Vietnam Retail Market - Report From Neisen

WHAT’S NEXT?
TODAY’S CHANGE IS
TOMORROW’S OPPORTUNITY
Copyright © 2017 The Nielsen Company. Confidential and proprietary.
Copyright © 2017 The Nielsen Company. Confidential and proprietary. 1

VIETNAM’S ECONOMY MAINTAINS STELLAR PERFORMANCE,
WITH INCREASED CONSUMER SPENDINGS AFTER
NECCESSITIES
HIGHEST HALF YEAR GDP since 2011 VIETNAM CONSUMER CONFIDENCE INDEX
GDP % Growth vs. YA 124 120
117 116 115
7.1 112 112
104 105 108 109 107 107
5.6 5.2 6.3 5.5 5.7
4.9
4.4
Q11 Q21
2015 2016 2017
8 8
*2017 only has CCI Q2, Q3 & Q4
GDP CONTRIBUTION BY SECTORS TOP SPENDING AFTER NECESSITIES
Total GDP Total GDP
7.1 Q2 2017 Q2 2018

49
46 46
43
2.9 38 36 38
Service Service
31 30 29
Industrial & Constructio Industry & Construction
3.5
Agriculture, Forestry & Fishey Agriculture, Forestry &Fishery
0.7 Holidays New clothes New technology Home improvements Out of home
0
products / decorating entertainment
5 6 7
1 2 3 4
Source: GSO. Consumer Confident Index Q1’18 8 2

OTHER INDUSTRIES ARE GROWING FASTER THAN
FMCG
SLOW GROWTH GROWTH 1st HALF OF 2018 FAST GROWTH
GDP 7.1%
Agriculture Services Industry
4% 6.9% 9%
Finance & Banking Retail Manufacturing

7.6% 8.2% 13 %
Imports Exports
10% 16%
FMCG* Consumer Electronics
Phones
3.2% 9%
15.4%
Transportation Accommodation & Travel Small Appliances
7.7% Catering services 9.4% 11%
7%
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- 3
WHILE TRADITIONAL TRADE BEGINS TO SHOW SIGNS OF
RECOVERY, MODERN TRADE CONTINUES TO BE IN THE
SPOTLIGHT
TOTAL VIETNAM (URBAN) FMCG MARKET DYNAMICS TOTAL VIETNAM (URBAN) – CHANNEL PERFORMANCE
(weighted average)
MAT MAT VALUE CONTRIBUTION AND GROWTH – MAT Q2-2018
YA TY Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18
YA TY Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18
6.5% 6.2%
5.2% 18% 3.2%

5.4% 1.6%
3.2% 5.0%
4.4% 2.7%
82% 11.3%
2.0% 2.1% 1.8%
1.1% 1.6%
0.8%
1.1% 1.1% 1.2% 1.0% 1.0% 1.1%
0.8%
Total FMCG TT Urban MT Urban
Unit Value Growth Volume Growth Nominal Value Growth
* Backdata not available due to change in store universe from 6 Cities coverage to Total Urban
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
4
MODERN TRADE KEEPS GROWING IN TERM OF STORE
EXPANSION, PROVIDING CONSUMERS MORE CHOICES
TO SHOP AND BUY
No. of chained MT stores in Jun’18 vs YA 1 INCREASE PENETRATION OF MT STORES
• Existing chains continue to open new stores
• New chains entering the market: 7-eleven
2018
(Japan), Cheers (Saigon Co.op), L-speed (Korea),
4543 GS25 (Korea)

~45% increased
compared to
3160 Jun’17
2 DIVERSE ACTIVITIES OF M&A IN RETAIL INDUSTRY
2017
• The increasing entries of foreign retailers
into market through M&As, especially by
Thailand companies
• Diverse activities has stimulated the
dynamics of retail landscape
Source: Retailer Official Websites 5

6
WHAT’S NEXT
VIETNAM
HEALTH AND
URBANIZATION CONVENIENCE ECOMMERCE
WELLNESS
7
MORE PEOPLE WILL LIVE IN MIXED DENSITY CITIES (1DRIVER-5 > URBANISATION
MILLION) THAN MEGA CITIES. WHERE IS YOUR NEXT SOURCE
OF GROWTH?
% population by urbanity % urban population by city size in people
23% 23%
60% 19%
66% 26%
6%
3%
10%
49%
40% 40%
34%
2015 2025
2015 2025
<300K 300k-500k 500k-1M

