nielsen business barometer - wave 5 - english
DESCRIPTION
Find out the latest on sentiment from Vietnam's business leaders in 2011. Among adjusted growth rates by leaders; dealing with inflation is the hottest issue now.TRANSCRIPT
Wave 51st Half 2011
1
Copyright © 2010 The Nielsen Company. Confidential and proprietary.
Title of PresentationCopyright © 2011 The Nielsen Company. Confidential and Proprietary.
1st Half 2011
Agenda
Setting the
Key issues faced by you & your peers
Growth expectations
1st Half 2011
Research design
Executive insights
Setting the scene
• A snapshot into the economic environment in Vietnam
• External economic & social impacts
• Consumer behavior
• Corporate strategic direction & plans
Research Design
Methodology
Online interviewing
Senior leaders of manufacturers & suppliers in Vietnam
Target Respondents
1st Half 2011
Fieldwork
Sample Size
Total sample N= 33
March to May 2011
Nielsen Vietnam Business Barometer– Senior Leaders of manufacturers in Vietnam
– Total sample N=33– March to May 2011
Nielsen Retail Audit Data– 6 Cities– All income levels
Nielsen Global Consumer
Confidence Study– Conducted Mar 2011
Research Design
1st Half 2011
– All income levels– Data to March 2011
– Conducted Mar 2011– Global online study in 55 countries
Macro Economic data– Vietnam Govt. Statistics Office– Press articles
Nielsen Vietnam Omnibus– HCMC & Hanoi (N=150/city)– All income levels – March 2011
Sample Profile
Key Metrics
Respondent Job Function
Sales9%
Marketing33%
MD / CEO58%
1st Half 2011
Company type
Industry Pharma12%
Multinational79%
FMCG58%
Finance15%
Pharma12%
Others15%
Local21%
Executive Insights• In 2011, business leaders are less positive about the economy and cautious in their outlook:– Nearly 2/3 of manufacturers claim that business conditions are now worse than a year ago
– Only 1/3 believe in an improvement of business conditions; whilst majority say that current situation will remain the same in the next 6-12 months
• In line with macroeconomic challenges, inflation and VND devaluation rank at the top of business leaders’ concerns.
• Despite the first challenging quarter, majority of business leaders
1st Half 2011
• Senior leaders are still optimistic about the next 6-12 months:• 90% of companies are expecting double-digit growth, driven by increased consumer demand and business expansion plans
• Almost no cut-back on advertising spend
• Trends toward savings and buying on promotions are expected to continue, as consumers cope with price increases.
• Despite the first challenging quarter, majority of business leaders claim to have managed to achieve their target so far.
Setting the Scene
1st Half 2011
Growth continues, yet inflation remains the major challenge…
Increased rate of GDP +6.78 +5.43
Total increased retail sales of goods & services
+24.5 +22.6
2010 vs2009 (%)
Q1’ 2011 vs Y.A. (%)
1st Half 2011
Sources: Main indicators 2010 and Q1 2011, GSO; Consumer Confidence, Nielsen Global Online Survey; FMCG Growth, Nielsen; Vietnam Retail Audit.
Increased rate of total export turnover +25.5 +43.7
Increased rate of total import turnover +20.1 +23.8
Increased rate of average CPI +9.19 +12.79
85
109
101
119
88
10398
2730
40
50
100
120
140
Global crisis bringing down confidence. Lower inflation brings down value growth
Prices stabilize; Economic recovery drives rise in consumer confidence and consumption
Inflation and VND devaluation pulls down confidence and FMCG growth
…and the key culprit behind economic instability and consumer confidence volatility
1st Half 2011
21
16
24
21
23
27
20
18
11
42
5
10 9 9 8
13
0
10
20
30
Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1' 11
0
20
40
60
80
Consumer Confidence Index FMCG Value Growth YA CPI
Gas retailers increased price
by 4%
Fuel increased by +18%
Macro and micro economic impacts in latest 3 months…
Retail electricity price increased
by +15%
1st Half 2011
Four VND DevaluationsIn the past two years
Trade deficit of $9.5B
Vinashin Collapse“what other state-owned firms are in trouble?”
by +15%
Nevertheless, various forecasters remain positive about the country’s economic growth
Economic growth in Vietnam is expected to average 7.2% a year in 2011-15, underpinned by strong growth in consumption, investment and exports.
