The changing face of Vietnam Consumerism. 10 years of growth. AMCHAM September 13, 2005

Transcription

1 The changing face of Vietnam Consumerism 10 years of growth AMCHAM September 13, 2005

2 TNS Vietnam Credentials

3 TNS Vietnam - Fast Facts 2004 Established in full time staff 1,281 exclusive field force Interviewed over! million Vietnamese Services Customized Research Consumer Panel Media Monitoring & Expenditure TV Audience Measurement

4 Complete National Coverage VIETNAM S MARKET LEADER Hanoi Hai Phong Hue Da Nang TNS HAS BEEN ISO ACCREDITED SINCE 1999 Dalat Can Tho Nha Trang HCMC

5 Complete Research Solutions Media Spend Trends Consumption Planning Targeting Optimization Consumer Panel Real time consumption Volume retail data Penetration Brand loyalty Repeat purchase Customized Research To answer your general issues with standard solutions Branded Solutions To answer your specific issues with specifically designed solutions

6 The Changing Face of Vietnam Consumerism 10 years of growth Prepared by: Ralf Matthaes Managing Director TNS Vietnam

7 The Changing Face Agenda Demographics Macros Wealth Distribution Ownership Consumer Trends The Retail Environment Consumer Insights Changing Attitudes

8 TNS VietCycle: Run every 18 months since 1998 N = 1,200 Hanoi & HCMC Age 15 to 45 Sources TNS Asiapanel: (daily diary collection) N = 1,600 panel households (6,400 individuals/week) Hanoi, Danang,, HCMC, Can Tho all household members (88,000 diaries / year) Bureau of Statistics (Hanoi) Asian Business Monitor 12 years of personal observations

9 Vietnam Demographics

10 Vietnam Snap-shot Population: 82 million in 2005 vs. 72 million in ethnic groups = less that 1.5 million (59 make-up 80%) Kinh is the major ethnic group comprising 80% + Ethnic Chinese second largest Buddhism, followed by Catholicism are main religions Country divided into 64 provinces 76% Rural & 24% urban split (80% in 1995) Main cities are: HCMC m Hanoi m Danang m Hai Phong m Can Tho m [1999 urban populations]

11 Cantho, n= HCMC, n=376 Danang, n=276 Hanoi, n=363 Total, n= Vietnam 48 Facts June Cantho, n=274 Male, n=639 Danang, HCMC, n=276 Female, n=376 n= Total, n= Number of times family had not enough to eat in last 12 months Hanoi, n= Often Sometimes Rarely Never 1 Cantho, Male, n=639 n= Devoted time to non-for-profit organization in last 12 months or not Female, Danang, n=650 n=276 Total, n= Yes, devoted time, No, not devoted time Male, n= Religious person or not 51 2 Total, Female, n=1289 n= A religious person Not a religious person A convinced atheist Only 5% of Vietnamese note they do not have enough to eat Almost half devote time to charitable organizations Almost half do not subscribe to any religion

12 Vietnam s s population pyramid 35 +, 31% Bureau of Statistics: Hanoi 25 to 34, 17% 15 to 24, 20% Below 15, 32% 52% of Vietnam s s population are under 24 years of age, meaning that Vietnam s s best consumer years are still ahead

13 Population Growth ' s 1 2 0, , , , , , , , , , , , Population expected to reach ~ 100 m in 20 years

14 We are quite well educated Literacy: 94% Grade 1-9, 12.6% No. formal education, 0.3% Post-University, 1.3% Grad 10-12, 45.4% University graduate/student, 30.8% Source: VietCycle College graduate/student, 9.6% 87% of the urban pop. aged 15 to 40 yrs have formal education to at least Grade 10 level

15 Demographic Summary Empowerment of young consumers,, once they hit the employment market, will drive the consumer economy Continued migration from rural to urban centres, creating more demand for white collar work and creature comforts Highly educated work force, with more sophisticated tastes, more choice and much higher expectations More privatization of the work force, thus more competition

16 Vietnam macros

17 Vietnam past and present ex patriates 66 43,000 66,000 tourists 3,000 2 mio. 2.9 mill. ad spending 1 mio. 124 mio. 230 mill. ad agencies motorc y c le penetration 20.0% 65.0% 92% urban f ix ed phone lines 1.0% 35.0% 76% urban mobile phones 1.0% 3.0% 37% urban internet N/A 3.0% 8.0% Top 25 Global Brands N/A Note: Some figure are estimates only

18 GDP Growth Rate 6.0% 9.5% 6.7% Impact of Asian economic recession 7.7% Vietnam s s GDP is second fastest growing in Asia & should continue to do so over the next 5 years

