1 B Catherine Eddy


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To what extent are you committed to success? Don’t miss the most compelling marketing event of the year. Come and hear how three leading marketers have dealt with challenging situations, turning them into outstanding successes. Here is your opportunity to ask questions and workshop issues and ideas. Learn how to focus your marketing energy, recognise what you are good at and charge on!

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1 B Catherine Eddy

  1. 1. SE Asian Reaction to The GFC
  2. 2. The D Word National Foods Conference 2009 <ul><li>Diversity in: </li></ul><ul><ul><li>Economic performance (Singapore, Malaysia, Thailand forecasting negative GDP growth) </li></ul></ul><ul><ul><li>Political stability (Thailand and Philippines challenges; Indonesia, Singapore, Malaysia ok) </li></ul></ul><ul><ul><li>Size (Indonesia 1,860,360 km2, Singapore 707 km2) </li></ul></ul><ul><ul><li>Ethnicity </li></ul></ul><ul><ul><li>Consumer sentiment </li></ul></ul><ul><ul><li>Health status……. </li></ul></ul>
  3. 3. The D Word <ul><li>Culture </li></ul><ul><li>Religion </li></ul><ul><li>Geography </li></ul><ul><li>Language </li></ul><ul><li>Wealth </li></ul><ul><li>Foreign investment </li></ul><ul><li>Currency volatility </li></ul><ul><li>Demographics </li></ul><ul><li>Retail development </li></ul><ul><li>Reliance on exports </li></ul><ul><li>Infrastructure </li></ul><ul><li>Democratic maturity </li></ul><ul><li>Population </li></ul><ul><li>Unemployment </li></ul><ul><li>Government </li></ul><ul><li>Media channels and consumption </li></ul><ul><li>Retail development </li></ul>
  4. 4. GDP – Indonesia and Vietnam standouts <ul><li>Singapore </li></ul><ul><li>Thailand </li></ul><ul><li>Indonesia </li></ul><ul><li>Philippines </li></ul><ul><li>Malaysia </li></ul><ul><li>Vietnam </li></ul>2009 2008 2007 2006 -6.5 1.1 7.8 8.4 -3.4 2.6 4.9 5.2 3.5 6.1 6.3 5.5 1.0 4.6 7.2 5.4 -3.1 4.6 6.2 5.8 4.5 6.2 8.4 8.2
  5. 5. Inflation <ul><li>Singapore </li></ul><ul><li>Thailand </li></ul><ul><li>Indonesia </li></ul><ul><li>Philippines </li></ul><ul><li>Malaysia </li></ul><ul><li>Vietnam </li></ul>2009 2008 2007 2006 0.1 6.5 2.1 1.1 -0.5 5.4 2.2 4.7 6.0 9.8 6.4 13.1 2.0 9.3 2.8 6.3 1.8 5.4 2.0 3.6 6.0 23.1 8.5 7.5
  6. 6. A melting pot or a hotchpotch…. <ul><li>Singapore </li></ul><ul><li>Thailand </li></ul><ul><li>Indonesia </li></ul><ul><li>Philippines </li></ul><ul><li>Malaysia </li></ul><ul><li>Vietnam </li></ul>Pop mln Area km2 2008 GDP PP USD FDI inflow USDm 4.8 707 49,912 22,801 66.5 513,120 8.705 9,834 228.5 1.860,360 3.943 7,918 90.4 300.000 3.506 1,520 27.8 330,252 13,748 8,053 86.1 331,212 2,816 8,050
  7. 7. Internet penetration ASIA Internet Users, Latest Data Penetration (% Population) Users (%) in Asia <ul><li>Singapore </li></ul>3,104,900 67.4 % 0.5 % <ul><li>Malaysia </li></ul>15,868,000 62.8 % 2.4 % <ul><li>Vietnam </li></ul>20,993,374 24.4 % 3.2 % <ul><li>Philippines </li></ul>20,650,000 21.5 % 3.1 % <ul><li>Thailand </li></ul>13,416,000 20.5 % 2.0 % <ul><li>Indonesia </li></ul>25,000,000 10.5 % 3.8 % TOTAL ASIA 657,170,816 17.4 % 100.0 %
  8. 8. The telling factors… Exports as % of GDP
  9. 9. Big variation in proportion of GDP from private consumption
  10. 10. Not all stimulus packages are equal Fiscal Stimulus plans of select G20 countries $75 b 38 of GDP United States $31 b 2.5 of GDP Canada $32.87 b 1.3 of GDP France $28.5 b over 1 of GDP Britain $102.4 b 3.25 of GDP Germany $8.85 b 0.4 of GDP Italy $62 b 5.4 of GDP Russia China a $49.28 b 5.7 of GDP South Korea $122.9 b 2 of GDP Japan $33.59 b 2 of GDP Australia $6.1 b 1.3 of GDP Indonesia $4 b 0.4 of GDP India South Africa $30 b (approx.) Argentina $0.43 b 1.5 of GDP Turkey Source - The Standard Thursday 2 nd April ? $585 billion 13.3 of GDP $6 b = 7% of GDP Vietnam
