Vietnamese consumer market review - Người Tiêu Dùng Việt Nam - from TNS

1. Ralf Matthaes
Managing Director
TNS Indochina
October 8, 2009
Hilton Hotel
Hanoi

2. Consumer Trends Agenda
§ Poor Children of Ninh Thuan Province
§ Half year 2008 vs half year 2009
§ Wealth
§ Consumption
§ Consumer concerns
§ Branding
§ Media
§ Environment

3. 2008 vs 2009

4. Half year 2008 vs half year 2009 Comparison
2008 2009
GDP growth = 8.5% q GDP growth = 3.9%
FDI (US Billion) = $18 Billion q FDI (US Billion) = $2.8 Billion
Inflation (CPI) = 28% q Inflation (CPI) = 3.4%
Exports** = 47.7 Billion q Exports** = 41.7 Billion
Consumer confidence = 94% q Consumer confidence = 86%
(economy same/ better in next 12 months) (economy same /better in next 12 months)
Ad expenditure growth = 16% q Ad expenditure growth = 23%
FMCG growth* = 20% q FMCG growth* = 8%
Modern trade growth* = 27% q Modern trade growth* = 10%
Internet users growth = 23% q Internet user Growth = 25%
Car sales^ = 30% q Car sales^ = -19%**
Overseas remittance = 8 Billion q Overseas remittance = 6.7 Billion
Overall growth spend at half year is down by 25% compared to 2008
While economic indices show a decline of over 50% in growth
Source: GSO /TNS * Value growth / TNS Worldpanel ^VAMA – end of August **Exports = End of September 09

5. Vietnam by the numbers – 2008 vs 2009
Inflation is down by 88% from half year 2008
Ad spend growth is up by 23% from half year 2008
Internet growth is up by 25% from September 2008
GDP at half year is less than half of 2008
FDI is down by 87% compared to September 2008
Exports are down by 6% compared to years end 2008
estimate
FMCG growth is down by 12% from half year 2008
Modern trade growth is down by 17% from half year 2008
Car sales are down by 19% from half year 2008
As FDI & Exports accounted for US $120 Billion of the VN economy in 2008,
VN will struggle moving forward, with only US $65 Billion in 2009 (est.)

6. Wealth Trends

7. GDP per capita evolution - USD
In USD
1,200
1,024
1,024 1,075
1,000
835
800
725
600 552
402 440
400
289
200
0
1995 2000 2002 2004 2006 2007 2008 2009 Est.
Vietnam’s GDP has doubled in 4 years, but only by 5% in 2009
Source: GSOVN

8. HCMC Declared Monthly Household Income
2008 5 14 26 12 32 3 8
SEC Income Scale
A1 = US $1,200 +
A = US $801 -1,200
2006 7 27 31 11 18 2 4 B = US $401 - 800
C = US $400 - 276
D = US $181 - 275
E = US $126 - 180
F = US $ 45 - 125
2004 20 37 20 5 12 4 2
2001 24 34 20 6 11 5
1999 30 27 23 12 5 3
0% 20% 40% 60% 80% 100%
SEC F SEC E SEC D SEC C SEC B SEC A SEC A+
A-B-C SEC has more than doubled in the last 4 years (+59%)
Source: TNS VietCycle: 1999-2008
Base: N = 1,000

9. Hanoi Declared Monthly Household Income
2008 1 7 35 23 31 12
SEC Income Scale
A1 = US $1,200 +
A = US $801 -1,200
2006 6 26 38 10 18 02 B = US $401 - 800
C = US $400 - 276
D = US $181 - 275
E = US $126 - 180
2004 26 44 20 4 5 1 F = US $ 45 - 125
2001 46 36 11 3 31
1999 40 37 14 5 31
0% 20% 40% 60% 80% 100%
SEC F SEC E SEC D SEC C SEC B SEC A SEC A+
A-B-C SEC has almost doubled in the last 2 years
Source: TNS VietCycle: 1999-2008
Base: N = 1,000

10. Consumption Trends

11. FMCG Growth in Asian countries (%) - 2008
19
16
11
10
8
8%
3
Vietnam China Malaysia Thailand Philippines Taiwan Vietnam
July 09
Vietnam experienced the fastest FMCG growth in Asia in 2008
FMCG Trends % value Changes – Source: TNS Worldpanel Asia

