B&Company Vietnam 2014, Jannuary

Report on Vietnam Chocolate Confectionery

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Market Overview

Retail sales value and volume registered stable growth rate of more than 13% and 6% over the last few years.

36.3

43.3

51.1 53.5

56.0 58.6

61.1 63.6

2010 2011 2012 2013e 2014f 2015f 2016f 2017f

Unit: Million USD*

3.1 3.2 3.4 3.7 3.9 4.2

4.4 4.7

2010 2011 2012 2013e 2014f 2015f 2016f 2017f

Chocolate Confectionery’s retail volume sales

*: fixed 2013 exchange rates e/f: estimate/forecast Source: Euromonitor International, Vietnam Chocolate Confectionery Report, 2013

Unit: thousand tonnes

Retail market

Chocolate Confectionery’s retail value sales

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Market Overview Vietnam exports only a small quantity of chocolate due to small capability of production and non-recognized Vietnamese brands in the world

Chocolate Confectionery’s export value

Source: International trade center, 2013

1.3 2.1

2.9

4.5

7.7

9.7 9.2

10.7

15.4

21.8

2008 2009 2010 2011 2012

Unit: Million USD

Export-import value

Export

Import

Chocolate Confectionery Classification Despite the domination of Boxed Assortments, Bagged Selflines/Softlines volume sales is having high growth rates of over 9% and will become new trend in the years to come.

52.0 52.3 52.7

27.9 27.2 26.4

15.8 16.4 16.9

4.2 4.1 4.0

2010 2011 2012

100% = 3051 3241 3445

Unit: tones

Chocolate Confectionery of all types Sales

Source: Euromonitor International, Vietnam Chocolate Confectionery Report, 2013 5

Tablets

Boxed Assortments

Bagged Selflines/ Softlines

Countlines

Chocolate Confectionery Retail Market Share Belcholat, a FDI local specialist, is leading in retail market which presents 12.3% of retail value meanwhile Storck KG, Mars and Guylian NV, not too far behind Belcholat are 3 strongest foreign companies

Retail market share in value sales- 2012

100% = 51.1

Unit: US$ million

Source: Euromonitor International, Vietnam Chocolate Confectionery Report, 2013

Mars

Storck KG

12.3

10.7

10.1

9.7

7.9 6.2 4.7

4.3

34.1

Belcholat

Others

Guylian NV

Maestrani Schweizer Schokoladen AG

Hershey

Maestro

Godiva

No. Company Most consumed brands

1 Belcholat Belcholat (Tablets)

2 Storck KG Merci (Tablets), Toffifee (Boxed Assortments)

3 Mars M&M’s (Bagged softlines/Selflines)

4 Chocolaterie Guylian NV

Guylian NV ( Boxed Assortments, Tablets)

5 Maestrani Schweizer Schokoladen AG

Munz (Bagged softlines/Selflines, Tablets)

6

Hershey Van Houten (Bagged softlines/Selflines)

7 Maestro Swiss Chocolate

Vochelle (Boxed Assortments)

8 Godiva Godiva (Boxed Assortments)

Source: Online newspaper, company websites,

1: Bibica estimation, 2011

Competitive landscape

Puratos - Grand Place Belcholat

Kim Linh Trading & Import

Royal Foods Co., Ltd

Chocolate Graphics D’art Chocolate Boniva

Kinh Do Bibica

Importer

FDI chocolate specialist

Local confectionery manufacturer

Local chocolate specialist

Customer segments Key characteristics Main players

Middle – high end consumers High-end HORECA clients Mass corporate clients

Sophisticated consumers High-end HORECA** clients

Mass consumers

Middle – high end consumers Mass corporate clients

Mostly small importers Large distribution network Price: $3-$35/100 grams

Big market share across local

players Both import and manufacture

chocolate

Small market share across local players

Influence much by season factor Price: $1-$7/100 grams (2011)

Wide range of chocolate flavored confectioneries

Few famous chocolate brands Price: $1-$7/100 grams (2011)

**: Hotel, Restaurant and Cafeteria

Foreign chocolate imported through Vietnamese importers account for 60% of volume sales annually, providing premium products, while local chocolate are relatively cheap and mostly are not famous brands.

Most consumed Chocolate Confectionery brands

Top 10 most – consumed Chocolate Confectionery products mostly belongs to foreign specialists

Top 10 most - consumed chocolate confectionery products in retail value sales-2012

2.1

3.8

4.3

4.7

6.2

6.3

7.8

7.9

9.7

11.1

Toffifee

Bella

Godiva

Vochelle

Van Houten

M&M's

Merci

Munz

Guylian

Belcholat

Source: Euromonitor International, Vietnam Chocolate Confectionery Report, 2013

Unit: % 100%= US$ 51.1 million

Brand positioning

High price

Low price

Snack Indulgence

Potential of Chocolate Confectionery in Vietnam There are still rooms for foreign investors of chocolate confectionery in Vietnam but they must be aware of Vietnamese shopping behaviors

Competition

• More international investors will invest in Vietnam, directly competing with the local manufacturers.

• Puratos-Grand Place plan: to build a new manufacturing plant with supporting logistic infrastructure in Bac Ninh to expand the market to the North, producing ice-cream and decoration chocolate in 2013.

• Mars has set up a cocoa development center in Cu Hue commune of Ea Kar district in Dak Lak province

• Japan’s Lotte acquired Guylian, a Belgian chocolate company in 2008 which has brand in top most consumed chocolate in 2012

• Several cake and candy manufacturers keep diversifying to produce chocolate products like Bibica (Choco bella), Kinh Do (Koko Choco).

Products

• Bagged selflines/softlines volume sales is expected to register the fastest growth rate. The development will strongly link to the growing habit of consuming chocolate as a daily snack, particularly among young consumers.

Customer behaviors

• Under 40 age of Vietnamese, accounting for nearly 70% of the population tends to buy chocolate.

• Vietnamese look for the designs which reflects premium and elegant when they purchase chocolate.

• Vietnamese prefer foreign brands to local ones and they prefer to buy these products through modern distribution channels to guarantee their quality.

Source: Press search

Chocolate classification definition

Boxed Assortments:

• Includes assortments which may be budget or premium priced, and are typically adult-orientated rather than being intended for children. Popular formats include picture boxes, liqueurs, pralines and bouchées. Also includes selflines where the chocolates contained therein are identical.

Tablet:

• Moulded and segmented chocolate bars in a wide range of sizes ranging from bite-size to family bars. Some are filled with nuts and/or raisins and made of different types of chocolate (e.g., white, milk and dark). Others are simply plain.

Bagged selfline/Softline:

• These bagged products include either chocolate or sugar coated items with a solid centre that is usually chocolate or nut-based. In some cases, it may include other types of centre (e.g,. Honeycomb). This also includes all other selflines, many of which have liquid/soft centers, such as cream or caramel

Countlines:

• Chocolate bars eaten as snacks. Many are filled and unsegmented (e.g., not precut into smaller pieces/segments). Typical examples include Snickers and Mars. Countlines can be sold in a diversity of formats, including multipacks or mini-fun sizes that are not twist-wrapped and not sold in boxes

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