Prevailing 2013
Economic & Consumer
Trends

Ralf Matthaes
Regional Managing Director
Cambodia | Laos | Myanmar | Vietnam

...
THE GOOD, THE BAD, THE UGLY

2012 / Q.2 2013 macro economic overview
©TNS 2012
The Ugly
Un-real estate market
 No movement in the real-estate market
 Commercial rents have fallen up to 40%

Until the...
The Ugly
Consumer Confidence (%)
100
80

89
78

60

79
68

64

56
40
20
0
2008

2009

2010

2011

2012

2013

Consumer con...
The Bad
Bankruptcies

Tourism (Million)
6.65

54,000
49,000

6.0
5.0

39,000

2.6

2010

2011

Q.2 - 2012

Bankruptcies ar...
GDP Growth - Bad…or Good?
6.78%
5.89%
5.03%

2010

2011

4. 9%

2012

Jul-2013

GDP = 4.9% slow down of growth actually ha...
The Good
Exports

Trade Deficit

(US Billion)
12.4

114.6
96.4

9.6
72.2

71.6

0.3
2010

(US Billion)

2011

2012

2010

...
The Good
Inflation

ATL Ad Spend

(%)

(US Million)

900M

18.13%
726M

760M
625M

11.75%

9.21%
6.81%

2010

2011

2012

...
The Good
New Foreign Direct Investment
60,271

A Rebound?
17,855

16,345

17,200
11,559

9,097

2006

2007

2008

2009

Ne...
Smartphone Ownership
Growth of smartphone ownership – Vietnam
42
35

+42%
27
19

Global

Emerging Asia

Vietnam 2013

Viet...
Automotive Sales

+10.5%
26,691
24,166

Jan - April 2012

Jan - April 2013

TNS Consumer Confidence Poll
© TNS

11
2013 YTD Economic indices scorecard
Ugly = 3 - Real Estate – Confidence – bad debt
Bad = 3 - Bankruptcies - FMCG growth – ...
Prevailing 2013
Consumer Trends
©TNS 2012
Consumer Confidence (%)
100

80

89
78

60

79
68

64

56
40
20
0
2008

2009

2010

2011

2012

2013

Consumer confidence ...
Recession impact
 SEC differences are stark
 Education, life stage impact views & involvement
 A-B: relatively safe & s...
Is your present job is safe or not?
Employment fears
on the rise leading
to more caution,
less spend
Jan-13

Aug-12

63

3...
Forecast in the next 12 months
2013
Consumer Confidence
index = 56
Value of the…

25

40

Employment

12

The cost of livi...
1. Consumers spending will be down in 2013
Consumer backlash to economic downturn
will result in specific spend cuts
40

E...
2. Mobile device as the everything hub

As the availability of
wireless broadband
expands & the cost of
advanced mobile
ph...
3. Authenticity matters
Authenticity will become paramount for brands as they look to
regain credibility and trust. Consum...
4. Modern trade growth is in decline

FMCG
General Trade
Modern Trade

Value growth
July 12
July 13
15%
19%

Value contrib...
5. Buy / use less / conserve / save5.
Value growth
(%)

Price growth
(%)

2008-2009

18.6

2009-2010

16.7

2010-2011

16....
Marketing trends
1. Internet as a research tool
ENSURE YOU ARE DIGITAL

As the value of
purchases increases, the
amount of research both
of...
2. Promotion Impact – Coupon Crazy
Discounted prices are preferred promotions, driving
“Groupon” & on-line coupon discount...
3. Media Spend – driven by security of TV
Media

2013 (Q1)

2012 (Q1)

Difference

4.991.72

3.329.87

49.9%

5.75

5.21

...
4.Brand innovation & new product launches

X-Men
Manly
international
standard ads
for men

©TNS 2012

Knorr
All-in-one new...
Summary

+/©TNS 2012

28
5 P’s to consider in 2013
People / Vietnamese Mindsets
 VN Consumers stuck for opportunities – need reason to believe
 C...
5 P’s to consider in 2013
Promotion
 Digital – think APS / multiple entertainment media / product research
 Develop coup...
2013 Economic forecast

Negatives
State Debt is huge
Sagging consumer confidence
Unemployment
Slower growth & spend
Relian...
Growth summary

2013 focus







Drive differentiation in offer
Understand price points
Drive loyalty & assurance
C...
Thank you

©TNS 2012
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TNS - Prevailing 2013 Economic & Consumer Trends