  11. 11. Vietnam
  12. 12. Vietnam inflation
  13. 13. Retail Volume index: Vietnam Total Top 37 Categories   Growth %   YTD'09 vs. YTD'08 Jun'09 vs. May'09 Jun'09 vs. Jun'08 Total 6 Cities 12.4 -4.2 11.2
  14. 14. Top 5 Consumer Concerns 1) Health 2) Increasing Bills 1) Increasing Food Prices 3) Increasing Bills 3) Job Security 4) Work Life Balance 2) Job Security 4) Price Increases in Petrol 5) Debt 5) Children’s Welfare Hanoi HCMC Source : Nielsen Vietnam Omnibus May 2009 $ $
  15. 15. Individualism V Collectivism Other peoples opinions do affect my actions and behaviours Hanoians It’s my decision that counts. I use other opinions for reference only Saigonese “ When I came to the store to buy an LCD, I had already decided to buy Samsung brand before going there. I just asked others’ opinions for reassurance’’ “ For example, I want to buy a new TV and if some of my neighbors tell me that the TV is not high quality, then I would be turned off that TV right away” Source : Nielsen Regional Differences Qualitative Study
  16. 16. The Hanoi consumer is a complex beast for marketers <ul><li>Want it all but are willing to wait </li></ul><ul><li>Want the best and will tell you the price </li></ul><ul><li>Seek affirmation of others for their purchases </li></ul><ul><li>Ask others opinions prior to purchase </li></ul><ul><li>Love promotions and are very price aware </li></ul><ul><li>But are conservative in their purchasing behavior displaying more loyalty than in HCMC </li></ul>“ It’s not ok when your friend is using a premium mobile phone while you use a cheap one. People will look down on you and judge you” Source : Nielsen Regional Differences Qualitative & Quantitative Studies
  17. 17. Saigonese and the push for individualism <ul><li>“ I don’t care so much what others think” </li></ul><ul><li>If they need it they will buy it </li></ul><ul><li>Live for today and worry about tomorrow later </li></ul><ul><li>Do listen to others but in the end it’s very much their own decision </li></ul><ul><li>Less impacted by marketing influences </li></ul><ul><li>Display lower levels of brand loyalty </li></ul>Source : Nielsen Regional Differences Qualitative & Quantitative Studies “ Everyone comments that my phone looks ugly but I don’t really care. It's not that important…if people like something, I don’t necessarily follow them”
  18. 18. Family recommendation a factor for all, but then much variation on sources Q: How important are each of these groups in making your purchase decisions? * Significantly higher Q 23b: Please rate those statements based on importance (1 to 5).Top 2 Boxes 94% 99% Recommendation from my family members 71% 91% Recommendatios from my friends * 52% 83% Recommendation from colleagues/ partners * 42% 94% Recommendation from my neighbors * Saigonese Hanoians
  19. 19. But why? The role of public opinion and social conformity differs between the two cities and seems to influence Hanoians more They don’t just live for themselves and they do care what others think of them. Appearance is key. They feel a responsibility to obey certain standards and disciplines Hanoians They just live for themselves and don’t care “much” about what others think. Saigonese “ When I go out with my friends, I don’t need to wear premium luxurious brands ” “ There’s a saying in the North which is: Tell me what motobike you are riding, then I would tell you who you are” Source : Nielsen Regional Differences Qualitative Study
