Consumer Confidence Trends

Consumer Confidence Trends
Lampe Omoyele
ADVAN MARKETERS CONFERENCE
13TH MAY 2016

Copyright©2014TheNielsenCompany.Confidentialandproprietary.
2
Q4’15 MAR/APR‘16
Q1’15 Q3’15 JAN/FEB‘16
Uncertainty as elections
approach
Presidential election is
postponed & later
successfully held
2015/2016: NIGERIA CHANGING TO A NEW NORMAL?
Oil prices dip
further
27 states owe
salaries
Fuel Scarcity
Economic
Uncertainty
Uncertainty around
Economic Direction
Ministers Appointed.
2016 Budget Presented
.
Increased Energy
Prices
Budget Financing
Q2’15
Fiscal pressure as oil
prices dip
Smooth Transition
Fuel Scarcity Crisis

3
SIGNIFICANT MACRO-ECONOMIC SLOWDOWN AMIDST UNCERTAINTY…
CRUDE OIL PRICES
• Dwindling crude oil prices
• Decline in Foreign Cash Reserves ($26.2bn
May’16 vs. $33.3bn Jan’15)
• Weakened Naira@61% (N321/$ May’16 vs.
N197 /$ May’15)
Decline in Government revenue & Naira
depreciation
FOREIGN INVESTMENT
• 74% decline in Q1’16 vs. Q1’15 as foreign
investors reduce bet on Nigerian equities
• Total Capital import declined by 54.3% in
Q1 2016 vs. $1,557M in Q4 2015
Drop in Foreign Investment
INFLATION
• Rise in Inflation Mar’15(8.5%) vs. Mar ’16
(12.8%). *April forecast – 13.2%
• Rise in Food Inflation Mar’15(11.3%) vs.
Mar’16(12.7%)
• Major drivers: Transportation cost , rise in
prices of imported food & non-food items
and adjustment of electricity tariffs
Rising Inflation
Source: Nigerian Bureau of Statistics
4.5
5.4
5.2
6.8
6.2
6.5
6.2
5.9
4
2.4
2.8
2.1
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015
GDP Growth % Trends
*Forecast for Q1’16 – 2.3%

4
Copyright©2014TheNielsenCompany.Confidentialandproprietary.Copyright©2013TheNielsenCompany.Confidentialandproprietary.
4
MANIFESTING IN LOWER CONSUMER DISPOSABLE INCOME...
•BENUE
Source: Nigerian Bureau of Statistics
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
H1 2011 H1 2012 H1 2013 H1 2014 H1 2015
Disposable Income Compensation of Employees
Growth in disposable income and Compensation of Employees

5
11%
127
97%
..LEADING TO DROP IN CONSUMER CONFIDENCE INDEX FOR THE FIRST
TIME IN Q3, 2015
132
Source: Nielsen Consumer Confidence Index
120 121
123
127
129
132
127 127
2014-Q1 2014-Q2 2014-Q3 2014-Q4 2015-Q1 2015-Q2 2015-Q3 2015-Q4
NIELSEN CONSUMER CONFIDENCE INDEX, NIGERIA, Q1 2014 – Q4 2015

6
ACROSS KEY INDICES, CONSUMERS REMAIN CAUTIOUSLY
OPTIMISTIC, BUT WANING…
0
10
20
30
40
50
60
70
80
90
JOB PROSPECT STATE OF PERSONAL FINANCE
2014-Q2 2014-Q3 2014-Q4 2015-Q1 2015-Q2 2015-Q3 2015-Q4

Copyright©IITheNielsenCompany.Confidentialandproprietary.
7
11%
39%
50%
Q4 2015
A good time to spend Not so good time to spend Bad time to spend
8%
36%
56%
Q4 2014
12%
35%
53%
Q1 2015
10%
34%
56%
Q2 2015
12%
40%
48%
Q3 2015
INTENTION TO SPEND IN NEAR-TERM IS ON THE DECLINE...