Vietnam ranks 8th in the A.T Kearney Global Services Index, 2011 report (measured by Financial attractiveness, Business
Environment and People skills &
availability)
1st Half 2011
Economic Intelligence UnitAT Kearney
Vietnam can curb inflation this year if the country successfully implements Resolution 11
ADB at 44th Annual meeting in May 2011
Key Issues Faced by Your Peers
1. External Economic and Social impacts2. Consumer Behavior3. Corporate Strategic Direction & Plans
1st Half 2011
External economic &
social impactExternal Social and
Economic Impact
1st Half 2011
Economic Impact
Almost two thirds of business leaders believe that business conditions in Vietnam have deteriorated versus last year
Business Conditions in Vietnam (Now vs Year Ago)
3041
40
638
54
5
60%
80%
100%
Improved significantly
Improved somewhat
1st Half 2011
Q6a: Compared to the same time last year, do you think business conditions in Vietnamhave improved or deteriorated?
3 2 2 3
24
9 12
61
30
30
38
0%
20%
40%
60%
2009 2nd half 2010 1st half 2010 2nd half 2011 1st half
Remained the same
Deteriorated somewhat
Deteriorated significantly
More optimism was felt with business conditions in their own industry
Business Conditions in your industry (Now vs Year Ago)
30
2825
24
712
6
32
11
60%
80%
100%
Improved significantly
Improved somewhat
1st Half 2011
Q6b: Compared to the same time last year, do you think business conditions in your industryhave improved or deteriorated?
3 3 6
30
1922
33
33
39
38
30
0%
20%
40%
2009 2nd half 2010 1st half 2010 2nd half 2011 1st half
Remained the same
Deteriorated somewhat
Deteriorated significantly
Inflation and VND devaluation are top concerns of business leaders
1) Competitive pressure /activity / growth (69%)
2) Ability to pass on price increase (55%)
3) Inflation (49%)
4) Labor force skill shortage (39%)
2010 1st half
3) Inflation (56%)
4) Labor force/ skill shortage (29%)
1) Competitive pressure/activity / growth (68%)
2) Ability to pass on price increase (59%)
2010 2nd half
1) Inflation (68%)
2) VND devaluation (68%)
3) Ability to pass on price increase (50%)
4) Competitive pressure/ activity/ growth (32%)
2011 1st half
=
Source: Nielsen Business
Barometer
Base: All respondents
Q12: Which of the following issues concern you in terms of the impact they may have on your business? Rank the top three (3) issues that concern you where 1=most concerned, 2= second most concern and so on.1st Half 2011
6) Low GDP growth (14%)
skill shortage (39%)
8) Others (VND devaluation, Govt.’ regulations, Govt.’s support
for local brands (12%)
5) Wages growth (18%)
7) Impact of corruption (14%)7) Global Economic
Crisis (10%)
skill shortage (29%)
8) Others (Government regs, currency depreciation (10%)
6) Wages growth (12%)
5) Petrol prices (22%)
6) Logistical challenges (10%)
activity/ growth (32%)
8) Wage growth (9%)
5) Low GDP growth (14%)
7) Petrol Prices (9%)
=
Consumers also feel the pressure of price increases
Top 5 supplier / mfr concerns
1) Inflation
2) VND devaluation
3) Ability to pass on price increase
Top 5 consumer concerns
1) Health
2) Increasing food prices
3) Increasing utility bills (gas, electricity, water...)
$
$
1st Half 2011
Source: Nielsen Business Barometer & Nielsen Omnibus March 2011
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...
4) Competitive pressure/ Activity /growth
5) Low GDP growth
(gas, electricity, water...)
4) Job security
5) My children's future/ welfare
$
About two thirds of the interviewed companies have experienced double-digit input price increases
12
6
12
3
60%
80%
100%
30% and higher than
25 - less than 30%
20 - less than 25%
15 - less than 20%
10 - less than 15%
Change in input prices
1st Half 2011
363
24
30
0%
20%
40%
2011 1st half
10 - less than 15%
5 - less than 10%
Less than 0% (negative)
No change
Don't know/ No answer
Q12c: Have you seen any change in input prices for your products? If yes, how much?