19 GDP Per Capital (US$) Doi Moi Impact GDP per capita should grow by at least 20% per year Source: World Bank

20 80% 70% 60 60% 50 50% 40 40% 30 30% % % 0% -10% 67.5% Inflation rate 12.7% -0.6% 9.5% Inflation rates will be one of the key hindrances, With respect to Vietnam s s ongoing development

21 Marco Summary By 2024 Vietnam shall boast Asia s s third largest population (exceed Japan s) Outside of China, Vietnam will experience the fastest growth rate of GDP (WTO assession paramount) GDP should double by 2010 (20% per year) FDI & Privatization will fuel Vietnam s s economic development Inflation is the key barrier to Vn growth

22 Wealth Distribution Source: TNS VietCycle - Vietnam s Lifestyle Monitor , Asiapanel

23 The Growth of Income SEC Scale A = US $1,001 + B = US $1, C = US $ D = US $ E = US $ F = US $150 below Source: TNS VietCycle Class AB Class CD Class EF In the past 6 years, AB SEC has more than doubled, while the poorer EF SEC represents less than half of the urban population of Hanoi & HCMC

24 18 16 Wealth distribution SEC Scale A = US $1,001 + B = US $1, C = US $ Class A Class B Class C /3 RD of Urban Vietnamese can be considered a part of the consumer class

25 Quarterly average spend 1.25 mill % % 1.44 mill % % 1.56 mill % % Increase 10% 5% % % % 5% BEVERAGES FOOD OTHER NON FOOD Total FMCG urban Vietnam Total spend on in-home purchases increased by 25% from 2002 to 2004 Source: TNS Asiapanel

26 How do we $ave$ ave? Keep in a safe place Deposit in a bank Convert into gold Buy insurance Convert into hard currency Source: TNS VietCycle: Financial institutions are gaining trust

27 Wealth Summary AB SEC has doubled in the last 5 years The poorer classes represent less that 50% of urban populations A middle class is emerging,, but at a slower rate than the smaller but more affluent wealthier classes The immense increase of disposable income is driving competition for consumer goods Financial institutions are gaining the trust of the wealthier classes indicating a change in financial transactions and savings

28 Ownership Source: TNS VietCycle - Vietnam s Lifestyle Monitor

29 Technology Embracers DVD player Flat screen TV Personal computer Mobile phone Video disk VCD Vietnamese are becoming very high tech focused

30 100 Keeping in Touch Mobile phone Internet usage Fixed line Consumers are very much in touch, making them actually harder to reach

31 How we get around Though Vietnamese urban cities have witnessed a substantial increase in automobiles on their roads, this number is not significant in terms of the total urban pop Motorbike Car The motorcycle market has become saturated, leaving room for new innovations and poising the automotive market to race ahead

32 SURFING THE WEB Source: TNS VietCycle: % 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Have used the internet Not yet Internet usage is being driven by the aged 15 to years of age = 82% & = 74% have used the internet

33 Top 5 things we wish to own 40 VC-2005, n=580 VC-2004, n=1315 VC-2001, n=1232 VC-1999, n=1304 VC VC House / property A car Motorbike An overseas holiday Personal computer House/property Motorbike Personal computer Washing machine A car House/property Motorbike An overseas holiday House renovations Personal computer Motorbike Personal computer An overseas holiday A car Washing machine Property & transportation means, head the list of aspirational ownership

34 Ownership Summary In-home entertainment devices are becoming a mainstay Creature features are allowing Consumers more leisure time Consumers are very much in touch, making them actually harder to reach Internet usage is being driven by the in-gener@tion, age Transportation is driven by Motorbikes, but not in the future Vietnamese are becoming very high tech focused Higher priced luxury items top Vietnamese shopping lists

35 Consumer Trends Source: TNS Asiapanel

36 DISPARITY BETWEEN INCOME & SPEND 620 < 95 USD 95 to190 USD 190 to 285 USD 285 to 411 USD > 411 USD INCOME SPEND Avg. Monthly Income Avg. Monthly FMCG Expenditure The highest income group has increased spend 10 times compared to the lowest, but only spends 3 times more on FMCG products TOT. URBAN VIETNAM FMCG - 52 w/e Apr 04 & 52 w/e Apr 05

37 More westernized-influenced by fashion Open to premium products Enjoy shopping in Modern Trade at weekend Impulse buying Impacted by promotion Consider international brands as good quality Less used to Modern Trade ->Tend to shop more often: daily shopping Price Sensitive Tend to buy small package: Out of pocket Find it more convenient to shop at their local shop Seek for promotion: shop around Attracted by high priced products 30 High income Versus Low Income 50 Source: Vietcycle 2004

