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Consumer t rendsConsumer t rends
Ralf MatthaesRalf Matthaes
managing directormanaging director
TNS VietnamTNS VietnamAMCHAM
October, 2008
Condensed version
20082008
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AMCHAM Consumer trends 2008AMCHAM Consumer trends 2008
Key Consumer trendsKey Consumer trends19991999--20082008State of the nationState of the nation
WealthWealth
InflationInflation
ConsumptionConsumption
BrandingBranding
My DreamsMy Dreams
TechnologyTechnology
Financial CrisisFinancial Crisis
Stock MarketStock MarketMediaMedia
Rural VietnamRural Vietnam
ProductProduct
RetailRetail
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The state of t heThe state of t he
Consumer Nat ionConsumer Nat ion
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Vietnam Happiness IndexVietnam Happiness Index 20062006--20082008
2006 Source: World value survey: 2008 source: TNS Vietcycle 2008
53.5
43.5
3
49
44
7
0
10
20
30
40
50
60
Very happy Quite happy Not happy
2008 2006
Vietnamese consumers continue to be a very happy lot,indicating that not much has negatively impacted their lives
Hanoi & HCMC only
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My standard of livingMy standard of living Hanoi & HCMC onlyHanoi & HCMC only
0.4
2
2.2
37
40
36
49
51
52
6
5
9
0
25
VC-2004
VC-2006
VC-2008
Much lower than today Somewhat lower than todayEqual to today Somewhat higher than todayMuch higher than today
Wealthyhavereasontosmile
Source: TNS / Gallup - Voice of People Survey
The rich are getting richer & 2/3rd believe their lot will increase
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Wealth TrendsWealth Trends
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GDP per capita evolutionGDP per capita evolution -- USDUSD
In USD
Source: Vietnam Economic Times KINH TE 2007-2008GDP has doubled in 7 years
289
402412
440
491
552
639725
835
0
100
200
300
400
500
600
700
800
900
1995 2000 2001 2002 2003 2004 2005 2006 2007
Source: GSOVN
412412
835835
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I mpact of inf lat ionI mpact of inf lat ion
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Source: Vietnam Economic Times KINH TE 2007-2008
GDP & InflationGDP & Inflation
impact on disposable incomeimpact on disposable income
Inflation is decreasing Disposable income
8%
0.8
18.6
12.6
4.0 3.0
9.5 8.4
3.60.1
9.2
6.6
-5
0
5
10
15
20
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Inflation % GDP Growth %
-1.6
%
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How Vietnamese Combat inflation (by Income)How Vietnamese Combat inflation (by Income)
63
37
20
17
7
57
49
12
25
8
60
41
18
17
8
72
30
26
13
6
Buy less
Hold off on buying more expensive
big ticket items to be able to afford
inflationary increase
Switch to cheaper brands
Use some of savings to pay for
higher price
Just buy what I usually buy and
don't worry about the price
increase
Total Class AB
Class CD Class EF
Most consumers are buying less to combat inflation& holding off purchasing big ticket items
Source: TNS Gallup 2008 Voice of the People Survey
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39.637.2
-4.5
11.2
46.9
14.5
-17.2
20.0
All Households High Income Middle Income Low Income
% Value Change 06 vs. 05 % Value Change 07 vs. 06
Consumer Spend inflation ImpactConsumer Spend inflation ImpactTotal FMCG Total 4 key urban cities
High income earners are spending more, but middleincome & low income earners are spending much less
6.5 milvnd plus
3.5 mil -6.5 vnd
Below3.5vnd
FMCG Trends % value Changes Source: TNS Worldpanel Asia
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Consumpt ion TrendsConsumpt ion Trends
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FMCG Growth in Asian countries (%)FMCG Growth in Asian countries (%) -- 20072007
11
16
-2
2
9
-2
2
Urban
Vietnam
National
China
National
Thailand
National
Taiwan
National
Malaysia
National
Korea
National
Philippines
Vietnam is experiencing the second fastest FMCG growth in Asia.However, growth has dropped from 21% in 2006 to 11% in 2007
FMCG Trends % value Changes Source: TNS Worldpanel Asia
11
20
-22
9
-2
2
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72% Price is the most important
factor when grocery shopping
70%I always compare prices betweenbrands before buying
63%I know the shelf prices of theproducts I want to buy
Mini Life Style 2007 - TNS Worldpanel Vietnam
Consumers are Very PriceConsumers are Very Price--Conscious!Conscious!
