Vietnam consumer trends in Vietnam and Asia

1. 1 Major Consumer Trends Vietnam and Asia

2. 2 Agenda ♦ Asia overview ♦ Major consumer trends

3. Asia Overview

4. Asia represents a huge consumer base 4 ASIA REMAINS THE GLOBAL GROWTH ENGINE Source: United Nations | IMF 60% 36% of global GDPof global population ASIA 3rd biggest consumer base in S. E. Asia 15th biggest consumer base in the world VIETNAM 60% of global economic growth

5. Emerging & Developed countries Year-on-year GDP Growth Rates (%) Asian countries 7.1 6.7 6.2 6.9 4.2 5.0 3.3 2.4 2.0 1.5 1.0 1.6 -3.6 1.5 -0.2 7.4 6.9 6.8 6.7 5.9 5.1 3.9 3.6 3.1 2.6 1.7 2.7 1.9 2.3 1.7 India China Vietnam Philippines Malaysia Indonesia Thailand Singapore Korea Taiwan Japan Eurozone Brazil US Rusia 2016 2017 5 A majority of Asia sees brighter economic outlook. Vietnam is still among the fastest growing markets, surpassing the 2017’s GDP target of 6.5% Asia GDP growth: +5.5% in 2017 Global GDP growth: + 3.7%

6. Higher purchasing power across Asia, increasing the potential from ‘newly-rich’ Household final consumption expenditure per capita (US$) 6 Source: World Bank 0 5000 10000 15000 20000 25000 30000 1990 1995 2000 2005 2010 2016 0 1000 2000 3000 4000 5000 6000 Malaysia Thailand China Indonesia Philippines Vietnam India

7. 7 The whole region witnesses rapid urbanization Source: IMF Malaysia Indonesia Thailand Vietnam Philippines 2000 2010 2016 China South Korea 62 71 75 42 50 54 31 44 52 24 30 34 484544 36 49 57 80 82 83 % Urban development Rapid urbanization Rural and suburban today will become the new urban consumers of tomorrow

8. Nearly half of Asian women in the workplace, indicating time poor and demand for speed and convenience % Working female 8 20 30 40 50 60 70 80 China Hong Kong Indonesia India Japan South Korea Malaysia Philippines Singapore Thailand Vietnam 2012 2016 Source: World Bank – Female employment % of population ages 15+

9. Household size is shrinking, arising more individual needs among Asian consumers 9 2.5 3.0 2.7 3.4 3.5 4.4 4.5 4.4 4.8 5.3 2.4 2.8 2.8 2.9 3.2 3.8 4.5 4.3 4.6 4.9 Japan Taiwan South Korea China Thailand Vietnam Indonesia Malaysia Philippines India 2012 2016 Average number of people per household Source: The Economist & ArcGIS Families with 1-2 generations Families with 2-4 generations * Indonesia: Average number of people per household in 2015 *

10. Asia has 3 clusters of consumers. SEA population is still young compared to other areas with Millennials are key future consumers 10 Japan Hong Kong South Korea Taiwan Thailand China Vietnam Indonesia Malaysia Philippines 20 25 30 35 40 45 50 - 10,000 20,000 30,000 40,000 50,000 60,000 70,000 Median age GDP per capita - PPP (US$) Source: IMF and World by Map | Millennials defined as those born between 1980 and 2000 Aging consumers Millennials consumers (Over 1/3 of SEA pop) Working-age consumers

11. 11 Source: National Statistics and http://populationpyramid.net/ With 177 million individuals, Millennials account for over one third of SEA population # of Millennial Individuals (defined as those born between 1980 and 2000) Indonesia ThailandSEA 177 Million 19 Million89 Million Philippines Vietnam 36 Million 34 Million 35% 38% 35% 36% 28%

12. 12 Millennial generation poses significant different portraits versus older generations Social and geographic shifts Tech-Savvy Online Millennials spend 4.6 hours/day online. They use digital platform for research. Marriage delay Sharing economy Higher Education Changes in career choices Different lifestyles • Seek for greater convenience • More going out • Open to new things • Go premium but value for money Source: The Council of Economic Adviser | 15 Economic Facts about Millennials

13. The mindset of Millennials is different from that of older generations in many aspects 13 48 60 The internet has changed drastically the way I enjoy in latest years 65 54 When I buy FMCG products, I always compare prices between brands before buying 35 28 I believe in benefits claimed by products 85 70 I exercise regularly for better health Source: Kantar Worldpanel | Lifestyle Survey 2017 | Urban 4 cities & Rural Vietnam | Millennials is defined as people under 40 years old DIGITAL AGE PRICE SENSITIVITY SKEPTICISM HEALTH HABITS Millennials Older gen % OF HOUSEHOLDS AGREE