38 BASIC BASKET: 10 MUST HAVE CATS Dairy! Milk Yogurt Non food! Grocery! San. Napkins Toothpaste Shampoo Detergent Sugar Cooking Oil Sauces Noodles 100% PENETRATION 46% BASKET SHARE All families purchase these 10 key categories, which account for 46% of their total FMCG spend. No beverages are considered must have. TOT. URBAN VIETNAM BASIC BASKET (%) - VALUE FMCG - 52 w/e Apr 04 & 52 w/e Apr 05

39 FMCG GROWTH DRIVERS 18.0 FMCG: +8% Non Food Food Dairy products Beverages Groceries Household Care Personal Care FMCG market grew 8%, driven by Dairy & Non food categories % GROWTH - VALUE FMCG - 52 w/e Apr 04 & 52 w/e Apr 05 Source: Urban areas - TNS Asiapanel * Excludes Fresh Foods & durables

40 TET SEASON IMPACT Shoppers double their expenditure during this period! Switch to better brands, more expensive products, attractive packaging, gift sets Avg Expenditure per buyer (FMCG) Jun Aug Oct Dic 04 Feb Apr Beverage categories spend increases 4 fold over TET! TOT. URBAN VIETNAM TET SEASON FMCG - USD

41 Attitudes Summary Price is still a crucial factor, but High Income HH are ready to pay more. There is more Disposable Income to buy non basic categories and self-rewarding products The trend to healthier product usage is on the incline Dairy market is expanding, and health is an important factor in the product/brand choice

42 Retail environment Source: TNS Asiapanel Vietnam

43 THE MODERN TRADE PHENOMENA Modern Trade: Hypermarkets, Supermarkets and department stores Traditional Trade: Wet markets, Hawkers, Working unit, Grocery & Provision stores etc Modern Trade Traditional Trade Malaysia Vietnam Philippines Korea Taiwan Thailand China Retail structure of Asian countries is quite heterogeneous. Modern trade is undeveloped in Vietnam but promises huge growth! RETAILERS STRUCTURE (%) - VALUE FMCG - 52 w/e Mar 04 & 52 w/e Mar 05 * Excludes Fresh Foods & durables

44 CHANGING SHOPPING HABITS AVG. MONTHLY TRAFFIC (%) AVG MONTHLY SPEND (USD) AVG LOYALTY (%) STREET SHOP MODERN TRADE MARKET SPECIALTY Modern trade and Specialty shops are driving future shopping habits, evolving a cheaper and easier distribution network 52 w/e Apr 04 & 52 w/e Apr 05 TOT FMCG Total urban Vietnam * Excludes Fresh Foods & durables

45 THE PURCHASE CHANNELS Market (Pen 73%) I choose my grocery Streetshop (Pen 100%) 1. Sauces 2. Sugar 3. Cooking Oil 4. Salt 5. Noodle 6. Milk 7. Shampoo 8. MSG 9. Toothpaste 10. Detergent 11. Bouillon 12. Seasoning shop depending on what I want to buy (89%) Source: Lifestyle Milk 2. Instant Noodle 3. Sauces 4. Sugar 5. Shampoo 6. Cooking Oil 7. Detergent 8. Toothpaste 9. Yogurt 10. San. Napkins Commodities! Basic Basket! M. Trade (Pen 85%) Specialty (Pen 55%) 1. Shampoo 2. Milk 3. Sauces 4. Detergent 5. Toothpaste 6. Noodles 7. Fabric Care 8. Bar soap 9. Yogurt 10. San. Napkins 11. Toothbrush 12. Liquid bath 13. Canned food House & Personal Care! 1. Dairy 2. Soft drinks / Juices 3. Tea 4. Beer 5. Ground Coffee 6. Ice cream 7. Facial / Hand / Body Care 8. Make-up Beverages & Cosmetics! TOT. URBAN VIETNAM Ranking Closure Rate (%) 52 w/e Apr 05

46 THE POTENTIAL OF MODERN TRADE Street shops are the most powerful channel Largest traffic, over 75% of the shoppers purchase all category of products 85% of Modern Trade shoppers buy Grocery products in Modern Trade! Around 70% Modern Trade shoppers buy Household products in Modern Trade! 50% of Modern Trade shoppers does not buy any beverages nor Dairy in Modern Trade! TOT. URBAN VIETNAM Closure Rate (%) P11-P

47 PROMOTION IMPACT No Promotion Yes Promotion Total Retailer 18 Modern Trade 18% of Modern Trade value is sold under promotion! % SOLD UNDER PROMOTION - VALUE FMCG - 52 w/e Apr 04 & 52 w/e Apr 05

48 Attitudes Summary Modern trade is at different stages of development in the region Vietnam promises huge growth Modern trade is the channel developing the fastest in Vietnam, especially in HCMC. 62% of Urban population note they will shop in MT in next 12 months Modern trade is highly supported by promotional activities = 18%