Urban Rural
1M-5M 5M-10M 10M+
Source: Study What’s Next In Emerging Markets Study, 2018 8

DRIVER > URBANISATION
THEN, THE FORMULA OF GROWTH MAY NOT EXIST IN OUR

MEGA-CITIES IN THE FUTURE.
FORECAST: DEMAND GROWTH FOR DETERGENT, 2016 - 2030
Type of region by
population, 2016
Small regions (300,000-

500,000)
Small middleweights
(500,000–1 million)
Large middleweights
(1 million–5 million)
Mega-cities
(≥5 million)
Annual demand growth for

product category, 2016 –
2030
Less than 2%
2–5%
More than 6%
Source: Nielsen Alpha Delta Forecasting Report 9

DRIVER > CONVENIENCE
URBANIZATION LEADS TO CONVENIENCE NEED,

AND CVS/MM EXPANSION
 Number of Chained Convenient store & Minimart (stores)  Top 3 important attributes for shopping destination (index)
3000
2500 Convenient Easy to

Low prices
find what I
to get to need
2000
SUPERMARKET 6.6 5.7

1500 1134 1281 1313 1227 1230 1278 1319 1358 1399 1456 1557 1726 1810
7.7
CVS/MM 9.0 7.8

1000 9.7
1817
500 Convenient Efficient
Easy to find checkout
to get to
what I need
0
700 699 711 728 731 745 744 774 783 788 795 818 827 823
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)
10
DRIVER > CONVENIENCE
CVS & MM GAIN SIGNIFICANT PENETRATION &

FREQUENCY
CHANNEL PENETRATION, FREQUENCY & SPEND MOST
Where do consumers shop? How often do they shop ? Channel spend most in?
% Ave. per month
Change
2018 2017 (+/-) 2018 2017 2018 2017
Wet Markets 81 91 -10 18.9 21.9 32 46
TraditionalGrocery 81 84 -3 9.5 7.6 14 10

Supermarkets 78 87 -5 2.5 2.1 39 36
PersonalCare 39 34 +5 1.2 1.1 1 -
ConvenienceStores 42 29 +13 4.5 3.2 11 6
Minimarts 17 6 +11 2.2 1.7 20 1
Department Store 13 12 +1 0.8 0.7 0 1
-
Cosmetic Shops 9 7 +2 0.8 0.8
CHANNEL PENETRATION, FREQUENCY & SPEND MOST
0.6 0.5 0 -
0 1
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? 11
DRIVER > HEALTH & WELLNESS
VIETNAMESE ARE VERY CONSCIOUS ABOUT HEALTH, AND

THEIR CONCERN IS ONLY INCREASING
OVERWEIGHT FOOD SCANDALS AGING POPULATION

Vietnam is one of the fastest
Prevalence of obesity & overweight rises
Food poisoning death toll x2 in 2017 vs. aging countries (#25 global).
from 2.3% in 1993 to 15% in 2015 2016 Estimated population aged 60+ is
28% in 2050
Health as a top concern in Vietnam TAKING ACTIONS
35 34 35 32 34
42
38 37 40 41 42 • 83% 83% actively make dietary choice to
27 29 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)
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 12
DRIVER > HEALTH & WELLNESS
NEED TO RESOLVE THE TRUST ISSUES
I feel more positively about

I trust health claims on food Health claims are just a way for companies that are transparent
packages manufacturers to charge more about how products were made
57% 60% 83%

63% 58% 73%
Global Vietnam
Source; Global Ingredient and Dining-out Trends Report Aug’16 | Global Survey We are what we eat Jan’15 13
DRIVER > COMMERCE
FMCG E-COMMERCE IS STILL AT EARLY STAGE IN
VIETNAM
 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
14
DRIVER > ECOMMERCE
FOUNDATIONAL ELEMENTS SHOW IMPROVEMENT, BUT YET TO

MEET THE THRESHOLD FOR SIZEABLE E-COMMERCE MARKET
 Vietnam FMCG E-commerce foundational elements
INTERNET PENETRATION SMART PHONE PENETRATION
80
Minimum level for significant FMCG E-commerce size*
67
Minimum level for significant FMCG E-commerce size*
59
54 55 55
52 50
49
44
2017 2018 2019 2020 2017 2018 2019 2020
• 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 15
E-COMMERCE MAY NEED MORE TIME TO GETDRIVERBIG,> ECOMMERCE
BUT OPPORTUNIES ARE ALREADY HERE WITH CONNECTED
SPENDERS
WHO ARE THEY? HOW THEY ACT?
They stay connected with brands
Engage with other viewers on social media while

