Vietnam Consumer Outlook 2023 ENG - Summary Deck 1 [PDF]

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2023 Vietnamese Consumer Outlook Explore the evolving Vietnamese consumers

2023 Thought Leadership NielsenIQ Vietnam – Retail Measurement Service Source: Data ending by Dec’22

© 2023 Nielsen Consumer LLC. All Rights Reserv ed.

© 2023 Nielsen Consumer LLC. All Rights Reserv ed.

Vietnam FMCG records +17.5% growth in 2022, with highest uplift in Q3/4 …thanks to organic consumption. TET’23 (Jan-Feb) also delivers good growth, yet majorly add-up by price increase VN – GDP yearly growth vs. YA 37.6

31.8

21.4

17.5 14.3

11.7

11.4 8.3 6.9

0.6 -7.6

-4.0 -13.5

-7.1

-7.2

-8.7

-4.1

-3.7

-8.3

5.0

5.8

7.1

6.4

Jan-Feb'23

2.5

6.3 4.3 2.5

Q4'22

4.9 2.4

4.6

Q3'22

-7.7

2.3

4.3 2.4

Q2'22

5.8

2.4

4.7

Q1'22

7.4

5.2

10.7 4.4

-3.3

-12.2

-13.7

Ave. Price Change

Volume Change

Q4'21

Q3'21

Q2'21

Q1'21

Q4'20

Q3'20

Q2'20

Q1'20

Q4'19

Q3'19

Q2'19

Q1'19

2022

2021

2020

2019

-16.3

Nominal Value Growth

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2

1 Prevailing “consciously optimistic” lifestyle Understand 2023 consumer profiles and how they set their spending tone for 2023 Speaker: Thien Nguyen © 2023 Nielsen Consumer LLC. All Rights Reserv ed.

3

“Conscious lifestyle” choices is expected in 2023 Understand the uniqueness of each consumers group to develop adaptive business strategy APAC vs. VN – Consumer groups upon household financial Q. How events of the last few years have impacted your overall household financial situation?

14%

9%

10% 14%

36% 31%

15% 33%

25%

13% APAC (Dec'22)

Strugglers: Have suffered financial insecurity & continue to do so today.

Rebounders: Experienced income or job loss but now they are back on track.

Cautious: Not impacted financially but cautious with spending.

Unchanged: Not impacted & continued to spend the same.

Thrivers: Saved money and feel more financially secure.

34%

39%

40%

36%

23%

Less personal/beauty care if prices rise (*)

Minimize the OOH eating/entertainment

Less alcoholic beverages if prices rise

Regularly look after health & wellness

Buy in bulk/ larger sizes

43%

37%

35%

28%

26%

Prioritize access to basic (e.g., shelter, food, and health care)

Shop at discount/ value/ lower-priced stores

Monitor the cost of my overall basket

Shop at discount/ value/ lower-priced stores

Use digital technologies to find better deals

38%

51%

50%

48%

51%

Focus on relationships & emotional support

Ensure financial/ job security & wellness

Focus on planning for the future

Prioritize physical wellness

Save for unforeseen circumstances

Vietnam (Mar'22)

Source: NielsenIQ 2022 Consumer Outlook Survey (APAC – Dec’22/Jan’23 , Vietnam - Mar’22) | Asia Pacific data includes 7 countries – Australia, China, India, Indonesia, Singapore, Thailand, South Korea

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4

Consumers prefer a larger size to deal with rising prices But for consumers who are not willing to spend, they sought out price promotions FMCG – Volume & Unit growth 2022 vs. YA

APAC – Upsizing & Promotion

By super categories (Vol % Growth | Unit % Growth)

% respondents

Unit % Growth

Downsizing

28%

Beer (+25 | +25)

Prefer that manufacturers offer them a bigger value pack/ economy size

N/A Beverage (+21 | +19) Cigarette (+10 | +9)

37%

Impulse Foods (+12 | +8) Milk Bases (+0 | -1)

Total APAC value sales was a result of price promotion in FY21

Home Care (+10 | +6) Staple Foods (-2 | -5)

Volume % Growth

Personal Care (+8 | +2)

Bab y Care (-7 | -13)

Upsizing

Source: NIQ Advanced Analytics – Everyday Pricing Analytics & Consumer Outlook Survey – APAC (Australia, Singapore, South Korea, Thailand, & India) , June 2022 .