8
FOOD & GROCERY ACCOUNT FOR LARGEST SHARE OF
HOUSEHOLD WALLET SPEND AND PROJECTED TO INCREASE…
Share Of
Monthly
Household
Spend
Source: Nielsen Emerging Market Insights 2014

9
HOUSEHOLDS REPRIORITIZING SPEND…
• Foodstuff –raw food
• Transport
• School fees
• Telephone airtime
• Fuel
Spend More
• Aso-ebi (party uniforms)
• Clothes
• Hair do
• Gas (C2D)
• Certain food items (e.g.
Beverages) C2D
• Outings / going to
eateries (C2D)
• Detergent
• Gas (BC1)
• Water (Dispenser
canisters) (BC1)
• Body Creams (few)
MaintainSpend Less
• Gold / jewellery
• Aso-ebi (party uniforms)
• Generator (C2D)
• Certain food types e.g.
Cereals (C2D)
Drop/Eliminate
Strategies employed to cope with the limited budget on hand is mainly a function of their personal taste and outlook to life
Source: Nielsen Consumer Insights Focus Group Discussion ** B, C1, C2 and D are Living Standard Measurements (LSM)

10
FrequencyofUsage
ReprioritizationofSpendin
favorofEssentialssuchasstaple
foods
AmountusedperOccasion
FMCG
……ADOPTING VARIED MEANS TO SURVIVE CURRENT CRUNCH SEASON

11
LEADING TO A SWITCH IN FAVOUR OF SMALLER PACK SIZES AND/OR
VALUE-FOR-MONEY BRANDS…
CocoaBeveragesPowderedMilk
Source: Nielsen Retail Audit

12
TotalFMCGValueGrowth
Source: Nielsen Retail Audit. NB: Total FMCG represents 50 Food & Non-Food Categories
-40.0
-30.0
-20.0
-10.0
0.0
10.0
FOOD CONFECTIONARY BABY HOME CARE PERSONAL CARE MEDICNES NON-ALCOHOLIC
BEVERAGES
Value Growth Q1'15 Q2'15 Q3'15 Q4'15 Q1'16
22.1
17.9
19.9
24.9
20.8
18.7
12.2 11.2
7.6
3.5
5.6 4.8
-1.2 -0.8
-3.2
-9.1 -8.0 -9.8
-13.3 -11.6
-9.4 -8.1 -8.0
-11.7 -10.7 -9.7 -8.7
Jan2014
Feb2014
Mar2014
Apr2014
May2014
Jun2014
Jul2014
Aug2014
Sep2014
Oct2014
Nov2014
Dec2014
Jan2015
Feb2015
Mar2015
Apr2015
May2015
Jun2015
Jul2015
Aug2015
Sep2015
Oct2015
Nov2015
Dec2015
Jan2016
Feb2016
Mar2016
EVIDENCED BY DECLINE IN OVERALL FMCG
CONSUMPTION THROUGHOUT 2015

13
-3.7
-1.5
-8.4
HOME CARE
+5.0
TELCO
-11.6
CONFECTIONERY
NON-ALCOHOLIC BEVERAGE
-31.1
BABY CARE
+6.1
ALCOHOLIC BEVERAGE
-13.1
PERSONAL CARE
-24.1
MEDICINE
ALCHOHOL BEVERAGES AND TELCO WERE AMONGST FEW
EXCEPTIONS THAT RECORDED GROWTH IN CONSUMPTION IN 2015…
-8.8
FOODS
TOTAL FMCG VALUE GROWTH FY’15 VS. FY’14
NON-DISCRETIONARY SEGMENTS DISCRETIONARY SEGMENTS
Source: Nielsen Retail Audit Data (50 Categories)
Value $ (Billion)
$13.8
FMCG Value
Growth
-3.7%

14
-10% -98% 0.38% -48.3% 5.5% 6.8%
0.7% -50.9% 6.22% -50.5% 10.3% -10.4%
Revenue
Growth
Net Profit
Growth
Source: http://www.nse.com.ng/Issuers-section/corporate-disclosures ,http://newsng.com/nigeria-news/2015/05/why-nigerian-fmcg-companies-are-falling-off-a-cliff/
JAN UARY– DECEMBER ‘15 vs. ‘14
…DECLINE IN CONSUMPTION IMPACTED CORPORATE PERFORMANCE
-17.8% -83.4%
5.7% 53%
*9 months ended Dec’15
*9 months ended Mar’16
*9 months ended Dec’15
*9 months ended Sep ‘15