Solutions for input price increases
53
87
Improve productivity to
lower production costs
Increase product price
to a reasonable amount
Most have passed on input price increases to consumers, and many have also looked at productivity improvements
1st Half 2011
Q12d: How do you cope with input price increases?
7
10
13
33
Others
Reduce production
Choose lower cost
materials and supplies
Accept lower profits
Majority of manufacturers have so far managed to achieve their target, although overall performance is less positive than 2010
26
17
18
14
28
6
23
23
60%
80%
100%
Significantly better
Somewhat better
Business performance compared to overall target
1st Half 2011
Q5: Looking back at your business’s performance from the beginning of the year until now, how well do you think your business has been doing compared to your overall targets?
4 27
25
12
17
18
30
40
32
58
0%
20%
40%
2009 2nd half 2010 1st half 2010 2nd half 2011 1st half
On par with target
Somewhat worse than target
Significantly worse than target
Mixed outlook towards business conditions in Vietnam, and only one third of business leaders believe it will improve
72
38
30
46
37
4036
4 7 115
10 6
58
5
60%
80%
100%Improved significantly
Improved somewhat
Vietnam Your Industry
1st Half 2011
Q7, Q8: Over the next 6 to 12 months, do you believe that business conditions in Vietnam & your industry are more likely to improve or deteriorate?
1 4 2 2 2 639 10
21
7
16 121520
25
43
48
37
4037
36
0%
20%
40%
2009 2nd
half
2010 1st
half
2010 2nd
half
20111 1st
half
2009 2nd
half
2010 1st
half
2010 2nd
half
2011 1st
half
Remained the same
Deteriorated somewhat
Deteriorated significantly
Consumer behavior
ConsumerBehavior
Consumer Behavior
1st Half 2011
Consumer trend of savings and buying on promotions is expected to continue
2011 1st half
41
49
44
Purchase more on
promotion
Buy bigger packs
to save money
Purchase more
local/ Vietnamese
brands
2010 1st half
35
51
41
Trade up to more
premium/indulgent
products
Buy bigger packs
to save money
Purchase more on
promotion
2010 2nd half
41
64
50
Trade down to cheaper
products
Not buy some 'non-
essentials'
Purchase more on
promotion
1st Half 2011
Q16: Do you anticipate that Vietnamese consumers will change their purchasing behaviour next 6 to 12 months?
22
22
22
37
Trade down to
cheaper products
Trade up to more
premium/indulgent
products
Not buy some
'non-essentials'
Change channel to
save money
promotion
10
12
22
31
Buy less / smaller
packs of the same
products
Not buy some
'non-essentials'
Change channel to
save money
Purchase more
local/ Vietnamese
brands
products
27
32
32
41
Change channel to save
money
Buy less / smaller packs of
the same products
Purchase more local/
Vietnamese brands
Buy bigger packs to save
money
products
Confectionery, Health & Beauty and Beverages are likely to be
impacted the most by the trend
2010 1st half
44
44
50
Confectionery
Household
products
Health &
beauty
Beverages
35
53
60
Dry grocery
Household
products
Dairy
Beverages
2010 2nd half 2011 1st half
45
60
40Beverages
Health &
beauty
Confectionery
1st Half 2011
Q17: Which industry do you think will be impacted the most?
3
14
19
22
28
36
OTHERS
Dry grocery
Frozen food
Dairy
Tobacco
products
Confectionery
2
7
21
26
30
35
OTHERS
Tobacco
products
Frozen food
Confectionery
Health &
beauty
Dry grocery
5
20
25
25
35
Tobacco
products
Dry grocery
Dairy
Household
products
Frozen food
Corporate strategic direction &
planCorporate Strategic Direction and Plan
1st Half 2011
Direction and Plan
Rural market remains an important growth engine, and continues to attract manufacturers’ investment
58
1725
12
53
18
60%
80%
100%
Increase significantly
Increase somewhat
Neither increase nor decrease
Rural areas to drive company growth
1st Half 2011
Q22: In the next 12 – 18 months, to what extent will you look to rural Vietnam areas to drive your company growth?