Basket preference

Packsize choice

Value hunting

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6

Consumer polarizes between value offerings & price As their financial & economic literacy is heightened amidst inflationary pressure VN – FMCG by Price-tiers

VN – Search interest in 2022 vs YA

Value/ Volume % Share

Source: Think with Google: Year in Search 2022

Value % Share

32.7

Volume % Share

37.0

4.7 4.5

5.9 5.8

24.7

20.9

8.5

20.2

35.6

34.2

2019

2022

66.1

67.4

2019

2022

Economy (API 200)

Basket preference

Search interest in “what is the price of goods”

+30%

7.0

24.6

+260%

Packsize choice

Value hunting

Search interest in products with “affordable price”

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7

2 Resources reallocation for growth engines Optimize portfolio and tailor marketing activities to serve new consumers needs Speaker: Huong Nguyen © 2023 Nielsen Consumer LLC. All Rights Reserv ed.

8

More attention to serve The Elders in Urban with more targeted needs Consumers sought after specifications when making a purchase to satisfy their distinctive needs VN – % Elders population (age 60+)

VN – % Elders in Urban

Trend of population (‘Million)

In terms of population & category consumption

% Elders Female

Male

77

Life Expectancy

71.2

(2019) vs 75.6 (2009)

Value % SOT - Urban 2029

(2019)

% Chg vs 2021

2019

vs 70.2 (2009)

45.4%

+3%

+1%

2009

27.5%

2039 22,8 mil. (20.6%)

63

54

2029 17,3 mil. (16.5%) Adult Liquid Milk Powder

2019 11,4 mil. (11.9%)

Adult Milk Powder

VN – Search interest in 2022 vs YA Source: Think with Google: Year in Search 2022

2040

2039

2038

2037

2036

2035

2034

2033

2032

2031

2030

2029

2028

2027

2026

2025

2024

2023

2022

2021

2020

2019

2018

2017

2016

+20% Search interest for “for diabetes” terms

+20% Search interest in “for senior”

Source: GSO. Market Outlook for Elderly Care Service in Vietnam, VCCI.

The Elders

Women

Gen Z

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9

Vietnamese women are more empowered to work With more financial self-reliance, beauty & skincare products benefit % Female Labor - 2021

Urban – Beauty & Personal Care categories

Based on total labor force

Contribution to Value % Growth 2022 vs 2019

+0.5% VN

48.2

-1.6% +1.7%

Thailand

Singapore

-0.3%

45.9

41.2 +3.0%

Indonesia

39.6

Philippines

38.9

Malaysia

38.7

+3.3%

Beauty & PC 2019

Hygiene (Body/ Oral)

(34.1%) Myanmar

Personal Care

(16.8%)

Skin Care

Hair Care

(17.6%)

(27.3%)

Fragrances

(4.2%)

Beauty & PC 2022 Share Contrib ution

38 Source: w orldbank.org | Classification: Hair Care (Hair Colorants, Hair Conditioner, Shampoo), Hygiene (Mouth Wash, Personal Wash, Toothbrush, Toothpaste), Personal Care (Adult Diaper, Feminine Protection, Insecticide Control), Skin Care (Body Cream Lotion, Eye Care, Facial Care Product, Facial Tissue, Sun Care), Fragrances (Body Spray, Deodorants),

The Elders

Women

Gen Z

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10

The emerging Gen Z thinks of the consumed products as their value reflection Successful brands are those tapping into the new social trends or issues (e.g., environmental sustainability, domestic abuse) APAC – Generation highlights & movement

