Neilsen - Indonesia Middle Class and The Opportunity

1
Kadin Indonesia & NZTE Seminar

Copyright 2012 Nielsen. Confidential and proprietary.
Indonesia has a strong economic profile
GDP Growth
5.7 5.5 6.3 6.5 6.1 6.5 6.7 6.5 6.5 6.5 6.5
4.9 4.8 5.0
3.6 4.5 4.5
0.8
-13.1
98 99 20 01 02 03 O4 O5 06 07 08 O9 10 11 12F Q1 Q2 Q3Q4 2011
Source: Bank Indonesia 2

Economic power is shifting
West
North Europe
America
1.7% East Europe
2.4% 3.8% Asia Pacific
MEAP 6.5%
LATAM 3.5%
4.3%
Average annual GDP growth rates in
emerging markets from 2011 to 2016 is
50% higher than developed markets 3
Source: IMF Sept 2011, World Economic Outlook Report

Indonesia remains the 3rd most optimistic nation
in the world
Q3 2011 Q4 2011
121 122 120
117 117
113 114 112 112 112
108 109
104 104 105 105 104
101 101 99
IN SA ID PH CN BR TH MY AE HK
Base : All respondents n=31038
4

72% of Indonesians are confident in the local jobs
market for 2012
Excellent Good
58
%
60 60 54
62 49
54
54 42
53
20
14 16 14
12 12 9 10 8 5
IN ID PH BR CN SA MY TH VN AE

5

83% are optimistic about their personal finances
over the next year
Excellent Good
63
65
69 58
% 57
58
59
50
55 53
20 17 18 16 13
11 10 12
6 8
ID PH BR IN SA CO CN AE MY TH

6

Indonesian Consumers think its a good time to
spend on the things they want/need this year
Excellent Good
43
%
41
47 40 36
46 42 38 39 32
36 36
12
8 9 7
6
3 2 3 4 3 3 3
IN AU SA HK PH NO BR ID CO CH SE AE

7

8

FMCG Sales grew at 12% in 2011, first double digit
growth since 2008
Indonesia Total Grocery | Total 55 FMCG Categories | YTD 2011 vs. YA
156,159
139,867
129,329
+12%
+8%
95,219 +5%
77,715
63,587.50 +21%
57,243.86
48,642.02 +15%
41929
+14%
+14% +18%
2003 2004 2005 2006 2007 2008 2009* 2010* 2011*
Sales Value in Billion (Rp) 9

Highest growth in 2011 came from suburban
areas
Indonesia by Areas | Value; Growth | Total FMCG 55 Categories
+9.2%
+14.2%
+13.5%
+5.1%
+10.4%
+9.8%
2010 2010 2011
Metro Rest of Urban Rural 10

FMCG still dominates the advertising
spending
OTHERS
17 17
CORPORATE, GOVERNMENT &
9 8 POLITIC
4 4 RETAIL SERVICES
4 4
7 8
FINANCIAL SERVICES
11 10
3 3
AUTOMOTIVE
COMPUTER &
TELECOMMUNICATION
46 47
SMOKING & ACCESSORIES
FMCG
2010 2011
Source: Nielsen, AIS, YTD Dec 2010 vs. YTD Dec 2011, All 11
Media, Based on 20 Nielsens sector values (Commercial Products
only),

12

Largest Middle Class
population in the world 13

Half of Jabotabeks urban
citizens are Middle Class 14
consumers
Same proportion nationally
Monthly Expenditure
(in 000 Rupiah)
Upper 2,001 and Over
Middle 1,000 2,000
Lower Below 1,000
Monthly HH expenditure includes

food, electricity, petrol, telephone, school fee, and
other basic costs. Excludes;
cigarettes, entertainment (dining out, new
clothes, movies, etc), payment on credit 15
cards, installments on cars/motorcycles, house.

16

Fresh Food is their main concern,
it comprises 37% of their
monthly spending
Fresh Food
Transport
FMCG
Telecom Electricity
17
Entertainment

Theyre spending more on
Inflation Rate
11.1
7.0 2.8 5.7 7 6.8 6.2

6.0
5%
4.8
FMCG
5.1 4.6
3.7 3.9
2.8
2009
2008
2010
Jul 10
Aug 10
Jul 11
Aug 11
Apr 11
Feb 10
Nov 10
Feb 11
Jan 10
Jun 10
Mar 10
Apr 10
May 10
Dec 10
May 11
Jan 11
Jun 11
Mar 11
Oct 10
Sep 10
Annual HH Spend on FMCG

(in Rp. 000)
2011
2010
4,118
3,772
+10% 18

Middle Class accounts for 44% of
FMCG spending
3 Yr Ago 2 yr Ago Last Year This Year
47% 45% 44% 42%
42% 42% 44%

41%
12% 14% 15% 14%
19
Upper Class Middle Class Lower Class

In 5 Cities + GJ Urban
Middle class spending is
increasing faster than other
classes
Personal Household
Total Food Beverages
Care Care
All Buyers +10% +9% +13% +15% +8%
Upper +5% +4% +8% +6% +7%
Middle +17% +17% +18% +23% +10%
Lower +7% +2% +14% +23% +5% 20

The growth is driven by increased
Spending per Trip
Spending per Trip
2011 15,141
+5.2%
2010 13,816
Frequency of Shopping
2011 272
-0.7%
2010 273 21

Where are they spending more/less?
Ice cream 1.6X more than
last year
Vs. last
Dishwashing year
Frozen Cologne Baby Ice
Liquid
meat & Diapers Cream
fish 22

23

Mature Categories are stagnant
+0.3% +1.4% +2.4% +4.8%
342,880
143,428
105,727
71,029
Instant Noodles Sweetened Condensed Stock Soup Biscuit