2
2526
1712
58
5876
53
0%
20%
40%
2009 2nd half 2010 1st half 2010 2nd half 2011 1st half
Neither increase nor decrease
Decrease somewhat
Decrease significantly
Manufacturers won’t cut back their advertising spending, although intention to increase spending is less positive than 2010
Spending on advertising
45
50
36
5
179
43
2
60%
80%
100%
Increase significantly
Increase somewhat
1st Half 2011
Q13: Over the next 6 to 12 months, how do you anticipate your company's spending on advertising to change?
2 611 11
3
9
3943
30
39
50
0%
20%
40%
60%
2009 2nd half 2010 1st half 2010 2nd half 2011 1st half
Remain the same
Reduce somewhat
Reduce significantly
Choice of media channels remains unchanged, and TV advertising stands out as the most dominant channel
14%
40%
15%
Newspaper /Magazine (print)
Point-of-Sale-Materials (POSM)
TVC
2010 1st half
N=56
16%
37%
15%Newspaper /
Point-of-Sale-Materials (POSM)
TVC
N=60
2010 2nd half 2011 1st half
N=33
11%
42%
14%
In-storebanners/posters
Point-of-Sale-Materials(POSM)
TVC
1st Half 2011
Q14: For the last 6 months, which of the following media channels has your company utilized for advertising? As a breakdown amongst all of the media channels you chose, please provide an estimated % to the extent your company has spent on those channels for the last 6 months?
6%
5%
7%
7%
14%
Others
Internet
Outdoor posters /Billboard
In-storebanners/posters
Magazine (print) 15%
7%
5%
4%
3%Others
Internet
Outdoor posters /Billboard
In-storebanners/posters
Magazine (print)
5%
5%
7%
10%
11%
Others
Internet
Outdoor posters/ Billboard
Newspaper /Magazine (print)
banners/posters
Senior leaders anticipate increased spending on POSMS and in-store activities. Internet appears to be a promising media platform
3
12
327
33 42
24
3018
18
36
15
3
39
69 6 615
3
55
60%
80%
100%
Increase significantly
Increase Somewhat
Remain the same
T2B (increase): 27% 61% 18% 42% 15% 3% 55% 9%
B2B (decrease): 30% 9% 36% 15% 27% 61% 18% 58%
1st Half 2011
Q15: Over the next 6- 12 months, how do you anticipate your company's spending on the following media channels for advertising?
21
9
33
1521
58
18
559
3
6
33
15
3
12
12
15
3
327
30
24
27
0%
20%
40%
60%
TVC Point-of-Sale-
Materials
Outdoor posters In-store
banners/posters
News
paper/Magazine
(print)
Radio Internet Mobile Phone
Remain the same
Reduce somewhat
Reduce significantly
No spending on thischannel
No significant changes are expected towards modern trade contribution
Modern Trade Contribution to Sales Revenue
2011 1st half
46
15
210
27
2010 1st half
3129
13
10 13
15
2010 2nd half
Mean score 13.3 % 16.4% 13.8% 14.7% 15.1% 15.9%
2535
20
10 10
20
1st Half 2011
Q18: How important is the modern trade to your business today (as a % of your business’s revenue)? Q19: What do you expect MT (as a % of your revenue) to be worth by the end of the year?
Less than 5% (2.5) 5% - less than 10% (7.5)
10% - less than 20% (15) 20% - less than 30% (25)
30% or greater (35)
2217
1215
29
Now End of '10
23 19
2325
Now End of '10
10 10
3525
35
Now End of '11
Growth expectations
1st Half 2011
More caution is noticed with GDP growth rate expectation, whilst industry growth rate remains positive
11.3
13.6 13.7
15.1
8
10
12
14
16
%
Expected GDP growth rateExpected GDP growth rateExpected GDP growth rateExpected GDP growth rate Expected industry growth rateExpected industry growth rateExpected industry growth rateExpected industry growth rate
1st Half 2011
Q9: What do you think GDP growth rate will be for the next 12 months?Q10: What do you think your industry growth rate will be for the next 12 months?
