Vietnam Retail Market_Report from Neisen.pdf
- 1. 1 Copyright © 2017 The Nielsen Company. Confidential and proprietary. Copyright © 2017 The Nielsen Company. Confidential and proprietary. WHAT’S NEXT? TODAY’S CHANGE IS TOMORROW’S OPPORTUNITY
- 2. 2 Copyright © 2017 The Nielsen Company. Confidential and proprietary. VIETNAM’S ECONOMY MAINTAINS STELLAR PERFORMANCE, WITH INCREASED CONSUMER SPENDINGS AFTER NECCESSITIES 5.6 4.4 4.9 5.2 6.3 5.5 5.7 7.1 GDP % Growth vs. YA HIGHEST HALF YEAR GDP since 2011 7.1 0.7 3.5 2.9 0 1 2 3 4 5 6 7 8 Agriculture, Forestry & Fishery Industry & Construction Service Total GDP Total GDP Service Industrial & Construction Agriculture, Forestry & Fishery 112 104 105 108 109 107 107 112 117 116 115 124 120 *2017 only has CCI Q2, Q3 & Q4 VIETNAM CONSUMER CONFIDENCE INDEX TOP SPENDING AFTER NECESSITIES 38 36 31 30 29 49 46 46 38 43 Holidays New clothes New technology products Home improvements / decorating Out of home entertainment Q2 2017 Q2 2018 GDP CONTRIBUTION BY SECTORS Source: GSO. Consumer Confident Index Q1’18 2015 2016 2017 Q11 8 Q21 8
- 3. 3 Copyright © 2017 The Nielsen Company. Confidential and proprietary. Retail 8.2% Finance & Banking 7.6% Agriculture 4% Source: *Nielsen Retail Audit Data FMCG Urban (YTD TY ); Desk Research http://www.vietnam-briefing.com/news/vietnams-economy-sees-strong-growth-in-the-first-half-of-2018.html/ OTHER INDUSTRIES ARE GROWING FASTER THAN FMCG FAST GROWTH SLOW GROWTH GDP 7.1% Services 6.9% Industry 9% Manufacturing 13 % Exports 16% Imports 10% FMCG* 3.2% GROWTH 1st HALF OF 2018 Phones 15.4% Transportation 7.7% Consumer Electronics 9% Small Appliances 11% Travel 9.4% Accommodation & Catering services 7%
- 4. 4 Copyright © 2017 The Nielsen Company. Confidential and proprietary. WHILE TRADITIONAL TRADE BEGINS TO SHOW SIGNS OF RECOVERY, MODERN TRADE CONTINUES TO BE IN THE SPOTLIGHT Versus year ago – MT Urban except Beer, Beverage and Cigarette is MT Partial FMCG including 33 categories: Shampoo, Hair Conditioner, Toilet Soap, Toothpaste, Toothbrush, Feminine Protection, Laundry, Dishwashing Liquid, Fabric Softener, Household Cleaner, H.I. Aerosol, H.I. Coil, Insecticide Control, Msg-Bouillon, Instant Noodles, Biscuits, Pie & Sponge Cake, Soft Drink, Energy Drink, RTD Tea, Fruit Juice, Package Water, Sport Drink, Coffee , Beer, RTD Milk, SCM, Sauces, Chili Sauce, Tonic Food Drink, Cigarette, Baby Diaper, Milk Powder TOTAL VIETNAM (URBAN) FMCG MARKET DYNAMICS (weighted average) 1.1% 1.1% 0.8% 1.2% 1.0% 1.0% 1.1% 2.0% 5.4% 4.4% 5.0% 1.1% 0.8% 1.6% 3.2% 6.5% 5.2% 6.2% 2.1% 1.8% 2.7% MAT YA MAT TY Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Unit Value Growth Volume Growth Nominal Value Growth MAT YA MAT TY Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 * Backdata not available due to change in store universe from 6 Cities coverage to Total Urban TOTAL VIETNAM (URBAN) – CHANNEL PERFORMANCE VALUE CONTRIBUTION AND GROWTH – MAT Q2-2018 82% 18% 3.2% 1.6% 11.3% Total FMCG TT Urban MT Urban
- 5. 5 Copyright © 2017 The Nielsen Company. Confidential and proprietary. INCREASE PENETRATION OF MT STORES 1 DIVERSE ACTIVITIES OF M&A IN RETAIL INDUSTRY 2 • Existing chains continue to open new stores • New chains entering the market: 7-eleven (Japan), Cheers (Saigon Co.op), L-speed (Korea), GS25 (Korea) 3160 4543 • The increasing entries of foreign retailers into market through M&As, especially by Thailand companies • Diverse activities has stimulated the dynamics of retail landscape No. of chained MT stores in Jun’18 vs YA ~45% increased compared to Jun’17 MODERN TRADE KEEPS GROWING IN TERM OF STORE EXPANSION, PROVIDING CONSUMERS MORE CHOICES TO SHOP AND BUY Source: Retailer Official Websites 2017 2018