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17.0%
11.4%
10.3%
7.9% 7.7% 7.4%
6.4%5.6%
5.1%4.7%
Khong
do
Vinamilk Trang
Tien
Sting
(Pepsi)
Maggi C2 Tw ister
(Pepsi)
Vinh Hue Chinsu Aji-Ngon
20072007 10 fastest growing brands10 fastest growing brands
Source: TNS Worldpanel
Five of the ten fastest growing brands were Vietnamese in 2007
V VVV V
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20082008 -- 10 fastest growing brands10 fastest growing brands
Gillette
(Razor)
Wonderfarm
(Vegtable
juice)
Pulppy (Hand
Towel)
C2 (RTD Tea) Vinamilk
(Drinking
Yoghurt)
Sting (Energy
Drink)
Gift (Glass
cleaner)
Maggi (Soy
sauce)
Trang Tien
(Ice Cream)
Cholimex
(Ketchup
Tomato) (
Share (%) gain in MAT Jun/08 vs. MAT Jun/07
17%
14%13%
10%
21%
17%
14%
22%
10%
20%
Thus far in 2008, four of the fastest growing brands wereVietnamese and 8 were launched in the last 36 months
Source: TNS Worldpanel 2008 (urban only)
V V VV
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My dreamsMy dreams
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3027 26
23 2320 19
24
37
2
22
37
32
38
49
29
0
20
41
36 34
0
20
40
60
Hou
se/Pr
oper
ty Car
LCD/Pl
asma
TV
Airc
ondit
ioner
Washing
mac
hine
PC/
Desk
stop
Motor
bike
VC 2008, n=857 VC 2004, n=1,315 VC 2001, n=1,232
Top Desired PurchasesTop Desired Purchases All SECAll SEC
Source: TNS VietCycle 2001-2008
Aspirational purchases are in decline as manyconsumers have already fulfilled their dreams
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AspriationalAspriational PurchasingPurchasing the personal touchthe personal touch
I will choose a mobile phone
brand which can tell peoplethat Im youthful, fashionableand proactive
I only buy brands that
make me look more
mature, sophisticated andconfident
Iwanttoberecognizedasawealthyandup-to-
dateperson,soIbuyhigh
qualitybrands
Source: TNS 2007-2008 FGDs
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Brand impactBrand impact
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4335
30282221
SEC A SEC B SEC C SEC D SEC E SEC F
Preference of Vietnamese brands
Stage 1:Basic needs
Stage 2:Upgraded
needs
Stage 3:
Social recognition
Stage 5:Self-fulfillment
Stage 4:Esteem
TodayTodaysConsumer
sConsumer
Advertising Brand Consumer CycleAdvertising Brand Consumer Cycle
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Vietnamese brand perceptions are changingVietnamese brand perceptions are changing
My children will be veryintelligent and grow-up faster
as I feed her by a good qualitypowder milk. I feel that I am agood mother
I always choose the most expensive
detergent which I think it has the best
quality and good for my families clothes.I feel happy when my husband says to
others that I am a good housewife
Source: TNS 2007-2008 FGDs
PeoplesaythatIamamodern
motherbecauseIchoosegood
qualitybrandsformybaby.Itshows
mygreatloveformychildren
RECOGNITIONRECOGNITION
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9188
6770
4347
5044
49
0
20
40
60
80
100
1999 2004 1999 19992004 20042008 2008 2008
I usually buy brands
on promotionI switch brands
just to try
Country of origin ismore important than
branding
Vietnamese brand perceptionsVietnamese brand perceptions
Source: TNS VietCyle 1999-2008 Urban (HN - HCMC)
Vietnamese Brand perceptions are beginning to mirrormore developed countries, further stressing brand strategy
91
70
50
88
43 44
67
47 49
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Summarizing brandingSummarizing branding
Branding in Vietnam is critical because consumers Young
Wealthier
Aspirational
Want what is popular
Want what is reliable
More sophisticated
Still price sensitive
The key today is social recognitionsocial recognition
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Technology TrendsTechnology Trends
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81.7
84.4
51.3
30.6
28
74
53
40
28
22
16
17
21
16
1
0 10 20 30 40 50 60 70 80 90
Video disk VCD
Mobile phone
Personal computer
Karaoke machine
DVD player
2008 2004 1999
Mobile Phone ownership increased by 33% in 2 years
Technology EmbracersTechnology Embracers HCMC & HanoiHCMC & Hanoi
Source: VietCycle 1999-2008
DVD Player
Karaoke Player
PersonalComputer
Mobile Phone
VCD Player
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31
43
47
39
22
28
55
5045
20
4650
24
354232
39
13
16
28
25
3335
2328
32
5
36
47
47
59
42
43
G lob
al,n
=134
68