  1. 1. Prevailing 2013 Economic & Consumer Trends Ralf Matthaes Regional Managing Director Cambodia | Laos | Myanmar | Vietnam ©TNS 2012 1
  2. 2. THE GOOD, THE BAD, THE UGLY 2012 / Q.2 2013 macro economic overview ©TNS 2012
  3. 3. The Ugly Un-real estate market  No movement in the real-estate market  Commercial rents have fallen up to 40% Until the real estate market recovers, Vietnam will continue to struggle ©TNS 2012 3
  4. 4. The Ugly Consumer Confidence (%) 100 80 89 78 60 79 68 64 56 40 20 0 2008 2009 2010 2011 2012 2013 Consumer confidence has dropped due to domestic economic woes Source: TNS CCIP – 2008 – 2013 urban only ©TNS 2012 Bad Debt The State Bank of Vietnam reported that at the end of March this year Vietnam's bad debts ratio amounted US $9.6 billion U.S = 8.6% total outstanding credit. Vietnam’s 100 largest state enterprises are indebted about US $50 billion, or more than one third of GDP. Source: Reuters Bad debt will cause havoc in the near future
  5. 5. The Bad Bankruptcies Tourism (Million) 6.65 54,000 49,000 6.0 5.0 39,000 2.6 2010 2011 Q.2 - 2012 Bankruptcies are a sign of the times, but also a measure of Vietnam’s bubble popping 2010 2012 Jul-2013 Tourism is flat, down from 19% growth, and should have negative growth in 2013 Source: GSO ©TNS 2012 2011
  6. 6. GDP Growth - Bad…or Good? 6.78% 5.89% 5.03% 2010 2011 4. 9% 2012 Jul-2013 GDP = 4.9% slow down of growth actually has positive effects Source: GSO ©TNS 2012
  7. 7. The Good Exports Trade Deficit (US Billion) 12.4 114.6 96.4 9.6 72.2 71.6 0.3 2010 (US Billion) 2011 2012 2010 Jul-2013 2012 Jul-2013 Trade Deficit = a sign of fiscal responsibility or lack of growth? Exports are Vietnam’s saving grace = US $72 Billion end July Source: GSO ©TNS 2012 2011 0.7
  8. 8. The Good Inflation ATL Ad Spend (%) (US Million) 900M 18.13% 726M 760M 625M 11.75% 9.21% 6.81% 2010 2011 2012 Jul-2013 Inflation is in check, but will it remain, as typically Q.4 sees a spike Source: GSO ©TNS 2012 2010 2011 2012 Jul-2013 Advertising spend looks to grow at a healthy 19% Source: Kantar Media
  9. 9. The Good New Foreign Direct Investment 60,271 A Rebound? 17,855 16,345 17,200 11,559 9,097 2006 2007 2008 2009 New Investment 2010 13,013 11,900 2011 2012 Jul-2013 Implemented Capital Source: Vietnam Economic Times TNS Consumer Confidence Poll © TNS
  10. 10. Smartphone Ownership Growth of smartphone ownership – Vietnam 42 35 +42% 27 19 Global Emerging Asia Vietnam 2013 Vietnam 2012 B1. Device ownership Base: All respondents – Global 37698 | Emerging Asia 3491 | Vietnam 500 | Male 250 | Female 250 | 16-21 100 | 22-30 125 | 31-40 125 | 41-50 100 | 51-60 50 Local Report 2013 - Vietnam © TNS 2013 10
  11. 11. Automotive Sales +10.5% 26,691 24,166 Jan - April 2012 Jan - April 2013 TNS Consumer Confidence Poll © TNS 11
  12. 12. 2013 YTD Economic indices scorecard Ugly = 3 - Real Estate – Confidence – bad debt Bad = 3 - Bankruptcies - FMCG growth – Tourism Good = 5 - Modest shift towards recovery YTD 2013 is a mixed bag, some ugly, some bad, some good Good time to invest for the future ©TNS 2012
  13. 13. Prevailing 2013 Consumer Trends ©TNS 2012
  14. 14. Consumer Confidence (%) 100 80 89 78 60 79 68 64 56 40 20 0 2008 2009 2010 2011 2012 2013 Consumer confidence has dropped due to domestic economic woes Source: TNS CCIP – 2008 – 2012 urban only ©TNS 2012
  15. 15. Recession impact  SEC differences are stark  Education, life stage impact views & involvement  A-B: relatively safe & stable in the “storm”, yet conscious of what’s happening around/ to poorer people  D-E :are doing it tough; it’s really tough in E- managing a family on 3 million VND a month “I don’t feel much different. I don’t feel the impact of economic crisis on me” ©TNS 2012 vs “too much stress, the worry always sticks in my mind, we don’t even have time to feel happy or relaxed…”
  16. 16. Is your present job is safe or not? Employment fears on the rise leading to more caution, less spend Jan-13 Aug-12 63 32 68 20 5 12 Present job is safe Chance of unemployment Don't know Source: TNS 2013 VCCI – Urban only ©TNS 2012
  17. 17. Forecast in the next 12 months 2013 Consumer Confidence index = 56 Value of the… 25 40 Employment 12 The cost of living 11 34 9 40 Vietnam's economy My personal… 6 Foreign investment 3 24 39 15 24 82 1 5 17 3 6 18 3 4 24 81 5 22 9 2 12 48 2 17 38 29 34 18 48 26 Far worse A little better 2012 Consumer Confidence index = 68 30 4 13 45 34 38 30 25 23 3 41 26 4 35 29 A little worse Far better 14 1 30 2 33 32 6 38 Same DK Consumer confidence index has dropped a massive 12 points in just 6 months, driven by consumer fears across most indices - not reassuring Source: TNS 2013 VCCI – Urban only ©TNS 2012 17
