleasures

The small

movement

Career

reinvention &

extension

Little touch of

luxury Yes / No

Definitely

Recession?

Im over it!

Redistribution

of power

The collective

consciousness Not Yet

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1. Mobile device as the everything hub

Absolutely!

DEVELOP YOUTH

APPLICACTIOSN FOR

YOUR BUSINESS

As the availability of wireless broadband

expands & the cost of advanced mobile phones drop, the mobile device will

become the preferred hub for digital activity.

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2. Distraction as entertainment

Yes, its the new trend especially for youth!

Jump on board!

DEVELOP

ENTERTAINMENT

WEBSITE / LINKS

Understanding people do more than one thing at a time, content creators are turning what could be a negative (distraction) into a positive (immersive) experience. By layering a multitude of media into entertainment, they are creating content designed for simultaneous consumption and engagement.

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3. Authenticity matters

Yes! I need to know the

companies where the

products or services are

from so I have confidence

to use them

GUARANTEE

QUALITY / SAFETY

Authenticity will become paramount for brands as they look to regain credibility and trust. Consumers have lost a great deal of faith in brands; they are searching for truths and clamouring for transparency.

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4. Internet as a research tool

Source: TNS Digital life 2012

As the value of purchases

increases, the amount of

research both off and

particularly online also

increases

ENSURE YOU ARE DIGITAL

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46

18

810

8

54

1310 9

5

2008 2011

Discounted price

Free gift with purchase

Sweepstake/Lucky draw prizes

Get free product/sample

with multiple purchase

Monetary gift

5. Promotion Impact Coupon Crazy

Source: TNS VietCycle 2011 Urban only

On-line Coupons

I often buy stuff I dont even need

right now, because

prices are so

cheap

Discounted prices are preferred promotions, driving Groupon & on-line coupon discount popularity

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2012 saw a mild rebound in FMCG purchasing as CPI reduced

6. Buy / use less conserve / save

2008-2009

2009-2010

2010-2011

2011-2012

18.6

16.7

16.2

16.0

Value growth (%)

18.8

8.5

13.0

13.9

0.1

7.6

3.0

6.0

Price growth (%)

Volume growth (%)

Source: Kantar Worldpanel

Urban only

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40

25

25

25

24

21

21

17

17

15

8

39

54

51

52

54

43

58

58

46

58

45

20

21

24

22

22

36

21

24

36

27

45

1

1

1

1

2

Entertainment & dining out

House hold care products

Household utilities

Personal equipment (mobile

Home appliances (wash

Transportation

Personal care products

Communications

Health care products/services

Food & beverages products

Education

Less Same More DK

7. Consumers spending will be down in 2013

24

Consumer backlash to economic downturn

will result in specific spend cuts

Source: TNS 2013 VCCI Urban only

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X-Men

Manly

international

standard ads

for men

8.Brand innovation & new product launches

Knorr

All-in-one new

multiple spices

for specific

meals

Pro Beauty New Yogurt gives you beautiful

skin

Kent

Taste & strength

control filter Non to menthol

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9. Decreased savings in 2013 ?

26

8

36

24

21

26

20

23

10

14

6

4

7

Aug-12

Jan-13

0% Up to 5% Up to 10% Up to 20% Up to 30% More than 30%

Savings have dropped dramatically in the last 6 months,

meaning spend will truly be down in 2013

Source: TNS VCCI 2013

Urban only

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10. Speed to respond to customer needs

27

Those who understand the needs of their

customers fastest and actually implement a

strategy to meet needs with win in

2013

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Summary

28

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5 Ps to consider in 2013

People / Vietnamese Mindsets

VN Consumers stuck for opportunities need reason to believe

Confidence down savings up Education & health industries booming

Psychological change afoot from community to self

16 million modern youth become consumer s over next 10 years

Product / Extension

F&B is the soul of the nation 47% of spend extend portfolio

Address hygiene & food safety concerns and create guarantees

The word is not innovation it is NEW

Product Position

Convenience and price points critical to success

Vietnamize or authenticate

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5 Ps to consider in 2013

Promotion

Digital think APS / multiple entertainment media / product research

Develop coupon scheme

Place

Review distribution GM vs Modern and urban vs rural

Significant regional differences require different approaches

Drive efforts in rural Vietnam

Price

Over half of consumers are suffering from recession

Review pack type / SKU offer

Discount with an explanation / Groupons

Vietnamese brands are not only competing on price

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2013 Economic forecast

Continued slight downward trend

State Debt is huge

Sagging consumer confidence

More bankruptcies = unemployment

Slower growth & spend

Reliance on cheap exports

Will to address core issues

Vietnam still largely untapped Global investment interest

Tourism & Overseas remittance

More competitive / Lower prices

Cheaper cost of entry

Why?

Positives

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Growth summary

32

Drive differentiation in offer Understand price points Drive loyalty & assurance Cross promote Be faster than competition Maximize digital reach

2013 focus

Bottom is in sight the only way is up!

TNS Vietnam mini credentials 2013

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TNS is the worlds leading custom research agency

34

With offices in over 80 countries, we have more conversations with consumers than anyone else.

Our focus is growth. And the four key areas through which companies can achieve it:

Loyalty and new spend

New customers

New products and services

New markets.

Our world-class solutions help us provide precise plans to uncover growth opportunities in each of these areas.

2

1

3

4

Todays business

New customers

Loyalty & new spend

New products & services

New markets

More money from each customer

More

custo

mers

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Our newest additions include: Cambodia & Myanmar

83 Countries

300 Offices

Over 25000 employees

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Established in 1996

Vietnams consumer insight market leader

100% foreign owned company

300 + full time staff

1,500 exclusive active field force

ISO accredited since 1999

Interviewed over million Vietnamese

Since 2008 we provide strategic business consultancy services via our global network

TNS has affiliates in Laos and since 2012 has full service offices in Cambodia & Myanmar as of January 2013

2012 fast facts

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Strategic exploratory research

Usage & attitude / tracking

Product/taste/fragrance tests

Advertising devt & evaluation

Positioning & segmentation

Customer satisfaction studies

Trade channel research

Mystery shopping

Pricing research

Shopper research

Demand & market size estimation

Coverage & services

HANOI

HCMC

CANTHO

DALAT

NHATRANG

DANANG

HUE

HAI PHONG

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Sector expertise

Consulting

Consumer

Healthcare

Media Technology

Banking & finance

Automotive

Public & Social

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1

3

Our difference

1

2

TNS is the only research group with offices in Cambodia, Myanmar, Thailand and Vietnam covering the greater Mekong region

3

18 years in market experience and most advanced analytics in market

Only research agency in Vietnam with certified quality control system (QCSI=ISO 9000) since 1999

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Finding growth for our clients through our expertise

40

Public & Social

Stakeholder Management Brand & Communication

Retail & Shopper Innovation & Product Development

Qualitative

Automotive

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Complete Consumer Insights

Please contact us at:

Ralf Matthaes

Regional Managing Director

Ralf.Matthaes@tnsglobal.com

Cambodia | Laos | Myanmar | Vietnam

TNS Vietnam

Floor 3-4-5 Agrex Building

58 Vo Van Tan Street

District 3, Ho Chi Minh City, Vietnam

Vietnam site: www.tnsvietnam.vn

Global site: www.tnsglobal.com