14. Winning among Millennials What we have learnt about Millennials? 14 Command a strong emotional connection Favour “Advanced Features” Willing to pay more for products justify its worth Favour Attractive Packaging Source: Kantar Worldpanel & Kantar Millward Brown 3x SEA’s top 20 Millennial brands are More loved by Millennials compared to competitors 55% categories Millennials buy are higher than the average price Additional BENEFITS Advanced FORMATS Better QUALITY

15. 15 Major consumer trends

16. 1 2 3 4 5 5KEY TRENDS HEALTH AND BEAUTY DIGITAL INVOLVEMENT OMNICHANNEL INDIVIDUALISM CONVENIENCE

17. DIGITAL INVOLVEMENT

18. Asian consumers are now more and more connected, internet access is expanding very fast esp. SEA 18 95 90 88 87 94 93 84 79 67 56 53 50 Internet Penetration by Countries (%) (2017) Source: Internet World Stats 6 8 8 13 9 11 13 19 28 36 58 Evolution of Internet Penetration (percentage points 2017 vs 2012) Source: United Nations

20. Rapid shifts in how people communicate and get their information …from a physical to virtual space and from one way to two way communication, driven by digital involvement 20 Consumers are consuming Media the way they want, where they want (content, vehicle, place, time) creating more difficulties to REACH the Consumers. Source: Google - Consumer Barometer 2015 - Local Report

21. HEALTH & BEAUTY

22. What does today’s “Health” mean to Asian consumers? 22 Source: Kantar Worldpanel STRONG IMMUNE SYSTEM HEIGHT-WEIGHT BALANCE WORK-LIFE BALANCE ORGANIC & UNPROCESSED FOOD MORE EXERCISE SELF-COOKING NATURAL & SAFE INGREDIENTS FRESHNESS ADDITIONAL NUTRIENTS & SUPPLEMENTS

23. 23 Vietnamese consumers remain their tremendous care for the health 92 91 URBAN RURAL § I worry about my health more than before § I exercise regularly for better health 80 83 URBAN RURAL Source: Kantar Worldpanel | Lifestyle Survey | Urban 4 cities & Rural Vietnam Source: Kantar Worldpanel | Households Panel | Consumer Connection June 2016 | n=525 in Urban 4 cities and n=100 in Rural Vietnam

24. 24 Health also means a healthier beauty § I am very conscious about my appearance 56 55 58 44 50 49 2011 2015 2016 § Nowadays, I am more concerned about mine and my family weight 71 75 67 68 § I prefer to buy low/ free sugar drinks 61 69 74 54 65 64 2011 2015 2016 51 55 36 40 § I prefer to buy low calorie foods Urban 4 cities Rural Source: Kantar Worldpanel | Lifestyle Survey | Urban 4 cities & Rural Vietnam (% households agree)

25. Consumers crave for healthy foods with natural ingredients, additional nutrients as well as hygiene products 25 Fortified Liquid Milk Vietnam Incremental penetration (2016 vs 2014) +12.8 points Urban 4 cities +10.3 points Rural Source: Kantar Worldpanel Growing healthy categories across Asia Drinking & Cup yogurt SOY Soy milk Bottled water Cheese Mouthwash

26. 355 187 397 249 476 338 Average spend per buyer (000 vnd) They also have greater focus on how they look. Having more money, they pay more attention to beauty products and look for premium offers 26 73 73 75 76 2011 2013 2015 2017 Source: Kantar Worldpanel | Lifestyle Survey 2017 | Household panel | Urban 4 cities Facial moisturizer Sun protection Nowadays you have to take care of your skin more % Of households agree 2015 2016 2017 2015 2016 2017 Penetration% High Income Total Urban 4 cities 29% 34% Make up 25% 30% Facial Moist

27. CONVENIENCE

28. 28 Consumers place less importance on price and more on convenience & speed. They value innovations that save them time Source: Kantar Worldpanel | Lifestyle Survey & Family Form | Urban 4 Key Cities Price is the most important factor when grocery shopping I rely heavily on convenience foods to make cooking simple and quick 77 68 73 66 2010 2017 24 49 24 44 2010 2017 Urban 4 cities Rural 72% 76% I would like to have more products/services which can make cleaning tasks simple and quick

29. Money rich and time poor proposing opportunities for ready to consume, ready to use products 29 Home cleaning services Quick effect products Multi-purpose products 1 2 3 Growing convenient categories across Asia Meal maker Instant noodle Bottled water Instant rice Canned food Quick meal at home4 All-in-one products5