  20. 20. To impact behavior it’s useful to understand the important touch points in each market 6% 23%* Like to watch ads and are affected by them * Significantly higher Q 32: Which statement best describe you? SA Base : All respondents Source : Nielsen Regional Differences Quantitative Study HCMC HN
  21. 21. How important are each of these factors in influencing purchase decisions? 41% 91%* Advertising 42% 83%* Newspapers/Magazines 36% 67%* Recommendations from sellers/store owners 22% 95%* Internet/other websites to compare information 22% 100%* Mfr/Distributor/Seller websites and forums * Significantly higher Q 23b: Please rate those statements based on importance (1 to 5). Top 2 Boxes Base : All respondents Source : Nielsen Regional Differences Quantitative Study HCMC HN
  22. 22. The role of advertising is more critical in Hanoi I watch advertising and also refer to others ideas to feel assured HCMC HN I like strange, unique and funny advertisements. It makes me laugh, feel happy and attracts my attention Advertisements are really helpful when I need to buy something I have a tendency to love meaningful implied advertisements I feel more comfortable with products which have many advertisements Preference for products will depend on the popularity of it’s advertisement 57% 81%* 44% 75%* 28% 73%* 30% 68%* 19% 49%* 17% 49%* * Significantly higher Q 33: How much would you agree on the following statements? Top 2 Boxes Base : All respondents Source : Nielsen Regional Differences Quantitative Study
  23. 23. Promotion strategies need to cater to different consumer preferences Increase volume/ quantity Attached gift Reduce price Reduce price 1 2 3 1 HCMC Saigonese consumers favor various promotion strategies HN Hanoians strongly prefer one type of promotion: PRICE Shampoo Beverage Shampoo Bouillon TV Fridge TV Food Base : All respondents Source: Nielsen Quantitative Study Q 19b: Which promotion program do you prefer the most? Q19c: Which categories would you like this promotion program to be applied?
  24. 24. Vietnam
  25. 25. What are the top concerns of manufacturers and suppliers? 1) Competitive pressure/ Activity/Growth (40%) 2) Global Economic Crisis (38%) 5) Inflation (24%) 7) Wage Growth (13%) 3) Price increases (37%) 4) Low GDP Growth (33%) 6) Labour force skill shortage (18%) 8) Foreign Investment Slowdown (12%) Source: Nielsen Business Barometer, Feb 2009, Base: All respondents Which of the following issues concern you in terms of the impact they may have on your business? Rank the top three issues that concern you where 1=most concern, 2=second most concern etc. $
  26. 26. How does business view Vietnam conditions (compared with last year)? Business Conditions in Vietnam (Now vs Year Ago) <ul><li>Q5. Compared to the same time last year, do you think business conditions in Vietnam have improved or deteriorated? </li></ul>60% 63%
  27. 27. … but the future feels bright - more optimism among own industry Total Market Your Industry Over the next 6 to 12 months, do you believe that business conditions in the total market & your industry are more likely to improve or deteriorate? 63% 59%
  28. 28. Over 70% of Vietnamese in rural; manufacturers are aware of the opportunity In the next 12 – 18 months, to what extent will you look to rural Vietnam areas to drive your company growth? 64% 64%
  29. 29. Mixed opinions on how advertising spend will move in next 6 – 12 months. Global or local forces? Over the next 6 to 12 months, how do you anticipate your company's spend on advertising to change? 39% 39%
  30. 30. Only 12% of companies plan to reduce staffing numbers Over the next 6 to 12 months, how do you anticipate your company's work force numbers to change ? 88% 91%
  31. 31. 57% of manufacturers expecting to grow at a greater rate than industry average Note: IA = Industry Average * Company versus Industry average growth rate (next 12 months)