  18. 18. 1. Consumers spending will be down in 2013 Consumer backlash to economic downturn will result in specific spend cuts 40 Entertainment & dining out House hold care products Household utilities Personal equipment (mobile… Home appliances (wash… Transportation Personal care products Communications… Health care products/services Food & beverages products Education Less 25 25 25 24 21 21 17 17 15 8 39 20 21 24 22 22 36 21 24 36 27 45 54 51 52 54 43 58 58 46 58 45 Same More 1 1 - + 1 1 2 DK Source: TNS 2013 VCCI – Urban only ©TNS 2012 18
  19. 19. 2. Mobile device as the everything hub As the availability of wireless broadband expands & the cost of advanced mobile phones drop, the mobile device will become the preferred hub for digital activity. DEVELOP YOUTH APPLICACTIOSN FOR YOUR BUSINESS ©TNS 2012 Absolutely!
  20. 20. 3. Authenticity matters Authenticity will become paramount for brands as they look to regain credibility and trust. Consumers have lost a great deal of faith in brands; they are searching for truths and clamouring for transparency. Yes! “I need to know the companies where the products or services are from so I have confidence to use them” GUARANTEE QUALITY / SAFETY ©TNS 2012
  21. 21. 4. Modern trade growth is in decline FMCG General Trade Modern Trade Value growth July 12 July 13 15% 19% Value contribution July 11 July 12 July 13 82.5 82.0 82.2 17.5 18.0 17.8 Generally prices at modern trade have out reached consumers pockets, while traditional trade still offers affordability and security ©TNS 2012
  22. 22. 5. Buy / use less / conserve / save5. Value growth (%) Price growth (%) 2008-2009 18.6 2009-2010 16.7 2010-2011 16.2 13.0 2011-2012 16.0 13.9 18.8 8.5 Volume growth (%) 0.1 7.6 3.0 6.0 2012 - 2013 Value Growth down to 11.6% and volume down to 4.8% Source: Kantar Worldpanel Urban only ©TNS 2012
  23. 23. Marketing trends
  24. 24. 1. Internet as a research tool ENSURE YOU ARE DIGITAL As the value of purchases increases, the amount of research both off and particularly online also increases Source: TNS Digital life 2012 ©TNS 2012
  25. 25. 2. Promotion Impact – Coupon Crazy Discounted prices are preferred promotions, driving “Groupon” & on-line coupon discount popularity 2008 54 46 On-line Coupons “I often buy stuff I don’t even need right now, because prices are so cheap” 18 13 8 Discounted price 2011 Free gift with purchase 10 10 9 Get free Sweepstake/Luck product/sample y draw prizes with multiple purchase 8 5 Monetary gift Source: TNS VietCycle 2011 – Urban only ©TNS 2012
  26. 26. 3. Media Spend – driven by security of TV Media 2013 (Q1) 2012 (Q1) Difference 4.991.72 3.329.87 49.9% 5.75 5.21 10.3% Newspaper 275.65 294.62 -6.4% Magazines 174.33 189.54 -8.0% 5.447.45 3.819.23 42.6% TV Radio May be due to advertisers shifting form BLT to ATL for measurability but has slowed in Q.3 to 19% YTD TNS Consumer Confidence Poll © TNS 26
  27. 27. 4.Brand innovation & new product launches X-Men Manly international standard ads for men ©TNS 2012 Knorr All-in-one new multiple spices for specific meals Pro Beauty New Yogurt gives you beautiful skin Kent Taste & strength control filter Non to menthol
  28. 28. Summary +/©TNS 2012 28
  29. 29. 5 P’s to consider in 2013 People / Vietnamese Mindsets  VN Consumers stuck for opportunities – need reason to believe  Confidence down – savings up – Education & Health industries booming  Psychological change afoot – from community to self  16 million modern youth become consumers over next 10 years Product / Extension  F&B is the soul of the nation – 47% of spend – extend portfolio  Address hygiene & food safety concerns and create guarantees  The word is not innovation it is “NEW” Product Position  Convenience and price points critical to success  Vietnamize or authenticate ©TNS 2012
  30. 30. 5 P’s to consider in 2013 Promotion  Digital – think APS / multiple entertainment media / product research  Develop coupon scheme Place  Review distribution GT vs Modern and urban vs rural  Significant regional differences require different approaches  Drive efforts in rural Vietnam Price  Over half of consumers are suffering from recession  Review pack type / SKU offer  Discount with an explanation / Groupons  Vietnamese brands are not only competing on price ©TNS 2012
  31. 31. 2013 Economic forecast Negatives State Debt is huge Sagging consumer confidence Unemployment Slower growth & spend Reliance on cheap exports Will to address core issues? Continued slight downward trend but also elements beginning to improve Positives Vietnam still largely untapped Global / SEA investment interest Overseas remittance More competitive / Lower prices Cheaper cost of entry Certain categories growing very well ©TNS 2012
  32. 32. Growth summary 2013 focus       Drive differentiation in offer Understand price points Drive loyalty & assurance Cross promote Be faster than competition Maximize digital reach Bottom is in sight – the only way is up! ©TNS 2012 32
  33. 33. Thank you ©TNS 2012

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