12. FMCG value growth
Half year 2008 vs. half year 2009
25%
22%
20%
15% 14%
10%
8% 8% 8%
7%
5% 4%
0%
0%
TOT HH TOT TOT FOOD TOT FMCG TOT TOT NON TOT TOT
PRODUCTS BEVERAGES GROCERY FOOD CHILLED PERSONAL
FOOD CARE
Personal care products have suffered the most from the recent
recession, as consumers are more concerned with filling their
stomachs and keeping their castles clean, as they are going out less
Source: TNS Worldpanel

13. Growth of FMCG Sector half year 2008 vs 2009
53
6.5 mil
vnd +
20 3.5 mil -
18
6.5 vnd
Below
8 3.5 vnd 10
7
2008 3
2009
All HouseHolds Low income Middle income High income
-6
% Value Change YTD P608 vs. P607 % Value Change YTD P609 vs. P608
Vietnam’s wealthier consumers have reduced their spend the most over the past
12 months, indicating that 2008 was a huge boon year, where these consumers
had little worry about the future, while today their confidence is not as high
Source: TNS Worldpanel

14. Wealth & Consumption Synopsis
Hanoi & HCMC have increased their wealth significantly in
the past 4 years.
Hanoi’s wealthy class has increased 5 fold, making it truly a
consumer paradise.
However, the recession is curbing the wealthy classes
spend more than all others.
Household products, beverages and foods are still seeing
double digit growth.
Thus, are your brands, products and services targeting the
right consumer?

15. Consumer Concerns

16. Quality of product and value for money
The Chinese Milk scare could be felt for years &
will make consumers more quality conscious

17. Vietnamese main fears in life
64%
Health of my family 71%
75%
48%
Personal health 47%
70%
39%
Unemployment 36%
55%
35%
Financial stability 29%
27%
TNS Consumer Poll - Jan. 09
17%
Global recession 16% TNS VietCycle - Sept. 08
27% TNS VietCycle - Nov. 06
Health still tops consumers main fears, followed by money matters
Source: TNS VietCycle 2006 / 2008 & TNS Consumer Confidence Poll – Jan. 09

18. My personal standard of living forecast
Far better A little better Same A little worse Far worse Don't know
TNS Consumer Poll -
Jan. 09
9 27 46 16 10
TNS VietCycle - Sept. 08 16 54 25 41
0
TNS VietCycle - Nov. 06 18 48 32 20
Vietnamese personal standard of living forecast for the next 12
months has dropped from 70% forecasting a better living standard
in September 2008 to only 36% in January 2009
Source: TNS VietCycle 2006 / 2008 & TNS Consumer Confidence Poll – Jan. 09

19. Will you reduce spending in 2009?
Don’t
know
2%
No
46%
Yes
52%
Over half of consumers shall reduce their monthly spending in 2009
Source: TNS Consumer Confidence Poll – Jan. 09

20. Consumers spending reduction in 2009?
Base: All n = 500
Less Same More Don't know
Entertainment & dining out 44 54 2
0
Home appliances (Wash machine, TV Hifi, etc) 29 69 2
Major
Decrease Household utilities 28 70 2
0
Personal equipment (mobile phone, laptop ,Etc) 28 69 30
Communications telephone/ fax/ email 25 71 40
Personal care products 23 73 40
Less than Transportation 23 73 4
25%
House hold care products 23 74 30
Food & beverages products 16 81 4
Health care products/ services 12 76 12 1
Education 4 72 23 1
Stable
Only education and healthcare seem to be unaffected
by the Global economic recession
Source: TNS Consumer Confidence Poll – Jan. 09

21. Consumers Concerns Synopsis
Health, sanitation and safety are still key consumer
concerns.
Consumers are conscientiously spending less due to fears
of unemployment, financial stability and global recession.
However they are still spending but on smaller ticket items,
especially keeping homes clean, stomachs filled and on
bigger ticket items such as Healthcare and Education.
Does your company have the right mix or offer for today’s
more conservative consumers?