China
,n=6
97
India
,n=4
8 2
Indo n
esia,
n= 3
7
Tha
iland
,n=4
57
Vie
tnam
,n=2
45
U SA ,
n=8
67
UK,n
=485
R us s
i a,n
=500
Braz
il ,n=
245
Mex
ico,n
=299
Using digital MP3 player on phone Using AM/FM radio on phone Nett - Using mobile music
Mobile music usageMobile music usage By countryBy country
Huge opportunities exist for Radio in Vietnam via Mobile
Source: TNS 2007 GTI
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48
84 80
7060 60
55
39 38
25
8
Global, Idonesia,
Frequency of SMS usageFrequency of SMS usage By countryBy country
SMS marketing opportunities are enormous & need to be explored
Source: TNS 2007 GTI
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InIn--home Internet penetrationhome Internet penetration
Source: TNS VietCyle 1999-2008 HCMC & Hanoi
In 9 years, In-home internet penetration increased by over 1000%,opening up new marketing & information avenues in Vietnam
3
89
21
34
0
10
20
30
40
1999 2001 2004 2006 2008
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Financial Cr isis !Financial Cr isis !
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Total Expenditure & SavingsTotal Expenditure & Savings HCMC & HanoiHCMC & Hanoi
Source: TNS VietCycle 1999-2008
83
86
88
91
17
14
12
9
0% 20% 40% 60% 80% 100%
VC-1999, n=1304
VC-2001, n=1232
VC-2006, n=441
VC-2008, n=857
Total expenditures Saving
Savings continue to drop, showingVietnamese overall consumer confidence
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Bank loan this yearBank loan this year
614
4 3
9486
96 97
Total Class AB Class CD Class EF
Yes No
Only 6% have taken out loans in the last 12 months,while 14% of wealthier have classes have done likewise
Source: TNS Gallup 2008 Voice of the People survey
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Purpose of loansPurpose of loans
43
23
18
14
13
Investing in business
Education
Repairing/ Upgrading
my house
Buying real estate
Buying transportation
Most loans have beeninvested back into
businesses (43%).while home repair /
real estate (37%)have been other big
investments
43
14
18
23
13
Source: TNS Gallup 2008 Voice of the People survey
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VietnamVietnams Stock Markets Stock Market
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5
14
4 3
9586
96 97
Total Class AB Class CD Class EF
Yes No
Investment in Stock marketInvestment in Stock market 370 index370 index-- Oct 15, 2008Oct 15, 2008
5% of urban consumers have invested in the stockmarket, but 3 times as many wealthy consumers have
Source: TNS Gallup 2008 Voice of the People survey
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33%
22%
45%
I don't earn much money and I want to earn
additional money through investment
I have some free money and don't want the
low interest rate of bank saving
I see others people do it
Reasons for investment in Stock marketReasons for investment in Stock market
An emerging trend of Monkey see, Monkey do isImpacting all facets of Vietnamese consumers lives
Source: TNS Gallup 2008 Voice of the People survey
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Fullysatisfied
4%
Not very
satisfied22%
Not
satisfied at
all19%
A little
satisfied
11%
So-so
44%
Satisfaction with profits from Stock marketSatisfaction with profits from Stock market
Only 15% of all investors are happy with their returns
Source: TNS Gallup 2008 Voice of the People survey
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Media TrendsMedia Trends
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Source: TNS Media Vietnam
RadioRadio 36% daily listenership
fastest growing media medium in VN
Radio & internet are becoming a genuine advertising opportunities
InternetInternet
Highly under utilized (US $6 mil. / year)
Captivated and young audience
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TelevisionTelevision
Viewership
F-T-A down
Cable up
growth at 16% in 08 vs. 20% in07
Source: TNS Media Vietnam
TV is over fragmented, while print is becoming more competitive
PrintPrint
713 daily and periodical publications
77% urban population read last week All major newspapers also online
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Though ad spend is down from 2006, with the continuation of FDI &local success, the industry should continue to grow at about 20%
AsiaAsias Media Spend Growths Media Spend Growth 20072007
18
15
4
22
