FMCGs in Vietnam. All images within this document are examples for illustrative purposes.

Transcription

1 FMCGs in Vietnam All images within this document are examples for illustrative purposes.

2 FAST-MOVING CONSUMER GOODS (FMCGS) OR CONSUMER PACKAGED GOODS (CPGS) ARE PRODUCTS THAT ARE SOLD QUICKLY AND (GENERALLY) AT A RELATIVELY LOW COST. Source: GSO Vietnam 2

3 KEY ECONOMIC INDICATORS : VIETNAM LOOKING GOOD FOR GROWTH CPI GDP Retail Sales of Consumer Goods Q vs. YA Source: GSO Vietnam 3

4 HOWEVER FMCG GROWTH HAS SLOWED MORE RECENTLY Value Growth% Volume Growth% Urban 4 Cities Rural *: To calculate FMCG price paid change, we calculate how much price contributes to the value change for each category, sum up these contributions and relate to value YA **: To calculate FMCG volume change, we calculate how much volume contributes to the value change for each category, sum up these contributions and relate to value YA (this results in an average category change in volume) Source: Kantar Worldpanel Households Panel Urban 4 Key Cities & Rural Vietnam Total FMCG excluding Gift 4

5 DESPITE THE POSITIVE ECONOMIC ENVIRONMENT, CONSUMERS ARE SPENDING LESS FOR FMCGS, AND MORE FOR A FOR LIFESTYLE UPGRADATION SLOW GROWTH GROWTH H1 18 vs YA FAST GROWTH Agriculture 3.9% GDP 7.1% Services 6.9% Industry 9.1% Telecom 7.1% HRC 9.6% Retail 10.7% Tourism 19.5% FMCG +0.0% Small Appliances* 8.2% Big Appliances* 17.1% Phones* 9.4% Consumer Electronics* 14.7% Motorbikes* 4.8% Pharmaceuticals* 10.0% FMCG brands need to invest in the right innovations to spur growth by addressing better the new changing lifestyles Source: Vietnam GSO Social and Economic Situation in H1 18, Vietnam Association of Motorbike Manufacturers FY 2017 ( GfK TEMAX results for Vietnam, FY 2017; 5 s-pharmaceutical-sector-expected-higher-growth.html; Nielsen RA ending Jun 18;

6 RAPID URBANIZATION AND RISING MIDDLE CLASS Vietnam s urbanization(*) was faster than the global rate. 50% of population will belong to Global middle class by 2035 Premiumization trends Rising demand for Health & Wellness products and services (*) Urbanization: increasing the densities of people and production in cities and towns Source: Vietnam 2035 report World Bank, Vietnam Ministry of planning Investment 6

7 FURTHER IMPACTING FMCG CONSUMPTION IS INCREASED AWARENESS OF FOOD SAFETY AND HEALTH AND WELLNESS The Vietnamese government imposition of a special consumption tax (SCT) for sugary drinks will be placed on carbonated and non-carbonated soft drinks, energy drinks, sports drinks and bottled instant coffee and tea. Vietnam's Ministry of Finance (MoF) announced its plans at a press conference in mid-august 2017 to apply a 10% or 20% tax that will take effect from Opportunity to develop better-for-me products Promote good related health functions (i.e. anti pollution) Source: Asia Pacific Journal of Clinical Nutrition Non-communicable diseases, food and nutrition in Vietnam from 1975 to 2015: the burden and national response 7

8 DAIRY AND PACKAGED FOODS STAGNANT URBAN 4 CITIES -0.7% -2.6% 3.9% 1.2% 0.7% -1.0% 6.3% 5.8% 2.1% 4.9% 2018 versus year ago Value change% Volume* change% DAIRY BEVERAGES PACKAGED FOODS PERSONAL CARE HOME CARE RURAL 7.9% 6.6% 8.1% 9.0% 3.6% 3.9% 3.7% 4.4% 2.8% 0.8% *: To calculate FMCG volume change, we calculate how much volume contributes to the value change for each category, sum up these contributions and relate to value YA (this results in an average category change in volume) Source: Kantar Worldpanel Households Panel Urban 4 Key Cities & Rural Vietnam Total FMCG excluding Gift 8

9 FOOD SAFETY HAS IMPACT BEVERAGES IN PARTICULAR Extensive marketing campaigns employed and to regain consumers' trust. Source: Vietnam Retailer Sentiment Q2 16

10 CONSUMERS NOW INCREASINGLY LOOKING TO NATURAL INGREDIENTS 10

11 AGEING POPULATION WILL IMPACT FMCGS INCREASINGLY TARGETING AN OLDER AGE BAND Gen Y and Z Vietnam Total population and % by age group Vietnam population ( 000 people) 80,286 84,309 88,473 93,572 98, ,764 6% 7% 7% 7% 8% 10% 7% 9% 12% 14% 16% 17% 18% 20% 21% 21% 22% 23% 26% 27% 27% 27% 25% 10% 21% 11% 10% 7% 7% 7% 32% 27% 24% 23% 23% 22% Vietnam Population CAGR CAGR Total Source: United Nations, WUP,

12 1 VIETNAM HAS GONE MOBILE, ECOMMERCE WILL THRIVE Connected households % Households with Internet % Households with Smartphone 88% 38% 95% 69% Online shopping evolution Triple-digit growth rate Online hot categories Urban 4 cities Rural Urban 4 cities Rural % shoppers shop online: Urban 4 cities 22% +225k new households Rural 6% k new households Source: Kantar Worldpanel Family Form & Media Report & Households Panel 2018 vs 2017