22. Brand impact

23. Advertising Brand Consumer Cycle
“Brand aspirations and the
brand as an extension of the
consumer are now the norm
in Vietnam” BEYOND THE
Ralf Matthaes BRAND
(Post Modern Mktg)
BRAND AS ICON Niche Market
Needs Based Segmentation
(Customer Driven Brand Includes Company
Marketing)
BRAND AS Saturated Market
LOW Usage Segmentation
PERSONALITY Stage 5:
COMPETITION Symbolic Ads
(Classic Branding) Self-fulfillment
BRAND AS Intense Competition
Psychographic Segmentation
REFERENCE Emotional / Lifestyle Ads Stage 4:
(Marketing) Esteem
Increasing Competition Stage 3:
NO BRAND Demographic Segmentation
Social
(Commodity Selling) Rational Ads
recognition
Products have Power
No Segmentation Stage 2:
No Advertising Upgraded
needs
Stage 1: NAÏVE COMPETITION
Basic needs

24. Vietnamese Brand Perceptions
I am equally concerned about 81
Price and quality
I prefer brands with a health / 73
environmental focus
I’m willing to pay more for 71
higher quality brands
I like to use the brand which 56
shows my success
I prefer to buy well-know brands 56
Vietnamese brands are as good 50
as international brands
I prefer local Vietnamese brands 39
There are no real differences between 32
the brands available in the market
0 10 20 30 40 50 60 70 80 90
International / healthy / badge value brands and brands of
high quality are still much more preferred by VN consumers
Source: VietCycle 2008- September 2008

25. Vietnamese brand perceptions are changing
“My children will be very
intelligent and grow-up faster
ial
as I feed her by a good quality
powder milk. I feel that I am a
oc
good mother”
S
Pe o p le
“
m o t h e say t h a t I a
qualityr because I c m a m odern
m y g r e b r an d s f o r h o o se g o o d
at love m
for m yy b aby. It sh
ch il d r e ows
n”
RECOG NITION
“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 FGD’s

26. 10 fastest growing brands – Half year - 2009
25%
Value Share change%
22%
Market share movement
15%
12%
10% 10% 9%
9%
8% 7%
VFRESH CHINSU KOTEX VFRESH STING TRANG TUONG AN FAMI (Soya DIELAC VINAMILK
(Soya milk) (NAM NGU) (Pantyliner) (Fruit juice) TIEN (Margarine) milk) ANPHA 1 (UHT)
In 2007, 2 of the fastest growing brands were, Vietnamese, in 2008
= 4 and thus far in 2009 = 8 were Vietnamese Thus, meaning that
Vietnamese brands and the Gov’t initiative to buy local is working
Source: TNS Worldpanel

27. Branding synopsis
Vietnamese consumers are becoming brand savvy.
Vietnamese are using more and more Vietnamese brands.
Government initiatives and price points have much to do
with this surge in Vietnamese brand sales.
But do Vietnamese brands have the quality and
aspirational brand equity to thrive, when the economy
rebounds?

28. Internet us@ge

29. Top 18 countries – internet users
China 298
US 220
Japan 94
India 81
Germany 55.2
Brazil 50
United Kingdom 43.8
France 40.9
Russia 38
South Korea
Spain 28.6
36.8
@
Italy 28.4
M exico 27
Turkey 26.5
Indonesia 25
Vietnam 21
Philippines 20.7
Poland 20
0 50 100 150 200 250 300 350
Vietnam is now the 16th most active user of the internet globally. As of
Aug. 2009, there are 24.5 million users, an increase of 18% from last year
Source: WorldInternetstats.com – March 2009

30. In-home Internet penetration (Hanoi & HCMC)
40
34
30
21
20
9
10 8
3
0
1999 2001 2004 2006 2008
With 1 in 3 urban homes connected to internet,
Internet based advertising will experience steady growth
Source: TNS VietCyle – 1999-2008 – HCMC & Hanoi

31. Monthly Internet Expenditure
US$36M
US$36M
Monthly Personal Spending on the Internet (VND)
Monthly Personal Spending on the Internet (VND) monthly
monthly
Total (4 cities) 174,071
Ho Chi Minh City 191,145
Hanoi 155,155
Da Nang 133,258
Can Tho 115,475
Net users spend an average VND174,000
or US $10 per month on the Internet
Base: Past month internet users aged 15+ across all 4 major cities
who have home internet access
Source: Yahoo!-TNS Net Index 2008

32. Online User Profile
Age
Age Gender
Gender Marital Status
Marital Status
15%
35% 8% 40+ 37%
44%
10% 52%
35-39 64%
Female Married &
12% 18%
30-34 Others
12% Male
Single
24% 25-29
14% 63%
20-24 56%
48%
14% 36%
26% 15-19
14%
General Netizen* General Netizen* General Netizen*
Skewed towards young (68% <29 years), Male (56%) and Single (63%)

33. Internet Synopsis
The internet is surly becoming a mainstay in
Vietnam.
Though attracting a young audience, internet will
spread to all ages in the next 5 to 10 years.
There is huge amounts of money to be made via the
internet.
Do you know what your Return on investment could
be?