15
15
Difficulty in sourcing FX
Capital Controls & Depleting Foreign Reserve
Double Digit Inflation
2016: A YEAR OF ‘PERFECT STORM’?
1515
Increased Tax Drive
Difficulty in Financing Federal & State Budgets
Push for Infrastructure Development
Slowdown in China
Unstable Oil Prices
Iran Sanctions Lifted
Source: FSDH Economic and Financial Outlook
in 2016
Turmoil in Commodities prices
Mass Retrenchment in Public & Private Sector
Drop in FDI

16
IN THE NEWS…

17
17

18
CONSUMER CONFIDENCE PROJECTED TO FURTHER DECLINE...

19
-3.7
-8.1
-16.4
HOME CARE
-6.2
TELCO
-15.7
CONFECTIONERY
NON-ALCOHOLIC BEVERAGE
-18.4
BABY CARE
-8.9
ALCOHOLIC BEVERAGE
-20.8
PERSONAL CARE
-21.0
MEDICINE
2016 SHOWING SIMILAR DECLINE IN CONSUMPTION…
-10.4
FOODS
TOTAL FMCG VALUE GROWTH Q1’16 VS. Q1’15
NON-DISCRETIONARY SEGMENTS DISCRETIONARY SEGMENTS
Source: Nielsen Retail Audit Data (50 Categories)
Value $ (Billion)
$3.4
FMCG Value
Growth
-10.3%

20
HOWEVER, DESPITE DECLINE IN CONSUMER CONFIDENCE INDEX,
NIGERIAN CONSUMERS REMAIN THE MOST OPTIMISTIC IN SUB-
SAHARAN AFRICA…
Nigeria
Kenya
Ghana
Q4’ 14 Q1’ 15 Q2’ 15 Q3’ 15 Q4’ 15
127 129 132
127 127
102 99 94 99 104
113 104 112 117 103
South Africa
88 87 87
82 82

21
KEEP ENGAGING

22
Top Leisure activities on Weekend(% of
respondents)
Top considerations when buying
(% of respondents)
AWARENESS, AFFORDABILITY, AVAILABILITY AND ASSURANCE ARE KEY
FACTORS FOR WINNING WITH CONSUMERS/SHOPPERS
Engaging with consumers around these themes would help to build consumer confidence and loyalty
Familiarity
37%
Affordability
35%
Easily Available
31%
Recommendation
25%
Top Consumer Attitudes
(% of respondents)
Personal Appearance
90%
High Standards for
Oneself 84%
Future Planning
84%
Listening Music
58%
Internet (Facebook, Blogs
etc) 73%
Watching TV
53%
Spending time with
Family 65%
Respect for Elders
82%
Source: Nielsen Emerging Market Insights

23
SHOPPERS MORE WILLING TO SWITCH BRANDS IF CHOICES ARE
AVAILABLE (MARKET & MIND PRESENCE)
68%willing to buy a
substitute brand
31%visit another store
More store loyal
From traditional trade shoppers to…
More organised trade and
online buyers

24
ADVERTISING INFLUENCE ON CONSUMER & SHOPPER IS CONSIDERABLE
70%of purchases are
influenced to a large/very large
extent
19% Small extent
11% No Influence

25
BUT UNDERLEVERAGED…
Awareness of ad locations is high, but content is not deployed or memorable
89%
74%
69%
50%
50%
46%
24%
51%
23%
11%
3%
3%
3%
3%
Outdoor
Broadcast
Print
Public Service
Mobile
Product Placement
Online
Advertising Penetration
Advertising mode awareness Most seen adverts

26
CONSUMER PROMOTIONS HAVE IMPACT ON SHOPPER DECISION
52%of Nigerians will
buy/prefer to buy
MORE than usual
19% Usual extent
6% No Influence

27
89%
74%
69%
50%
50%
46%
24%
51%
23%
11%
3%
3%
3%
3%
Outdoor
Broadcast
Print
Public Service
Cell Phone &
Mobile
Product
Placement
Online
Awareness and most often seen advertising modes
Advertising mode awareness Most seen adverts
CAPTURE ATTENTION OF THE CONSUMER & SHOPPER BY
DEPLOYING MEMORABLE ADVERTISING CONTENT
Progressive Affluents and Trendy
Aspirants exhibit high awareness
of cell phone and online
advertising
.
Outdoor advertising offers highest reach and resonance across all
consumer segments

28
REIMAGINE PACK/PROMOTION STRATEGIES…
Drive availability of value
packs
Maintain portfolio price
pack architecture in line
with market realities
Run focused, value-adding
promotions

29
KEEP ENGAGING

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