50% APAC consumers will be Gen Y/Z by 2025

VN – Recent launches targeting Gen Z

“Satisfy the existing diverse demand”

42%

80%

Likely to support brands that are environmentally sustainable

Pay more for a product if the brand supports an issue they care about

58%

LOF MALTO - from Sep22

ChocoPie Molle - from Apr’22

Having slogan “Love Energy Leads the Future” with Malto Gang characters aiming to Gen Z

Innovating the ChocoPie with the new soft cream layer and “catchy” packaging

Cocoon in Personal Care

TH True Nut, TH True Juice Milk Orange, TH True Yoghurt Orange

Not only claiming as a vegan brand but also collaborating with Animal Asia to protect endangered animals

See brands as extension of themselves and reflect their values

Launching the campaign "Orange with TH” to end violence against women and children

Source: https://www.adb.org/what-we-do/themes/social-development/overview/aging https://foodinsight.org/spotlight-generation-z/ https://www.brandinginasia.com/study-looks-at-how-brands-should-navigate-purpose-with-gen-z-in-southeast-asia/

The Elders

Women

Gen Z

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11

3 The pulse of omni-channels shoppers Understand the shifted omni opportunities and implications for FMCG manufacturers Speaker: Huong Nguyen © 2023 Nielsen Consumer LLC. All Rights Reserv ed.

12

In APAC, omni-shoppers leads to stabilization of E-commerce In Vietnam, MT & TT Rural remain importance to secure, along with the gradual OOH recovery benefits F&B APAC – FMCG – Channel landscape

VN – FMCG – Channel landscape

Value % Contribution

Value % Contribution & Growth 2022 vs. YA

Value % Chg (2022 vs 2021)

Other

7.5

20.3

7.3

21.1

6.9

21.1

64% of APAC

6.9

6.2

5.7

6.2

consumers claimed to be omni-shoppers

TT On Rural 36.3

Online

37.3

39.9

38.2 TT Off Rural

31.1 Traditional Trade

CVS/Minimarket

17.3

Hyper/Super

23.8

2020

32.8

33.6

17.0

17.1

21.8

21.4

2021

2022

Growth mainly in: China, Hongkong, Indonesia, Philippines, Vietnam

Growth in SEA markets: Malaysia, Philippines, Singapore, Thailand

14.1

29.5

28

11.6

8.8

12.2

29.6

29.3

27.9

13.2

15.2

16.3

15.5

2019

2020

2021

2022

13

TT On Urban

63

TT Off Urban

12

MT Vietnam

11

Source: Retail Measurement Service 2022, CPS 2022

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13

Symbiotic balancing approach is essential under stabilization of e-commerce in APAC For Ecommerce, focus on weekdays shopping routines and double-days promotion to boost sales APAC – E-commerce – Value % Chg

E-commerce – Sales index vs. average normal day

Q2 & Q3’22 vs YA

During Apr-Sep’22 SG

21.1%

ID

VN

MY

TW

TH

PH

140%

Ecommerce to total APAC sales 120%

Growth in 2022 vs YA: -2.8%

100% 80%

Q2 2022

60%

Q3 2022

40%

28%

20% 0%

Monday

12%

-3%

-4%

-5%

Tuesday

Wednesday

Thursday

Friday

Saturday

Sunday

Besides, Online Double-Day events are season to drive sales, especially for:

-14% -22%

ID

MY

PH

SG

TH

TW

VN

Baby Diaper

Infant Milk Powder

Facial Moisturizer

*Top 3 categories in Double-Day event in VN (value sales)

Source: (Chart 1): NielsenIQ RMS and CPS data, Latest 52 w eeks ended Sept. 2022 vs. year-ago | Quarter by Numbers Q4’22 (Chart 2): NielsenIQ E-commerce Accelerator – April to September 2022 | Note: Excluding promotional days, average normal day sales value used as index

Ecommerce

MT

TT

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14

Semi-retailer reinforces its prominence in TT given its selling power and capacity VN – Semi-Retailer* Capacity

