vietnam consumer trends & growth opportunities & 2019...

Vietnam Consumer Trends & Growth

Opportunities & 2019 Predictions

Prepared by:

Ralf Matthaes - Managing Director

ECONOMICS

IFM CONSUMER CONFIDENCE INDEX

7968

5651

8292

8692 91

2011 2012 2013 2014 2015 2016 2017 2018 2019

9 years of moving up the food chain. Confidence is High, paving the way for a positive 2019

Base: N = over 20,000 Interviews since 2011N = 2,365 in 2019

55%

85%

67%

27%

11%

18%

40%

18%

4%

15%

18%

2017

2019

2017

2019

BETTER SAME WORSE

MY VIEW OF THE ECONOMY IN 2017 VS 2019

Base: 5,835 ConsumersBase: N =75 Business Leaders

Business community

Consumers

Consumers are much more upbeat about the overall economy for 2019, than in 2017, while the business community is more skeptical, meaning down turn is on the horizon.

42%

MAJOR CONCERNS FOR 2019

10%

53%

7%

14%

11%

33%

18%

18%

58%

40%

35%

27%

23%

10%

18%

8%

Global economic down turn

Environmental pollution

Lack of infrastructure development

Lack of business / Public institution transparency

Increase of Public Debt

Increased Inflation

Vietnam economic slow down

Increases Interest / Lending rates Consumers

VN Business community

Global economic down turn and pollution, infrastructure development and increased inflation are keeping people awake at night.

Base: 5,835 Consumers / N=75 Business Leaders

Top 2 responses

VN business community much less optimistic based on fears of global economic downturn

BOOM SECTORS

TET SPEND 2019 VS 2018

Base: 2,365

2019 Sector 2014 Plus / Minus1 Education 1 same2 Healthcare 2 same3 Personal care 9 + + + 4 Food & beverages 3 same5 Entertainment / dining out 11 + + + 6 Communications 5 same 7 Home appliances 10 + + 8 Electronic equipment 7 same9 House hold care 4 minus

10 Transportation 8 minus 11 Household utilities 6 minus

2019 vs 2014 SPENDING PRIORITIES

Most spending priorities have not changed over the years. However, self pampering, enjoyment purchase / activities, such as personal Care, entertainment and purchasing convenience such as home appliances are on the rise…

Tet 2019 should be positive in terms of consumer spend, reflecting consumer sentiment towards 2019

65% 28% 7%

More Same Less

DID YOU TAKE OUT A LOAN IN LAST 12 MONTHS?

52

41

29

48

59

71

2018

2017

2015yes no

Base: 2,365

6%10%

30%32%

42%

9%14%

25%

35%

57%

Automobile Education Real Estate Business Personal

2016

2018

Purpose for Loan

Source of Loan: Half from Banks / Half from friends / relatives

Personal debt continues to grow, as the good times roll. Caution - any economic down turn could be fatal for some, while reasons for loan are more and more about personal fulfillment, than investments.

Mega Trends

POPULATION

VIETNAM IS NO LONGER …. RURAL OR LOW INCOME

Vietnam is experiencing significant population shifts from rural to urban, and from

poor to middle income class.

18

29

40

82

61

60

1996

2016

2026

Urbanization

Urban Rural

82

50

35

14

40

45

3

10

20

1996

2016

2026

Middle income

Low Mid High

FROM BABY BOOMERS TO TECH MILLENNIALS

Those aged 40 plus belong to a bygone era and are very traditional , whilst your 40 below were

raised post war and famine and are more similar to millennials

35% born before US War (40 +) The “Lean” Generation

65% Born after War (0-39) “Doi Moi “ Generation

OTHER POPULATION TRENDS

▪ Smaller family sizes – from 4.2 ten years ago to 3.8 today in HCMC / Hanoi

▪ From 3 generational to 2 generational. But only for starter families

INFRASTRUCTURE

LOCATION, LOCATION, LOCATION

▪ Vietnam’s urban infrastructure is bursting at the seems, creating new opportunities, but reducing productivity, while increasing cost

▪ Cost of real estate is a major Achilles heel to Vietnam

200,000 new cars on the

roads every year

& new drivers!

ASPIRATIONS

28%19% 19% 16% 11%

5%

32%26%

17% 14%5% 3%

House New Car Overseasvacation

Set up my ownbusiness

Apartment Study overseas

Aspirations

urban rural

IFM Rural Reach : n = 649

The Ideal Family consumer Journey

Education – Experience - Good job – Marriage - Security Promotion – Kids – House – Car – Travel – Experience

English

International

Overseas

EDUCATIONTrend is towards…

from VN to international brands

BRAND SHIFTWhy?

▪ Safety & Hygiene▪ Value for money

35 million users in Vietnam

Youtube Vietnam has become (#1 in APAC) 5th largest market globally

TOP SOCIAL PLATFORMS %

29

25

FACEBOOK

FB MESSENGER

ZALO

GOOGLE +

SKYPE

VIBER

SOCIAL MESSENGER

57% plus spend more than 4 hours a day on their smartphones

All things smart, convenient and communication related

DIGITAL CONVERGENCE

Urban vs Rural

▪ Return of urbanites to their hometowns.