- 7. 7 Copyright © 2017 The Nielsen Company. Confidential and proprietary. WHAT’S NEXT VIETNAM URBANIZATION CONVENIENCE HEALTH AND WELLNESS ECOMMERCE
- 8. 8 Copyright © 2017 The Nielsen Company. Confidential and proprietary. MORE PEOPLE WILL LIVE IN MIXED DENSITY CITIES (1-5 MILLION) THAN MEGA CITIES. WHERE IS YOUR NEXT SOURCE OF GROWTH? Source: Study What’s Next In Emerging Markets Study, 2018 34% 40% 66% 60% 2015 2025 Urban Rural % urban population by city size in people 49% 40% 3% 10% 6% 19% 26% 23% 23% 2015 2025 <300K 300k-500k 500k-1M 1M-5M 5M-10M 10M+ % population by urbanity DRIVER > URBANISATION
- 9. 9 Copyright © 2017 The Nielsen Company. Confidential and proprietary. Source: Nielsen Alpha Delta Forecasting Report THEN, THE FORMULA OF GROWTH MAY NOT EXIST IN OUR MEGA-CITIES IN THE FUTURE. Type of region by population, 2016 Mega-cities (≥5 million) Large middleweights (1 million–5 million) Small middleweights (500,000–1 million) Small regions (300,000-500,000) Less than 2% 2–5% More than 6% Annual demand growth for product category, 2016 – 2030 FORECAST: DEMAND GROWTH FOR DETERGENT, 2016 - 2030 DRIVER > URBANISATION
- 10. 10 Copyright © 2017 The Nielsen Company. Confidential and proprietary. Number of Chained Convenient store & Minimart (stores) URBANIZATION LEADS TO CONVENIENCE NEED, AND CVS/MM EXPANSION Source: Retailers’ official website. CVS includes Circle K, B’s Mart, Family Mart, Shop & Go, Mini Stop, 7-eleven. MM includes: VinMart+, Coop Food, SatraFoods, Bach Hoa Xanh, Coop Smile, T-Mart, My Auchan. Nielsen Shopper Trend 2016 - Total Hanoi & Ho Chi Minh (All HM/SM shoppers n=1346) 700 699 711 728 731 745 744 774 783 788 795 818 827 823 1134 1281 1313 1227 1230 1278 1319 1358 1399 1456 1557 1726 1810 1817 0 500 1000 1500 2000 2500 3000 Convenient Store Minimart Top 3 important attributes for shopping destination (index) Easy to find what I need Convenient to get to Low prices SUPERMARKET CVS/MM Efficient checkout Easy to find what I need Convenient to get to 7.7 6.6 5.7 9.7 9.0 7.8 DRIVER > CONVENIENCE
- 11. 11 Copyright © 2017 The Nielsen Company. Confidential and proprietary. CVS & MM GAIN SIGNIFICANT PENETRATION & FREQUENCY Where do consumers shop? Base: All shoppers Ref: Q7a Which of these types of stores have you visited in the past 4 weekss? | Ref: Q8 On average, how often would you shop at the following type of store? Ref: Q7d Which of these types of stores would be the one where you normally buy most of your food and grocery items? 2017 % Change (+/-) How often do they shop ? Ave. per month 2018 2017 Channel spend most in? 2018 2018 2017 Wet Markets Traditional Grocery Supermarkets Personal Care Convenience Stores Minimarts Department Store Cosmetic Shops -10 -3 -5 +5 +13 +11 +1 +2 21.9 7.6 2.1 1.1 3.2 1.7 0.7 0.8 0.5 18.9 9.5 2.5 1.2 4.5 2.2 0.8 0.8 0.6 32 14 39 1 11 2 0 0 0 46 10 36 - 6 1 1 - - 91 84 87 34 29 6 12 7 1 81 81 78 39 42 17 13 9 0 CHANNEL PENETRATION, FREQUENCY & SPEND MOST DRIVER > CONVENIENCE CHANNEL PENETRATION, FREQUENCY & SPEND MOST
- 12. 12 Copyright © 2017 The Nielsen Company. Confidential and proprietary. VIETNAMESE ARE VERY CONSCIOUS ABOUT HEALTH, AND THEIR CONCERN IS ONLY INCREASING Source: Nielsen Global Consumer Confidence Survey Q4’17, Nielsen Global Health and Wellness Report 2015; Vietnam Ministry of Health – 2015, The United Nations, World Population Ageing 2015 Prevalence of obesity & overweight rises from 2.3% in 1993 to 15% in 2015 Food poisoning death toll x2 in 2017 vs. 2016 Vietnam is one of the fastest aging countries (#25 global). Estimated population aged 60+ is 28% in 2050 OVERWEIGHT FOOD SCANDALS AGING POPULATION DRIVER > HEALTH & WELLNESS Health as a top concern in Vietnam 35 27 29 34 35 32 34 42 38 37 40 41 42 • 83% 83% actively make dietary choice to prevent bad health condition (vs. 79% global) • 89% willing to pay more for foods that promote health benefits (vs. 76% global) • 88% read packaging labels carefully for nutrition contents (vs. 75% global) TAKING ACTIONS