VN – Semi-Retailer Contribuiton

Store numbers, pricing, SKUs handled per stores in 2022

Value % SOT to total VN – 2022

Tiny-but-mighty channel

More afffordable pricing

28,000 stores

~22% lower FMCG’s avg price in SR vs Retail stores

65

33

24

Milk Bases

24

49

Foods

38

24

7

6

12

16

12

Fabric Softener

Laundry Product

Gum & Candy

Beverage

Shampoo

SKUs Handling in SR

20

Beverage (W/O Beer)

58

56 47

Beer

Snack

Home Care

17

17

15 Bispie

Personal Care

17

SKUs Handling in Retailer

Note: Semi-Retailer is defined as having b etween 10% and 90% of Total Sales going direct to the end -consumers (defined at category level)

Ecommerce

MT

TT

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15

Rural remains as the fertile ground, yet competition is tougher in terms of small players & price Recent lay-off signals the possibility of 2 nd back-to-hometown trend, thus triggering Rural consumption TT Rural – FMCG – Value % SOT & Share by Segments

FMCG – Value % Share by Segments

SOT based on total TT Vietnam

By Manufacturer Ranking (upon their value sales) & Price-tiers

~62.9%

~47%

Consumers are living in Rural

Retail stores are in Rural (650,000+)

FMCG by Rankings 5.8

9.9

Enterprises out of the market

630,000+ Workers impacted in Sep/Nov’22

4.7 4.8

5.5 5.2

22.8

17.7

13.5

23.2

65,000+

143,200 ( 19.5% )

8.2

FMCG by Price-tiers

28.2

Workers are laidoff and returns to hometowns due to business hardship

2nd Rural migration given recent laid-off

Rural migration during Covid Wave 4

19.5 19.7

52 44

41

41

41

45

45

43

43

46

45

49

67.7 48

45

44

44

71.7

48

41.6 30.4

Urban TT Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 L2Ms (23)

Rural TT

Top 1-5

6-10

31-100

100+

11-30

Urban TT

Rural TT

Economy

Mainstream

Premium

Super Premium

Source: GSO Vietnam 2022 & NielsenIQ RRES Rural MythBuster

Ecommerce

MT

TT

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16

Explore the evolving Vietnamese consumers in 2023

Prevailing “consciously optimistic” lifestyle

Resource reallocation for growing consumer groups

The 2023 pulse of omnichannel shoppers

•

•

Build relatable brand communication with a conscience & customized needs.

•

Go with the symbiotic balancing approach to win in a hybrid and fast-changing channel.

•

Elder: Sought out the growth in Urban, with Elder-related product specification/ attributes.

•

•

Female: Build portfolio focusing on consumers skin care routines and gain trust via clear claim/ descriptions on the recently-preferred attributes.

Ecommerce: The channel start to stabilize post-Covid, yet weekdays & Double-day events are right period to boost sales.

•

MT & TT: Equip the recent retail technology to drive complete transformation & maximize consumer/ retailer’s omni-channel experience.

•

Region: Build our nationwide brands as regional differentiation is diminishing. With more focus on SR and Rural deserve stronger focus.

•

•

•

Understand the spending intentions to build up the adaptive strategies amongst different consumer groups. Review resource spent among portfolio, with more priority on Essentials, and drive growth through bigger pack sales and value-offering communication to wiser consumers. Monitor the OOH landscape, and sought out the occasional consumption of Non-essentials, yet be cautious on pricing strategy.

Build consumer trust is essential given familiar and popular brands are considered as “safe choices” with certified quality.

•

Gen Z: Launch new products with relevant story to new social trends or burning issues (i.e., environmental sustainability).

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Thank you! For more insights, please contact: Jayant Subhash Shenoy – Vietnam RMS Director [email protected] Laura Ihry – Vietnam Customer Success Lead [email protected]

© 2023 Nielsen Consumer LLC. All Rights Reserv ed.

© 2023 Nielsen Consumer LLC. All Rights Reserv ed.