34. A Shift in Advertising

35. Advertising spend breakdown - 2008
Internet (est.)
M agazines
0.4%
8%
Newspapers
,
16%
Radio
0.6%
TV 75%
TV Radio Newspapers M agazines Internet (est.)
TV is King followed by Print. However, Internet is growing
Source: TNS Media Co.

36. Top 4 Daily Home activities
66%
7%
7%
4%
7%
TV dominates followed by reading, using the computer
and watching movies and listening to music
Source: VietCycle 1999-2008

37. Media Reach
2006 2007 2008
(%)
99 99 100
83 85 84
77
73 76
62 60 62 62 64
57
51 52
44 42
33
27
15
11 11
TV (Past Week) Outdoor (Past Newspaper Magazine (Past DVD/VCD/Tape Radio (Past Cinema (Past 3 Internet (Past
Week) (Past Week) Week) (Past Week) Week) Months) Week)
TV is still King… but Internet is by far the
fastest-growing medium
Base: Males and Females aged 15+ across all 4 major cities (Ho
Chi Minh City, Hanoi, Da Nang and Can Tho)
Source: TNS Media Habits Survey (2006-2008)

38. Media Exposure Trends
Time Spent Per Day (Mins)
295
253
2006 2007 2008
233
46 45 46 43
22 24 21 22 30
9 10 8
TV Newspaper Magazine Radio Internet
Time spend watching TV has decreased by 1 hour per day since 2006,
while Internet is the only medium growing (21 minutes / day)
Base: Males and Females aged 15+ across all 4 major cities (Ho Chi Minh City,
Hanoi, Da Nang and Can Tho)
Source: TNS Media Habits Survey (2006-2008)

39. Ad spend half year 2008 vs half year 2009
250,000
(,000)
230,000
2008
200,000
2009
171,000
150,000 TV ad spend has increased by 26% and
Newspaper increased by 12%, while both
Magazine & Radio have dropped.
100,000
Total ad spend is up by 23% compared to 2008
50,000 42,050
36,980
20,500 20,429
937 828
0
TV Newspapers Magazines Radio

40. Top 6 Growth Sectors ad spend
Half yr 2008 vs half yr 2009 The Beverage sector, followed by
80,000,000 Telecoms has experienced the highest
growth in Ad spend, followed by
66%+ Foods, Beauty Care, etc. Ironically,
61,596,125 sector spend does not necessarily
60,000,000 translate into category growth in terms
35%+
of sales, as Beauty care grew by zero%
49,557,128 34%+
43,759,859
37,102,809 93%+
40,000,000 36,743,160 36,085,467
32,835,029
15%+ 42%+
18,731,560
20,000,000 16,493,830 14,877,059
14,423,011
10,478,135
0
Telecoms Food Hygiene & Beauty Beverages Pharmaceuticals Household
Care products
2008 2009

41. Top 6 declining Sectors ad spend
Half yr 2008 vs half yr 2009
Not surprisingly, the finance
-65%
14,000,000
13,086,280 sector has seen the highest
decline in ad spend in the past
12,000,000 12 months, followed by
-36%
Automotive, who’s sales have
10,000,000 9,233,583 dropped by 19%
-21%
8,000,000 7,630,154
-29%
6,174,207
6,031,925 -13%
5,966,609
6,000,000 -12%
4,962,512
4,629,849 4,675,415
4,425,797
4,323,077 4,1 6,805
1
4,000,000
2,000,000
0
Financial Automotive Computer & Household Retail Travel &
Audio Video Appliances Tourism
2008 2009

42. Media Shift Synopsis
Media habits are changing in Vietnam.
TV is still King but viewership is dropping.
Cable TV and the Internet are the new kids on the
block.
Are you spending your advertising dong wisely?