30. Consumers also seek for greater convenience in the way of shopping 30 Source: Kantar Worldpanel | Lifestyle Survey & Family Form | Urban 4 Key Cities & Rural Vietnam I like to spend time just looking around the shop before deciding what to buy I don’t mind traveling long distance to my preferred shop 50 54 49 59 2010 2017 57 51 61 56 2013 2017 It’s near my home or on my way back home The staff are friendly/ responsive to my request 1 2 3 It has good quality products4 You can easily find what you want5 It’s convenient to get there6 The store is clean Top 6 reasons for Urban 4 Cities consumers to choose a store

31. They drop their shopping frequency for FMCG 31 411 361 210 170 107 94 352 385 206 162 103 81 123 95 348 396 204 159 99 78 123 96 330 395 201 155 96 76 123 99 Indonesia Philippines Thailand Vietnam (Urban) Malaysia China Korea Taiwan 2012 2015 2016 2017 Frequency overtime across Asia Source: Kantar Worldpanel | Consumer Insights Asia

32. 32 61.2 59.3 60.0 11.8 9.6 7.6 4.2 7.5 7.9 14.8 13.2 12.0 2.0 0.6 0.2 0.9 3.4 8.0 0.1 0.8 2.2 2012 2017 2025F Total Street Shops Wet Market Specialty Stores Hyper & Supermarkets Cash & Carry CVS + Minimarkets Online Source: Kantar Worldpanel – Households Panel – Urban Vietnam 4 key cities – FMCG excluding Gift – Value% Proximity and convenience channels are leading the growth and will continue to thrive +0.7 +2.5 +3.3 +1.4 +4.6 +0.4

33. 33 Minimarts and convenience stores as convenient formats are stealing occasions from other channels and growing ahead of the market not only in Vietnam but across Asia Source: Kantar Worldpanel | One year ending September 2017 +27% +14% +14% +7% +5% +5% +3% Vietnam (Urban 4) Korea Philippines Taiwan Thailand Malaysia China (Urban) Over index Under index Growth index vs. FMCG % Value growth of minimarts & convenience stores

34. The need for more convenient lives will also support the development of online shopping Source: Kantar Worldpanel Benefit of online shopping

35. Global FMCG ecommerce is driven by Asian developed markets such as South Korea, China,… and is expanding into new Asian markets like Thailand and Vietnam 35 19.7% 6.2% 5.8% 0.8% 0.7% 0.8% 7.5% 5.6% 1.5% South Korea China Taiwan Malaysia Thailand Vietnam UK France US Source: Kantar Worldpanel | Total FMCG 2017 Value Share of FMCG E-Commerce +41% +52% +36% +68% +109% +74% +8% +7% +5%

36. INDIVIDUALISM

37. 37 Grooming, Active & interactive, Convenient & Impulsive More health concern Subtle needs Less skeptical < 40 YO ≥ 40 YO Source: Kantar Worldpanel | Lifestyle Survey 2017 | % agree I exercise regularly for better health I don't mind paying more to purchase better/new products I believe in benefits claimed by products < 40 YO ≥ 40 YO 28 35 54 61 70 85 I am very conscious about my appearance 56 50 60 47 I often impulsively buy products I see on in-store displays 25 20 I surf Internet to get updates about the world rather than traditional media More polarization: Socializing trend among young adults and cocooning trend among seniors – more in-home indulgence

38. 38 Total Imports to Vietnam Korea Japan Thailand +16% +6% Growth vs YA Malaysia Indonesia +6% +22% +8% Source: GSO Vietnam & Kantar Worldpanel | Lifestyle Survey | Urban 4 cities & Rural Vietnam § I would buy more international brand if the price was the same as the local brands § International brands are of higher quality International Confectionary International Milk Powder International Hair Conditioner International Show Gel With the open door through FTAs and higher purchasing power, consumers have higher demand for quality and express more preference towards international & imported products 53 58 31 35 2013 2017 59 66 30 37 2013 2017 Urban 4 cities Rural

39. They also place greater emphasis on leisure and personal indulgence 39 I would like to see more new products to ease my life URBAN 4 CITIES 59% 44% in 2010 68% 60% in 2010 I am prepared to pay more for products that make my life simpler Source: Kantar Worldpanel | Lifestyle & Expenditure Survey 2017 | Urban 4 cities I would like to see more new products to pamper/indulge myself 39% 32% in 2010 % SHARE OF HOUSEHOLD WALLET (2017 vs. 2010) Travel/holiday +0.5 pts Entertainment +0.4 pts % OF HOUSEHOLDS AGREE Basic necessities (housing, transport, communication) -2.6 pts