5.75.3
4.9
6.1
0
2
4
6
8
Est. Next 12 months GDP growth rate All industry est growth rate
%
2010 1st half2009 2nd half 2010 2nd half 2011 1st half
Despite current economic conditions, all senior leaders still look forward to double-digit growth
Expected company growth rateExpected company growth rateExpected company growth rateExpected company growth rate
17
20
18
2131 30
24
1160%
80%
100%
25%+
20% - less than 25%
15% - less than 20%
1st Half 2011
Q11: What do you think your company growth rate will be for the next 12 months?
4 5 2 6
17 14
73
1712
1221
20
28
2423
0%
20%
40%
2009 2nd half 2010 1st half 2010 2nd half 2011 1st half
15% - less than 20%
10% - less than 15%
5% - less than 10%
Less than 5%
Increased consumer demand and business expansion, both in terms of geography and trade channels, are believed to be key engines of growth next year
Expected 3 key factors of company growthExpected 3 key factors of company growthExpected 3 key factors of company growthExpected 3 key factors of company growth
45
76
72
Increased consumer demand in your existing categories/ industry
Expansion to secondary cities/ rural areas
Expansion to modern trade channel
1st Half 2011
Q11b: What do you think are the 3 key factors of growth for your company for the next 12 months?
12
14
31
43Expansion to new categories/ industries
Increased marketing expenses
Improved business conditions in Vietnam overall
Improved business conditions in your industry overall
Key observationsKey Observations
1st Half 2011
Vietnam Topline
1st Half 2009
2nd
Half 2009
1st
Half 2010
2nd
Half 2010
1st
Half 2011
Nielsen Market Index Volume*
Nielsen Market Index Value**
MFR outlook of the market
MFR outlook of own industry
Volume growth is positive
Value growth remains high
Manufacturers continue to see Vietnam as a growing market
Own industry will also experience growth
1st Half 2011
industry
Advertising Spend
Hiring levels
Modern Trade importance
Nielsen Vietnam Consumer
Confidence^
* Nielsen Market Index Volume defined as unit change vs. YAGO** Nielsen Market Index Value defined as dollar change vs. YAGO
Very Strong Growth: >= +5%
Growth: between +1 and plus 4% Neutral: between -1 and +1%
Negative: between -1% and -4%
Very Negative: <= -4%
growth
MT contribution expected to increase
Consumer confidence drops due to concerns of inflation and price increases
Advertising levels are expected to increase slightly
Key observations
• Volatility in the Consumer Confidence Index have been observed lately, with a drop in Q1’ 11.
• Senior leaders show caution towards business conditions in Vietnam compared to half a year ago
• Inflation and VND devaluation are at the top of their concerns
Macroeconomic challenges, most weight on inflation and price increases in past 3 months, have impacted consumers’ confidence and business leaders’ optimism:
1st Half 2011
•Q1 performance is on target for most companies•Double-digit growth is still expected from increasing consumer demand and business expansion plans•Almost no intention to cut back advertising spend and even a slight increase in spending is expected for some companies•Most are looking at expansion into rural areas to capture growth there
Nevertheless, business leaders are doing well in terms of maintaining their investment and spending, in order to capture double digit growth in this market
Key observations
• Look into rural areas as the next frontier of growth• Effectively invest in modern trade channels• Identify new potential categories to expand into• Diversify communication platforms to include channels such as digital media
• Effectively control ever-increasing costs, for example by improving productivity
To continue to grow in the Vietnam market, or to enter the market successfully, you need to continue to spend and consolidate your advantages against rival companies
•Consumers are concerned of price increases now than ever, therefore you should be cautious in passing on price increases to them. •Alternative measures to cope with input price increases should be considered such as improved productivity and efficiency.•Consumers are seeking savings via promotions or big pack sizes, hence you should consider addressing this in a relevant way to your category and brand
In addition, timely reactions to consumer trends and understanding their price sensitivity is vital for success:
“You will either step forward into growth or you will step back into safety”
Abraham Maslow
1st Half 2011
Nielsen Vietnam
Dabao Nielsen Top to Top Meeting
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1st Half 2011
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