43. Environment

44. Environmental awareness
I would be willing to pay 10% more for groceries/products that are more environmentally friendly
Strongly agree Somewhat agree
Somewhat disagree Strongly disagree
Ave
India 51 42 5 2 3.4
Chinese mainland 38 55 6 1 3.3
Philippines 44 46 9 1 3.3
Indonesia 41 47 11 1 3.3
Malaysia 28 55 14 3 3.1
Thailand 26 56 17 1 3.1
South Korea 22 58 18 2 3.0
Singapore 15 55 27 3 2.8
Hong Kong 15 54 27 4 2.8
Japan 10 54 33 3 2.7
New Zealand 15 38 34 13 2.6
Evidence of increasing concern across Asia…
Source: Grey Group study

45. Forecast in the next 12 months
Environmental Pollution
Far better A little better Same A little worse Far worse Don't know
TNS Consumer Poll -
Jan. 09
5 22 9 27 36 0
TNS VietCycle - Sept. 08 5 17 27 40 12 0
TNS VietCycle - Nov. 06 7 22 23 37 9 0
In a short time consumer sentiment towards the worsening
of Vietnam’s polluted environment has increased by 300%!
Source: TNS VietCycle 2006 / 2008 & TNS Consumer Confidence Poll – Jan. 09

46. How do we rate Vietnam’s environment?
By SEC, age group and gender
Quality of Vietnam environment
Very bad Fairly bad Fairly good Very good
AB (n=283) 25 52 20 3
CD (n=539) 25 57 16 1
EF (n=173) 28 47 22 2
Teenagers (n=195) 18 60 20 2
Young Adults (n=185) 32 53 14 1
Mature (n=296) 21 54 23 2
Older (n=324) 29 51 17 2
Male (n=503) 26 53 19 1
Female (n=497) 24 55 18 3
We can see the next generation of adults (teens)
are quite skeptical of the environmental situation.
Base: All respondents

47. What are we doing to look after the environment?
Current actions vs Perceived most important action
69
Not littering 45
51
Use less energy (gas, electricity) 13
45
Use less water 5
39
Less use of plastic bags 7
34
Recycle/separate waste items for recycling 13
26
Use energy saving bulbs/ solar power lights 4
20
Walk or use more bicycle / electric bicycle 4
17
Use more public transport 3
Ending littering is highest
13
Less use of motorbike/take more public transport 2 for action taken and
Share transport with others 0
10 considered most
10
important factor.
Use less harmful aerosols or products 1
9
Use less batteries/ use more rechargeable batteries 0
9
Use environmental friendly transport 3 Actions Most important

48. Environmental Brand Perceptions
“7 out of 10 consumers “say” they
lly
prefer to buy environmentally
ta
friendly products, …but do they?
en ?
nm ndly
iro rie
E nv F
Feeding hungry
mouths and buying
aspirational brands,
rules in Vietnam
le
No brand in Vietnam y mobi
has an image of being use m ocial
“I can w my s ”
environmentally friendly,
friendly
to sho ersonality
but lots of companies
s&p
have the opposite image! statu
Source: TNS VietCycle

49. So let’s smarten up
&
start to clean up!

50. Is the glass half full or half empty - Synopsis
Overall spend has continued to increase on almost all
consumer categories, but growth has declined by 15% to 50%
compared to 2008.
Not all sectors have been impacted the same…
Telecoms / Food / Beverages / Pharmaceuticals / Household Products /
Education have all maintained steady if not staggering growth
Electronics / Automotive / Travel-tourism, Computer-Audio video /
Finance-banking, beauty-personal care and real estate have all seen a
mild to steep drop off

51. Is the glass half full or half empty - Synopsis
Thus, Vietnamese consumers are more concerned with hygiene, health,
food and drink and connecting with one another and preparing for their
futures.
Inversely, big ticket items such as cars and computers, banking and real
estate products have all been relegated to a later date, during these times
of uncertainty.
Bottom-line:
Glass is half empty due impact of global recession (EXORTS / FDI)
Glass is half full due to strong performance of domestic market
Glass is full compared to the rest of Asia as Vietnam is 1 of only 5 Growth
economies in the region

52. 2008 - 2009

58. Why we need your help?
TNS Vietnam shall donate all proceeds of the sale of this
book, save for production costs, to UNICEF’s Ninh Thuan
Province Child Protection Program.
The intend is to raise at least US $40,000 from the sale of
TNS Pink Pages.
US $100 / copy or US $500 / 10 copies…

59. Imagine…
Travel to NT
NINH THUAN

60. Imagine…
A baby born in
Ninh Thuan
stands two
times the risk
to die during
or immediate
after birth
(vs national average)

61. Imagine…
A child growing
up in Ninh Thuan
is two times less
likely to reach her
fifth birthday
(vs national average)

62. Thus far we have donated
US $10,000 to UNICEF
You &

63. & You
Together, we can make a difference!
Ngoc.ta@tns-global.com
VC GTI

64. Thank You / Cam On
ralf.matthaes@tns-global.com
www.tnsglobal.com