40. OMNICHANNEL

41. 2013 Source: Kantar Worldpanel | Lifestyle Survey 2016 & Households Panel | Urban Vietnam 4 Key Cities “I like to buy all my groceries in one shop” Shoppers are increasing their repertoire of stores, and for some they nearly visit 7 channels in one year… Number of channels visited per year 6.0 6.3 Among HHs agree 6.2 Among HHs disagree 6.8 2017 71 70 68 55 57 56 2012 2013 2014 2015 2016 2017

42. Convenience – Value for Money – Digital are expected to be key shopper trends for 2025 42 Digital Convenience Value for Money § MINISTORES § ONLINE § PROVISION STORES § SPECIALTY STORES § MOM & POP § WET MARKET § CASH & CARRY WINNERS Retailers are investing in consumers needs: Smart and aspirational shopper LOSERS Less competitive in adapting to shopper needs OmniChannel Old model

43. Future path to purchase Crossover shopping will accelerate and Omni shoppers will become more common. Existing e-tailers will be trying to enter the offline market, and existing offline retailers will be trying to develop their online business. Fusion of online and offline New hybrid models Strategic partnerships New technologies Trends to shape future consumer journey:

44. 1. Fusion of online and offline 44 Leverage the existing networks of brick-and-mortar stores for fast delivery or bring shoppers back to stores to pick up products via online orders, smoothing shopping experience 7-eleven also hosts an extended marketplace through which customers can pay and pick up in store http://www.Shopat7.Com/ Alibaba’s Hema supermarket offers shoppers a ‘new retail’ experience LOTTE Mart launches mobile shopping app “Speed Lotte” with many incentives in Vietnam

45. 2. New hybrid models Click-and-Collect, Click-and-Drive, grocery delivery, subscription models, social commerce 45 Leverage nationwide store footprints to expand click-and- collect model New subscription laundry brand

46. 46 Co.op Smile – A new retail format that bridges the gap between traditional and modern trade in Vietnam Franchise in partnership with current street shop owners Hybrid format between medium- sized street shops and convenience stores The aim is to have one store on every corner of residential areas a pick-up point for online orders Allows shoppers to also pay utilities bill and wire- transfer money Features air- conditioner and parking 2. New hybrid models

47. 3. New data led technologies Voice activated products encourage shoppers to give up non-experience products in favour of auto- replenishment. Virtual and augmented reality keep them more engaged in the online shopping experience 47

48. 4. Strategic partnerships New blurring alliances between retailers and e-retailers 48 JD.com and Walmart Amazon and Whole Food

49. In Vietnam, the rising wave of M&A between international giants and local businesses, blending global thinking with local executions 4. Strategic partnerships

50. How does the retail industry evolve today in Vietnam? Though it’s currently not significant and just at a first step of investment, things could be changed very quickly tomorrow 50 The integration of offline and online and vice versa The rise of omnichannel shopping The evolution from independently-owned stores to retail chains Offline Online Single Multi Independence Chain

51. How is the retail landscape moving today in Vietnam? 51 Hybrid franchise format between medium-sized street shops and convenience stores Supermarket Hypermarket Convenience store Minimart Pharmacy Click & delivery website Click & Delivery Supermarket Convenience stores Click & Delivery MOBILE WORLD BRICK-AND-MORTAR STORES: Local players are proactively stretching their retail portfolio to meet Omnishoppers

52. How is the retail landscape moving today in Vietnam? 52 Hypermarket Click & delivery mobile app Hypermarket Emart Mall click & delivery mobile app Click & delivery website Hypermarket entertainment complex Click & delivery website BRICK-AND-MORTAR STORES: Foreign players are continuously pouring money into developing multiformats and are expected to bring new things for Vietnamese shoppers Convenience store

53. How is the retail landscape moving today in Vietnam? Online orders are on the rise with O2O (online to offline) delivery services, offering convenience and speed 53 PURE ONLINE PLAYERS THIRD PARTIES

54. How is the retail landscape moving today in Vietnam? New things are emerging: more players and more store openings 54 MODERNIZED SPECIALTY STORES LIFESTYLE STORES 27 stores in 2017 38 stores in 2017 6 stores in 2017 Drug storesBaby stores

55. 55 Strong urbanization rate, smaller family size, more working women, younger shoppers & users Higher aspirations and purchasing power #1 #2 #3 Ministores and E-commerce will still be the fastest growing channels #4 #5 #6 #7 Greater demand for convenience and quality Making consumers’ well-being a priority 7 POINTS TO REMEMBER Millennials – hard-won future shoppers Omni-channel strategies to win omnishoppers

56. 56 For further information please contact: Nguyen Huy Hoang, Commercial Director Mobile: +84 985247503 huyhoang.nguyen@kantarworldpanel.com Thank You!

Vietnam consumer trends in Vietnam and Asia

Vietnam consumer trends in Vietnam and Asia

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Vietnam consumer trends in Vietnam and Asia