Milk
24

Secondary Categories are growing
Lifestyle Convenience Condiment
104,746
98,000
46,158
32,241 31,597
24,035
12,286
Cheese Ice Cream Seasoning Flour Canned Meat Frozen Fish and Tomato Sauce Chilli Sauce
Meat
+81% +76% +62% +26% +25% +20% +16%25
25
I enjoy exploring several
different alternatives or brands
while shopping
26

Ice Cream:
Growth 32%!
2010 474 39
# of new Variant
/Flavor
2011 466 70
400 450 500 550 27

Existing Variants New Launch
Single pack Ice Cream is
the growth driver
was
In home
consumption
now
28

I always check on prices and
the quality of the products
before I go shopping
29

46% of HHs have bought
Flavored Water
5.3%
More volume purchased on 30
PROMOTION (vs. last

Kadin year) & NZTE Seminar
Indonesia
Bread Spread
Price-conscious people are reducing their consumption
in response to price increase
Price increased by 23.4%

Weight per
purchase -23.2%
decreased by
31

58%
Convenience is more
important than price
32

Packaged Water:
Healthier and more practical choice for drinks
Increase in middle class spend on

+33% packaged water compared to last
year
Increase in gallon
+17% purchases
33

Frozen Meat & Fish:
Practicality & fun for the kids?
38%
28%
Frozen Meat and Fish

penetration among the middle
class is increasing rapidly.
Last Year This Year 34
Middle class volume contribution

35

36

How the middle class
4.5hours
TV/day, in spend their time on media
weekdays
(watch TV yesterday)
Almost
2 hours
Radio/day
34minutes
(listen to radio yesterday)
Newspaper/
day, in Almost
weekdays
(read NPP yesterday)
1.5hours
Internet/day
(internet user in P1W)
37

Television
is still their main family
entertainment
TV Viewing remains stable
since 5 years ago
96% still watch TV.

38

Internet usage
among middle
class has
grown! 22%
16% Growth of internet

13% penetration among
11%
8% middle class is driven
7%
by younger age
groups (10-19 years 39
2006 2007 2008 2009 2010 2011 old.)
72 million Middle Class
Indonesian cell phone users
Penetration of
Cellular among
Middle Class
40

Status Of Emerging Media
among the Middle Class
41

Trying to get connected and
become Netizens
Of Middle Class have
Internet access
Access Internet
through their mobile
handset
78% of non-Internet users are waiting to get

connected. The barriers: adoption of sophisticated 42
devices and affordability.
Key Take outs
Innovation Value for money Convenience

excites Price still plays a Is a driver for
consumers big role growth
43

44

Consumer Confidence of New Zealanders
120
115
Global
110
105
100 100 99 Asia Pacific
99 98 98 99 98
97
95 95
90 90 90 91
89 New Zealand
85
80
Australia
75
70
45

One-third consumers in NZ feel good about job prospects

46

Half of consumers in NZ feel confident with the

47

One-third believes that the year ahead is a good time
to purchase the things they need/want

48

49


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1

Kadin Indonesia & NZTE Seminar

98 99 20 01 02 03 O4 O5 06 07 08 O9 10 11 12F Q1 Q2 Q3Q4 2011

Source: Bank Indonesia 2

Kadin Indonesia & NZTE Seminar

Source: IMF Sept 2011, World Economic Outlook Report

Kadin Indonesia & NZTE Seminar

Base : All respondents n=31348

Kadin Indonesia & NZTE Seminar

Base : All respondents n=31348

Kadin Indonesia & NZTE Seminar

Base : All respondents n=31348

Kadin Indonesia & NZTE Seminar

Kadin Indonesia & NZTE Seminar

Indonesia Total Grocery | Total 55 FMCG Categories | YTD 2011 vs. YA

2003 2004 2005 2006 2007 2008 2009* 2010* 2011*

Sales Value in Billion (Rp) 9

Kadin Indonesia & NZTE Seminar

2010 2010 2011

Metro Rest of Urban Rural 10

Kadin Indonesia & NZTE Seminar

Kadin Indonesia & NZTE Seminar

Kadin Indonesia & NZTE Seminar

Kadin Indonesia & NZTE Seminar

Upper 2,001 and Over

Middle 1,000 2,000

Lower Below 1,000

Monthly HH expenditure includes

Kadin Indonesia & NZTE Seminar

Kadin Indonesia & NZTE Seminar

Kadin Indonesia & NZTE Seminar

7.0 2.8 5.7 7 6.8 6.2

Annual HH Spend on FMCG

Kadin Indonesia & NZTE Seminar

47% 45% 44% 42%

42% 42% 44%

12% 14% 15% 14%

Kadin Indonesia & NZTE Seminar

All Buyers +10% +9% +13% +15% +8%

Upper +5% +4% +8% +6% +7%

Middle +17% +17% +18% +23% +10%

Lower +7% +2% +14% +23% +5% 20

Kadin Indonesia & NZTE Seminar

Kadin Indonesia & NZTE Seminar

Kadin Indonesia & NZTE Seminar

Kadin Indonesia & NZTE Seminar

Instant Noodles Sweetened Condensed Stock Soup Biscuit

Kadin Indonesia & NZTE Seminar

+81% +76% +62% +26% +25% +20% +16%25

Kadin Indonesia & NZTE Seminar

400 450 500 550 27

Kadin Indonesia & NZTE Seminar

Kadin Indonesia & NZTE Seminar

PROMOTION (vs. last

Price increased by 23.4%

Kadin Indonesia & NZTE Seminar

Kadin Indonesia & NZTE Seminar

Increase in middle class spend on

Kadin Indonesia & NZTE Seminar

Frozen Meat and Fish

Middle class volume contribution

Kadin Indonesia & NZTE Seminar

Kadin Indonesia & NZTE Seminar