  32. 32. Vietnam <ul><ul><li>There are some bad signs </li></ul></ul><ul><ul><ul><li>Textile and construction have suffered </li></ul></ul></ul><ul><ul><ul><li>Vietnam saw a significant drop in services exports (tourism air and maritime services) in 2008 but it’s a relatively minor export focus </li></ul></ul></ul><ul><ul><li>But good stuff too </li></ul></ul><ul><ul><ul><li>There is still a GDP estimate of 5-6% </li></ul></ul></ul><ul><ul><ul><li>Inflation is under control </li></ul></ul></ul><ul><ul><ul><li>Business is pretty buoyant and optimistic about the next 12 months </li></ul></ul></ul><ul><ul><ul><li>FMCG volumes continue to grow </li></ul></ul></ul>
  33. 33. Indonesia
  34. 35. Indonesia Q1 2009 Q2 2009 <ul><li>Stock market is at lowest level in Feb 2009 </li></ul><ul><li>Crude oil price stabilizes at $40 after sharp declines in the prior 6 months </li></ul><ul><li>Lay offs from export oriented manufacturers (i.e garment, shoes) </li></ul><ul><li>Currency rate at 11,250 to USD after peaking in Q4 ‘08 </li></ul><ul><li>Parliamentary election under way </li></ul><ul><li>Stock market index improves to 1800 way above prediction </li></ul><ul><li>Crude oil price increases to 65 per barrel (but local fuel price remains stable) </li></ul><ul><li>IMF revised their GDP prediction for Indonesia </li></ul><ul><li>Currency rate is 10.000 to the US$ 1 </li></ul><ul><li>SBY’s party secures highest vote, voters opting for stability & continuity </li></ul>
  35. 36. FMCG value continues to increase; driven by Modern Trade and Java. Indonesia Total 6.8 4.5 4.3 Ind. MT 12.1 7.2 11.8 Ind. TT (GT) 3.8 2.9 0.1 Java Total 7.8 5.8 6.4 Sumatra Total 3.3 4.7 2.1 O. Island Total 2.1 5.3 -0.1 Total Top 50 Categories , Value: indexed to Average of 200 7 Indonesia Growth (%) Cal. YTD 0 9 Vs Cal. YTD 0 8 May 0 9 Vs Apr 0 9 May 0 9 Vs May 0 8
  36. 37. Value grows but many categories seeing volume contraction Value & Volume Growth % - Jan-May09 vs. Jan-May 08 Instant Noodles Powder Milk Branded Coffee Detergent Biscuit SCM Shampoo Toilet Soap Branded Cooking Oil Skincare Source : Retail Index Indonesia
  37. 38. Top 10 categories Indonesia Total Grocery – Top 10 FMCG Instant Noodles Powder Milk Branded Coffee Detergent Biscuits SCM Shampoo Toilet soap Branded Cooking oil Skin Care Mini Market Super Hyper Trad. Trade Source : Retail Audit Indonesia Volume Value
  38. 39. Reaction to hard times is category dependent Brand Oriented Quantity Oriented Function driven Emotional driven Rice Cooking Oil Household Care (detergent, floor care) Instant Noodle Personal Care (soap, shampoo) Facial Care Tea, Coffee Milk for Kids (under 6 y.o.) Mums more willing to reduce quantity rather than brand as these products are linked to taste (preference) Quantity is more important – willing to use cheaper brand if necessary Reluctance to shift to cheaper brands; greater emotional attachment. Milk for kids serves a functional and an emotional role ( I want the best for my kid ). For kids under 6 years old – necessary to have adequate amount of nutrition rather than a prestigious brand <ul><li>Some products may be more difficult to replace compared to others  depending on degree of functional and emotional attachment to them </li></ul>
  39. 40. How does behaviour change when people are challenged economically? Activity LOWER CLASS Change to cheaper brand More Likely Less Likely Change pack size/ Reduce usage Reduce purchase quantity Reduce frequency (luxurious items) MIDDLE CLASS Change to cheaper brand Change pack size/ Reduce usage Reduce purchase quantity Reduce frequency (luxurious items) HIGHER CLASS Change to cheaper brand Change pack size/ Reduce usage Reduce purchase quantity Reduce frequency (luxurious items) Source: Nielsen, Qualitative