13 EVEN THOUGH CONSUMERS NOW SPEND AN AVERAGE OF OVER 4 HOURS/DAY ON DEVICES IN VIETNAM, THEY ARE GENERALLY LESS RECEPTIVE TO DIGITAL ADVERTISING, WITH MANY TAKING ACTION TO AVOID IT People are less accepting of digital advertising People use technology to avoid ads (e.g. ad blockers) as well as skipping and engaging in other activity Gen Z Gen X Gen Y % skip or pay to avoid ads 47% use tech to block ads 40% don t watch/ do something else Traditional advertising Digital advertising Net Positive attitude to advertising format

14 UPTRADING 14

15 LESS THAN 1 IN 10 BRANDS GREW SIGNIFICANTLY OVER A 3 YEAR TIME FRAME In many categories no brands grew Growth tends to come in the form of a step change, something that disrupts the status quo Incremental gains are easily countered by the competition and the status quo remains Budgets, protocols and processes create a comfort zone which encourages business as usual 6% Source: BrandZ, analysis of 2,052 brands between 2014 and

16 THE NEW WISDOM SUGGESTS THAT SALIENCE IS ALL A BRAND NEEDS TO GROW So which of our three topline measures of brand equity best anticipates whether brands grow or decline? SALIENCE MEANING DIFFERENCE Disruptors Brands that grew Brands that declined Dead and dying Source: BrandZ, profile scores comparing absolute to expected values for each brand, brands that grew or declined measured across 3 years 16

17 THERE ARE NOW 20 NEW LAUNCHES IN FMCG EACH DAY Personal Care & Packaged Foods: The most innovative environment More focus on brand s variant portfolio % of new launches (2018 vs 2014) Beverages Dairy Home Care New brand 2018 % of new launches (2018 vs 2014) New variant (flavor, benefit) 33 Packaged Foods Personal Care 32 Changes to existing products (pack size/type, format) Successful launches remain hard to achieve ( ) Urban 4 cities % Households a new launch reached after 1 year 4.4% (< 5.4 in 2014) % Households repeat purchase in the 1 st year 23.9% (< 26.9% in 2014) Source: Kantar Worldpanel Households Panel New Launch Tracker

18 INNOVATIONS THAT ARE DIFFERENT IN SOME WAY HAVE A GREATER CHANCE OF SUCCESS [1] Natural products with clear evidence of nature Vinamilk organic milk Sunlight Nature Clear Herbal Colgate Naturals Vinamilk introduced the first organic RTD milk in Vietnam Sunlight new added value variant (with white tea, mineral salt, lemon) claimed to be safe for kids, gentle to skin and have mild fragrance Clear s new variant with 9 herbal extracts such as Centella, Asiatica, Cinnamomum, Ginseng to help get rid of dandruff and helps to restore the necessary nutrients for the scalp. Colgate Natures - reconnecting with nature to revive our senses, rejuvenate our mind and revitalise our body for a healthy life with Lemon oil, Tea Tree oil, Seaweed and Aloe Vera extract, for a fresh and clean mouth 18

19 INNOVATIONS THAT ARE DIFFERENT IN SOME WAY HAVE A GREATER CHANCE OF SUCCESS [2] Make Life Easier Omomatic liquid washing ball Ajinomoto with diverse range of culinary products Omo pioneered in UPGRADING THE PACKAGE WITH A BALL helped to make laundry easier containing the liquid for accurate dosage and supporting washing machine from within. Ajinomoto with WIDE RANGE OF PRODUCTS facilitates the cooking process, helping Vietnamese cook delicious food in the convenient and less time-consuming way. 19

20 INNOVATIONS THAT ARE DIFFERENT IN SOME WAY HAVE A GREATER CHANCE OF SUCCESS [3] Mix of traditions and the modern Number 1 Salted Lemon Revive Salted Lemon Push Max Passion fruit Cobote Number 1 Salted Lemon initiated the salted lemon segment in isotonic drink category, and Revive Salted Lemon soon joined the band wagon. Both could grasp significant growth, hurting the long-established hard-core isotonic segment, by delivering the great traditional taste via a modern sporty & youthful imagery Push Max was the first RTDJ brand launching passion fruit flavor (a popular fruit flavor in North), gaining grounds quickly and hurting Twister market share in this market Cobote - a new local brand offers wide range of natural personal care products made from natural ingredients coconut, cucumber, ginger, lemon grass, 20

21 INNOVATIONS THAT ARE DIFFERENT IN SOME WAY HAVE A GREATER CHANCE OF SUCCESS [4] New mixes of ingredients Coke Coffee Fuzetea ADM Chuối Coke Coffee offers a different experience of Coke, which can also help them refreshed and wake them up. The combination of Chia seed and peach/ passion fruit flavour Vinamilk launched ADM Banana the first-ever combination of milk and banana in Vietnam 21

22 INNOVATIONS THAT ARE DIFFERENT IN SOME WAY HAVE A GREATER CHANCE OF SUCCESS [5] Packaging innovations that excite Pepsi Coke and Pepsi Milo Cocoxim Milo Pepsi Next Generation packaging collection Pepsi is reintroducing its iconic vintage design on regular Pepsi products for a limited time. Coke and Pepsi launched limited editions of packaging to celebrate World Cup 2018 Milo launched can, making it the first-ever dairy drink in Can format Cocoxim excites Vietnamese consumers with packed coconut juice 22

23 FMCGs in Vietnam All images within this document are examples for illustrative purposes.