64% watching advertising
Have internet access Are willing to spend
Appreciate learning about products through
discretionary income
53%
advertising
40 Million people in 2025 (x1.7 vs 2017)

54% Expect a relevant and personalized advertising
experience
99 Billion USD of annual spending in 2025 (x2.0 vs 2017)

They review products online before
making purchase
48% Total consumer spending in 2025 (x1.3 vs 2017)
77% 73% 70%
99 Confidence Index 117
Normal Connected CONNECTED Read product
review and
Check
promotion
Check brand’s
reputation and
Internet User Spenders
• Source: Demand Institutes, Nielsen Omni - Shopper Trend 2017
SPENDERS feedbacks quality
DRIVER > ECOMMERCE
MANY CONSUMERS HAVE PURCHASED ONLINE

 Categories Vietnamese online shopper purchased in L3M
61
49 41 40 38 36 34 31 29 27 24 23
Fashion Cosmetics Personal Books/ IT & Mobile Consumer Home care Grocery Travel Beverage Baby care Event
care Stationary electronics products food products tickets
• Source: Nielsen Omni - Shopper Trend 2017 - All respondents Total (n=1005) 17
TO IMPROVE IS TO CHANGE; TO BE
PERFECT IS TO CHANGE OFTEN”

Winston Churchill
18
Copyright © 2017 The Nielsen Company. Confidential and proprietary. 19

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WHAT’S NEXT?

Copyright © 2017 The Nielsen Company. Confidential and proprietary. 1

GDP CONTRIBUTION BY SECTORS TOP SPENDING AFTER NECESSITIES

Total GDP Total GDP

7.1 Q2 2017 Q2 2018

Industrial & Constructio Industry & Construction

Agriculture, Forestry & Fishey Agriculture, Forestry &Fishery

Source: GSO. Consumer Confident Index Q1’18 8 2

Finance & Banking Retail Manufacturing

5.2% 18% 3.2%

Unit Value Growth Volume Growth Nominal Value Growth

4543 GS25 (Korea)

Source: Retailer Official Websites 5

<300K 300k-500k 500k-1M

Source: Study What’s Next In Emerging Markets Study, 2018 8

THEN, THE FORMULA OF GROWTH MAY NOT EXIST IN OUR

Small regions (300,000-

Annual demand growth for

Source: Nielsen Alpha Delta Forecasting Report 9

URBANIZATION LEADS TO CONVENIENCE NEED,

2500 Convenient Easy to

SUPERMARKET 6.6 5.7

CVS/MM 9.0 7.8

CVS & MM GAIN SIGNIFICANT PENETRATION &

TraditionalGrocery 81 84 -3 9.5 7.6 14 10

Supermarkets 78 87 -5 2.5 2.1 39 36

PersonalCare 39 34 +5 1.2 1.1 1 -

ConvenienceStores 42 29 +13 4.5 3.2 11 6

Minimarts 17 6 +11 2.2 1.7 20 1

Department Store 13 12 +1 0.8 0.7 0 1

VIETNAMESE ARE VERY CONSCIOUS ABOUT HEALTH, AND

OVERWEIGHT FOOD SCANDALS AGING POPULATION

Health as a top concern in Vietnam TAKING ACTIONS

NEED TO RESOLVE THE TRUST ISSUES

I feel more positively about

57% 60% 83%

 E-commerce % Contribution to total FMCG Sales – 2016

FOUNDATIONAL ELEMENTS SHOW IMPROVEMENT, BUT YET TO

INTERNET PENETRATION SMART PHONE PENETRATION

Minimum level for significant FMCG E-commerce size*

2017 2018 2019 2020 2017 2018 2019 2020

They stay connected with brands

Engage with other viewers on social media while

40 Million people in 2025 (x1.7 vs 2017)

99 Billion USD of annual spending in 2025 (x2.0 vs 2017)

MANY CONSUMERS HAVE PURCHASED ONLINE

PERFECT IS TO CHANGE OFTEN”

Copyright © 2017 The Nielsen Company. Confidential and proprietary. 19

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