  40. 41. Indonesia
  41. 42. What are the big concerns for industry in Indonesia? Total FMCG Exchange rates Cost of raw materials Government policy / regulation Lifestyle changes among consumers Pressure on trading terms Inflation Political stability Increase in promotional sales & erosion of baseline sales Lack of certainty of enforcement of regulations Economic condition of trading partners Cost Of Raw Materials Exchange Rates Pressure On Trading Terms Lifestyle Changes Among Consumers Increase In Promotional Sales & Erosion Of Baseline Sales Government Policy / Regulation Inflation Political Stability Lack Of Certainty Of Enforcement Of Regulations Retailer Supply Chain Strategies
  42. 43. Total FMCG 59% 65% How does business view Indonesian conditions (compared with last year)? Business Conditions in Indonesia (Now vs Year Ago)
  43. 44. And bright conditions forecast for Indonesia (Over next 1 – 2 years) Total FMCG 88% 87% Over the next 1 to 2 years, do you believe that business conditions in the total market & your industry are more likely to improve or deteriorate?
  44. 45. Revenue growth of 12% + for 59% of companies in 2009 (FMCG 65%) Total FMCG
  45. 46. Future View on Rural Indonesia (Next 2 Years : Y2011) Total FMCG 72% 80%
  46. 47. Future View for outside Java business (Next 2 Years : Y2011) Total FMCG 83% 91%
  47. 48. Production Capacity anticipated to expand in the 2 Years to Y2011) Total FMCG 82% 90%
  48. 49. Advertising spend expected to increase in Indonesia in 2010; 79% of FMCG coys Total FMCG 70% 79%
  49. 50. 25 top advertising spenders in H1 2009 Indonesia Top 25 Ad Spenders Decreased Ad Spend 6 Increased Ad Spend 19 Volume Positive Growth 14 Negative Growth 5 Positive Growth 2 Negative Growth 4
  50. 51. And the majority of companies expect to increase hires in the 2010 year Total FMCG 59% 63%
  51. 52. Indonesia <ul><li>Q2 Domestic growth (Real GDP) slowed to 4% but it still leads the region </li></ul><ul><li>Demand has been broad-based, with domestic demand that is very resilient; balancing out the export concerns (but exports for Indonesia are among the lowest in the region) </li></ul><ul><li>Q2 saw stronger export performance partly due to commodity price increases </li></ul><ul><li>Things are not bad…Telkomunikasi Indonesia posted its biggest quarterly profit in almost 7 year in Q2 2009. Net income up 16% on PY and sales up 5.3% </li></ul><ul><li>A successful democratic election, highest consumer confidence in 4 years and a 14.6% gain in the rupiah in Q2 are all very positive signs </li></ul>
  52. 53. Regional Consumer Sentiment
  53. 54. Consumer Confidence Index Q1 ‘09
  54. 55. A good time to buy? Q1 ‘09
  55. 56. What do people do with spare cash? - South East Asia (Top 5)      National Foods Conference 2009 Indonesia Malaysia Philippines Singapore Thailand Vietnam Putting into savings (67%) Putting into savings (69%) Putting into savings (69%) Putting into savings (75%) Putting into savings (54%) Putting into savings (54%) Investing in shares of stock / mutual funds (44%) Paying off debts/credit cards/loans (41%) New clothes (35%) Holidays/vacations (42%) Holidays/vacation (46%)s Holidays/vacations (27%) New technology products (29%) Holidays/vacations (37%( New technology products (34%) New clothes (28%) Home improvements / decorating (27%) New technology products(25%) Paying off debts/credit cards/loan (29%)s Investing in shares of stock / mutual funds (32%) Paying off debts/credit cards/loans (32%) Paying off debts/credit cards/loans (27%) Retirement fund (27%) New clothes (23%) Holidays/vacation (25%(s New clothes (24%) Holidays/vacations (27%) Investing in shares of stock / mutual funds (26%) New technology products (24%) Home improvements / decorating (23%)