49 Insights into Vietnamese Consumer s

50 Vietnamese National Traits Respect for elders Strive for better life of children National pride Revere Education Inner silent strength Optimistic Hard-working Humble Resourceful

51 Differences between North & South HANOIANS more image conscious much more scrutinizing buy best-value-for-money trend followers reflective harder working more concentrated ambitious SAIGONESE less image conscious more down-to-earth more practical purchasing trend setters reactive more laid-back less goal-oriented Self-contentment Extreme differences still exists between North & South consumers

52 Image Drivers To measure their success in life, a Saigonese looks into his pocket Realistic while a Hanoian looks at his neighbor s possessions Face-driven A Central / rural Vietnamese looks to his family / relationship / happiness Family-oriented

53 Our Philosophy on Life? Health Conscious Living up to others expectations working hard for next generation Saving for a rainy day Compared to 1999, we show more refined taste for quality & luxury goods.

54 The Vietnam Family Tree Attached to Family Family always have dinner together 90% Listen to parents advise 74% A close family is essential to my happiness 98% Family is still the cornerstone of Vietnamese society

55 Insights Summary Family is still the cornerstone of Vietnamese society Education, occupation, ownership & income are driving self assessment Significant differences still exist between North and South Vietnamese Health consciousness & saving for a rainy day are the most significant changes in terms of priorities for Vietnamese

56 Changing attitudes Source: TNS VietCycle - Vietnam s Lifestyle Monitor

57 Brand Attitudes A recognizable brand is something I can trust International brands are of higher quality The brands I use often impress my friends The country of origin is more important than the brand name VC-2004, n=1320 VC-2001, n=1232 VC 1999n=1304 Vietnamese are becoming much more brand savvy

58 Advertising Attitudes 63 Advertising is normally done for higher quality products International brands & advertising have a negative impact on Vietnamese culture VC-2005, n=580 VC-2004, n=1320 VC-2001, n=1232 VC-1999, n=1304 Advertising is becoming mainstream in Vietnam s urban centres

59 Vietnamese we admire Ho Chi Minh Le Huynh Duc Lam Truong Ho Chi Minh Nong Duc Manh Truong Ngoc Anh 5 0 Ho Chi Minh Le Huynh Duc Lam Truong 2 2 Ho Chi Minh Nong Duc Manh Truong Ngoc Anh 1 1 Ho Chi Minh Vo Nguyen Giap 3 Nguyen Thi Binh 1 Ho Chi Minh Vo Nguyen Giap Nguyen Thi Binh Uncle Ho is still the most revered person in Vietnam, followed by Vo Nguyen Giap, the architect of both the victories over the French and US. Others include footballers, singers and models

60 Foreigners we admire 7 8 Bill Gates David Beckham Ronaldo Bill Clinton Bill Clinton Bill Gates David Beckham Ronaldo Lenin Bill Gates Bill Clinton Fidel Castro Lenin, followed by The Bill s, Clinton & Gates & Fidel Castro 5 4 Lenin Bill Clinton Bill Gates Fidel Castro 3 Lenin Bill Gates Bill Clinton Fidel Castro Lenin Bill Clinton Bill Gates Fidel Castro

61 A Historical Perspective on the Future What genre of music do you prefer? Total By age % 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Western Asian Vietnamese pop Vietnamese traditional Vietnamese pop music is enjoying a renaissance, especially amongst the young

62 100 How we see the future? Vietnam's international image Vietnam's economy My personal standard of living Environmental pollution Employment Foreign investment Value of Vietnamese dong Telecommunication Electric power Water treatment Vietnamese are very optimistic people. However, as the economy grows, infrastructure is being strained

63 Most important problem facing the world today Total, n= Hanoi, n= Danang, n= Female, n= % 20% 40% 60% 80% 100% HIV/ Aids and other health issures Poverty, the gap between rich and poor Terrorism Drugs and drug abuse Environmental issues Others AIDS and poverty reduction are Vietnamese biggest concerns in terms of world issues, followed by Terrorism & Drug use / abuse

64 Attitudes Summary Vietnamese are becoming much more brand savvy. Advertising is now seen as a necessary evil and not a social evil Vietnamese still revere Uncle Ho and their parents. Associational advertising has not yet taken route,, en mass. Vietnamese are much, much more receptive to foreign cultures and values,, but prefer to Vietnamize them. Vietnamese are very, very, very optimistic about the future, but in a realistic manner.

65 The changing face of consumerism As you can see, the face of consumerism has changed dramatically over the last 10 years However, please be reminded that not only the Vietnamese consumer has changed the last 10 years.

66 The changing face of consumerism So have we. FSA / TNS 1996 TNS 2004

67 The changing face of consumerism And so have I. I Hanoi, Jan HCMC, May 2005

68 Thank You / Cam On!