- 13. 13 Copyright © 2017 The Nielsen Company. Confidential and proprietary. 57% 63% 58% 60% I trust health claims on food packages Health claims are just a way for manufacturers to charge more I feel more positively about companies that are transparent about how products were made Global Vietnam NEED TO RESOLVE THE TRUST ISSUES Source; Global Ingredient and Dining-out Trends Report Aug’16 | Global Survey We are what we eat Jan’15 73% 83% DRIVER > HEALTH & WELLNESS
- 14. 14 Copyright © 2017 The Nielsen Company. Confidential and proprietary. E-commerce % Contribution to total FMCG Sales – 2016 • Source: Nielsen estimation based on Nielsen Retail Measurement Service, Nielsen Consumer Panel Service, Nielsen Online sales e-book and other leading industry sources FMCG E-COMMERCE IS STILL AT EARLY STAGE IN VIETNAM DRIVER > ECOMMERCE
- 15. 15 Copyright © 2017 The Nielsen Company. Confidential and proprietary. Vietnam FMCG E-commerce foundational elements • Source: CIA World Factbook; Nielsen: Cross Platform Insights 2016. *as compared to total 30 developed & developing countries – Nielsen global key drivers for Grocery E-commerce 2018 49 52 54 55 2017 2018 2019 2020 Minimum level for significant FMCG E-commerce size* 80 INTERNET PENETRATION 44 50 55 59 2017 2018 2019 2020 Minimum level for significant FMCG E-commerce size* 67 SMART PHONE PENETRATION FOUNDATIONAL ELEMENTS SHOW IMPROVEMENT, BUT YET TO MEET THE THRESHOLD FOR SIZEABLE E-COMMERCE MARKET DRIVER > ECOMMERCE
- 16. 16 Copyright © 2017 The Nielsen Company. Confidential and proprietary. Have internet access Are willing to spend discretionary income WHO ARE THEY? HOW THEY ACT? 40 Million people in 2025 (x1.7 vs 2017) 99 Billion USD of annual spending in 2025 (x2.0 vs 2017) 48% Total consumer spending in 2025 (x1.3 vs 2017) 99 Normal Internet User 117 Connected Spenders Confidence Index They stay connected with brands Engage with other viewers on social media while watching advertising Appreciate learning about products through advertising Expect a relevant and personalized advertising experience 77% 53% 54% They review products online before making purchase Read product review and feedbacks 73% Check promotion 70% Check brand’s reputation and quality • Source: Demand Institutes, Nielsen Omni - Shopper Trend 2017 64% E-COMMERCE MAY NEED MORE TIME TO GET BIG, BUT OPPORTUNIES ARE ALREADY HERE WITH CONNECTED SPENDERS CONNECTED SPENDERS DRIVER > ECOMMERCE
- 17. 17 Copyright © 2017 The Nielsen Company. Confidential and proprietary. Categories Vietnamese online shopper purchased in L3M 61 49 41 40 38 36 34 31 29 27 24 23 Fashion Cosmetics Personal care Books/ Stationary IT & Mobile Consumer electronics Home care products Grocery food Travel Beverage Baby care products Event tickets • Source: Nielsen Omni - Shopper Trend 2017 - All respondents Total (n=1005) MANY CONSUMERS HAVE PURCHASED ONLINE DRIVER > ECOMMERCE
- 18. 18 Copyright © 2017 The Nielsen Company. Confidential and proprietary. ORGANISATION SOCIETY MARKET GLOBAL/MACRO BRANDS INDUSTRY TO IMPROVE IS TO CHANGE; TO BE PERFECT IS TO CHANGE OFTEN” Winston Churchill
- 19. 19 Copyright © 2017 The Nielsen Company. Confidential and proprietary. Copyright © 2017 The Nielsen Company. Confidential and proprietary.