34
India Vietnam China Indonesia M alaysia Thailand Phil ippines
Source: TNS AP offices
23
16% growth as of Sept. 2008
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VietnamVietnams Rurals Rural
ConsumerConsumer
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4 Key Urban CitiesPopulation (%): 9.9
GDP (%): 25.6
Secondary CitiesPopulation (%): 13.6
GDP (%): 11.9
Rural Locations
Population (%): 76.5
GDP (%): 62.5
The potential of Rural VietnamThe potential of Rural Vietnam
Source: GSO VN
2/3rd of GDP resides in Rural Vietnam, an untapped market
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4,958,760
1,546,280 1,279,6802,132,800
17,243,688
4,105,640
1,231,692
11,906,356
Total available consumers 1.5mln - 3mln 3mln - 4.5mln > 4.5mln
Urban Rural
Consumers earning more thanConsumers earning more than
1.5 m VND / Month1.5 m VND / Month
Urban vs. Rural Household SpendUrban vs. Rural Household Spend
There are 3 times more available consumerin Rural Vietnam than Urban Vietnam
Source: TNS Rural Monitor Pilot
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Rural Durable OwnershipRural Durable Ownership
Many household items are permeating Rural Households
9%
Computer
Internet
1%
@@Refrigerator
30%
32%
Radio/ Cassette
Color Television
95%
Electronic Cooker
92%
Mobile Phone
33%
Source: TNS Rural Monitor Pilot
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33Major ProductMajor Product
TrendsTrends
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convenienceconvenience
healthhealthindulgenceindulgence
Vietnamese consumers are looking forVietnamese consumers are looking for
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convenienceconvenience
80% saidTime spentcooking is wasted
Consumers looking forConsumers looking for
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Source: TNS Worldpanel Vietnam Mini Lifestyle 2007
indulgenceindulgence
89% said I buybrands that are of
good quality, evenmore expensive
Consumers looking forConsumers looking for
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Retailer TrendsRetailer Trends
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20082008Vietnam topsA.T. Kearneys annual list of most
attractive emerging market retail
destinations
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Retail environment in AsiaRetail environment in Asia -- 20072007
Though small, Modern trade will grow substantially in Vietnam
48
1833 34
51 54 55 60
Asia
Vietna
m
Philippin
es
Thaila
nd
China
Taiwan
Korea
Malay
sia
Source: TNS Worldpanel Asia 2007
Traditional Trade Modern Trade
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DISTRIBUTIONDISTRIBUTION
Sales growth per channel (%)Sales growth per channel (%)
By 2009, moderntrade will take off
in Vietnam!
19.4
11.8
10.7
8.9
0.8
16.8
MODERN TRADE
DIRECT SALES
ALL RETAILERS
STREET SHOPS
MARKET
SPECIALTY
Source: TNS Worldpanel: N = 2000 urban Households Excl. Gift MAT P1107
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Modern Trade emergenceModern Trade emergence 2008 growth2008 growth
Modern trades value share grew by 26% in 2008
Source: TNS Worldpanel
16
17
18
62
61
61
14
14
13
8
8
7
MAT Jun/06
MAT Jun/07
MAT Jun/08
Modern Trade Street Shops Wet markets Others
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Penetration per month
More and more trafficMore and more traffic
41.7
46.750.8
1
11
21
31
41
51
61
71
81
91
2003 2005 2007TOTAL FM CG
50%urban householdsgo to shop in MT each month!
Keeps growing
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Quality of products 83%
Comfortable and Clean/Safe
76%
Innovation & promotion
82%
What do consumers think of Modern Trade?What do consumers think of Modern Trade?
More expensive 70%
Far from home 34%
Little advice from staff
40%
Hard to carry
47%Wide assortment 83%
Not true,actually8% lower
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As you can see, Vietnam is changing a lot andAs you can see, Vietnam is changing a lot and
unfortunately, so am Iunfortunately, so am I
Hanoi, Jan. 1994Hanoi, Jan. 1994 HCMC, Jan. 2008HCMC, Jan. 2008
Deputy Prime MinisterPham Gia Khiem
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Th k Y C O
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Thank You / Cam OnThank You / Cam On
www.tnsglobal.com
mailto:[email protected]://www.tnsglobal.com/http://www.tnsglobal.com/mailto:[email protected]