  56. 57. Compared to last year, how have consumers adjusted? Q1 ‘09
  57. 58. For Vietnam, also less on clothes, upgrading technology and OOH entertainment? Q1 ‘09
  58. 59. Moving ahead – what comes next
  59. 60. When conditions ‘improve’ consumers in Indonesia will continue to…
  60. 61. In Vietnam, when things get better, consumers will continue to …
  61. 62. Commonalities
  62. 63. <ul><li>Large rural population </li></ul><ul><li>Corruption </li></ul><ul><li>An emerging modern trade </li></ul><ul><li>Traditional still very significant </li></ul><ul><li>A big bubble of under 25’s </li></ul><ul><li>Infrastructure challenges </li></ul><ul><li>Legislative unpredictability </li></ul>
  63. 64. <ul><li>You need to create enough jobs to absorb new workers; if you don’t you risk dissent among the masses and that can drive instability </li></ul><ul><li>Are these large young populations – good or bad? It’s a double edged sword </li></ul><ul><li>Philippines have 10% of population working abroad; when things go wrong, they’re among the first to be sent home. If the economy were truly healthy they’d absorb that employment at home. </li></ul>
  64. 65. Good news <ul><li>ADB say Asian economies are likely to bounce back in 2010 </li></ul><ul><ul><ul><li>Philippines imports rebound up 18.9% in May </li></ul></ul></ul><ul><ul><ul><li>Hyundai in Seoul posted a 2 nd quarter net profit up 48% on strong sales </li></ul></ul></ul><ul><ul><ul><li>Bharti India net profit up 24% for Q1 </li></ul></ul></ul><ul><ul><ul><li>Asian stocks at a 10 month high end July </li></ul></ul></ul><ul><li>But perhaps the sustainability of the recovery is in question…..if the rest of the world fails to bounce back </li></ul><ul><li>In that case, Indonesia and Vietnam are better poised because of their relative resistance through lack of reliance on global market </li></ul>
  65. 66. Outlook and taking advantage
  66. 67. Opportunities <ul><li>Look for unmet opportunities eg. telcoms in rural areas. </li></ul><ul><li>Unbranded products that will covert to branded in good times </li></ul><ul><li>Distribution is key; extensive and effective distribution network </li></ul><ul><li>Rural comprises 75% in Vietnam, 58% in Indonesia </li></ul><ul><li>Note the huge income disparity between rural and urban – you are dealing with very different needs </li></ul><ul><li>Rural - daily paid. Unilever has worked this to advantage as has Coke - reducing pack size to make consumption of their products more affordable </li></ul>
  67. 68. <ul><li>Jakarta has a day time population of around 12 million and an evening one of 8 million </li></ul><ul><li>People quite happily spend the equivalent of their net monthly salary on a mobile handset </li></ul><ul><li>Despite body shape, SE Asians are not immune to diabetes or obesity </li></ul><ul><li>In fact 1 in 6 Thais are also considered obese (specialty drinks are a popular luxury for Asians with spare discretionary cash). </li></ul><ul><li>RTD Green Tea has experienced massive growth in Indonesia and Coke Zero has taken off in Thailand where Coke has seen 7% growth in Q1 2009 across all brands. This is counter to the general contraction in consumer spending there. </li></ul><ul><li>In Indonesia, if you have a disability you will soon be asked to wear signage so that drivers know that’s the case </li></ul>National Foods Conference 2009 Finally, just some interesting facts.... did you know?
  68. 69. such is life in Asia…. National Foods Conference 2009
  69. 70. SE ASIAN REACTION TO THE GFC <ul><li>Not so much…. </li></ul>