URBAN VS RURAL

11

30

31

59

44

10

15

2

Urban

Rural

MONTHLY HOUSEHOLD INCOME

below 10 M 10-12M 20-40M 40 M +

Urban vs Rural Incomes

IFMPANEL : n = 61,137

Still significant difference in incomes between Urban & Rural – hence the draw to urban life

IFM Consumer Index n = 3,134

Where we live

Three quarters live in their own homes, and rent far less than their urban cousins

1 3

1218

6

73

2 513

30

12

55

A vacationhouse

A secondapartment for

rent

A second housefor rent

I live in rentedproperty

I live in my ownapartment

I live in my ownfamily house

Rural Urban


What devices we own

99%93%

85% 81%

66%54%

63%

24%

99%

83%77%

66% 66%

53%42%

18%

Smartphone HomeInternet

connection

Laptop Internetphone

connection

Smart TV PC Tablet Smart watch

Urban Rural

Rurals are slightly behind their urban cousins in terms of ownership


Retailers used most often

25% 32%18%

7% 5% 5%

78%

14%3% 0% 0% 3%

Coopmart Big C VinMart AEON Lotte Mart Metro

urban rural

2

3

20

21

31

17

21

16

26

42

URBAN

RURAL

Weekly Wet Market Visits0 1 to 2 3 to 4 5 to 6 7 or more


Due to the lack of development of Modern trade, a huge discrepancy exists in terms of where Rurals shop, dominated by traditional trade and wet markets, opening the door for E-commerce

RETAIL - THE NEW RURAL

BATTLEGROUND

On-line purchase behavior

Still lots of room for On-line marketplace growth, especially in rural

69.6%

77.9%

27.7%

21.7%

2.8%

1.4%

Rural

Urban

On-line Purchase Frequency

LAST MONTH

LAST MONTH


2-12 MONTHS AGO

2-12 MONTHS AGO

NEVER

NEVER

Rural migration into the cities

10% 14% 11% 54% 11%

No never Probably not Do not know Possibly Definitely

11% will definitely move to the Big cities, while half note possibly migrating to the big smog


VIETNAM RETAIL TRENDS

VIETNAM MARKET RETAIL SIZE & GROWTH 2008 – 2018

8.9

4.33.9

9.5

7.8

66.5

1

2008 2010 2012 2014 2016 2017 2018

EST. RETAIL SPEND 2016

=US $ 100 Billion

Fastest growing retail market in Asia

FMCG VALUE & VOLUME GROWTH %

FMCG growth in Urban Vietnam is non existent, save for Rural Vietnam at

5.5% Value and 3.2% Volume growth. Note: 1st time in 25 years Zero Urban

Growth

9.55

3.772.74

5.2

6.7

2.4

4.86

1.21.78

2.36 2.3

-0.12013 2014 2015 2016 2017 2018

Value % Volume %

Note: Jan. 1, 2018 – November 30, 2018, 4 key cities

MODERN TRADE DILEMMA

Modern Vs Traditional Trade Value Growth %

73%

22%

5%

General Trade Modern Trade

On-line

Retail Market Sales

19

2

4.3

14.215

4.2 4.9

3.8

2012 2014 2016 2017

Modern General

Modern trade is beginning to grow again, but will heavily be impacted by On-line competition, which will erode MT.

4%

22%

74%

On-line

ModernTrade

GeneralTrade

Most popular future shopping method

PRESENT RETAIL MARKET SPLIT & FUTURE PROJECTIONS

17%

25% 27%31%

Other Smartphone On-line Modern

Present Market share

If you are not on-line - you are not relevant!

Source: IFM Market Place: Base1,623

Average 33% growth with anticipated US $10 Billion value by 2020

1

ON-LINE GROWTH / PROJECTED VALUE (US BILLION)

30%35% 37%

2012 2013 2015

YoY Ecommerce Market growth

2.5 3.004.32 5.18

7.41

10

2012 2013 2015 2016 2017 2020

Annual Ecommerce Market Size US Billion

Note: Figures below are highly overstated. IFM

survey indicated 2017 at just over US $3 Billion

88%81%

76%

61%55%

24%

5%

83%

65% 62%44% 37% 9%

80% 83%73%

41% 46%

5%4%

Retail (clothes,shoes, etc.)

Beauty products Healthcareproducts

Electronics Books Vehicles/Motorcycles

Others

Ever purchased at stores

Purchased at stores in P3M

Purchased online in P3M

ON-LINE VS OFF-LINE CATEGORIES PENETRATION

Some on-line categories in Urban already out sell off-line

Source: IFM Market Place: Base1,623

MEDIA TRENDS

HEADING

Vietnam Media Spend Share & Growth

331

1177 1295

0.6

200300

113

86

84

2008 2017 2018

TV

Internet

Print / Newspaper

outdoor

Media spend has sky rocketed in the past 10 years, driven by TV @ 10% growth. However, Digital growth at 32% plus YoY and gaining speed.

Source: Zenith / Group M

HEADING

% Total Media Consumption in Vietnam

51

62

43

27

16Urban

Rural

TV Internet Others

Source: Kantar Worldpanel Media Survey 2018

11

TV is still King, But digital is catching up quickly

The marketing disconnect of the decade!!!

HEADING

Disconnect between viewership and spend

51%

75%

43%

17%

16%Media Consumption

Media Spend

TV Internet Others

Source: IFM analysis

8%

10% 33% 5%

Though digital consumption is booming at 30% plus per year, ad spend represents only 17% of total spend, thus creating a chasm between CONSUMPTION & SPEND

Growth rate

WHY?▪We are creatures of habit and DO NOT LIKE CHANGE

▪Most decision makers are older and DO NOT UNDERSTAND DIGITAL

▪Some categories work better on TV – Products geared to THEGREY GENRATATION

▪Digital R.o.I. has been historically HARD TO MEASURE

GENERAL SEARCH QUERIES

WORLD CUP SCHEDULE

KENH 14 SOUTHERN LOTTERY

TOP IMAGE SEARCH QUERIES

BUI THIEN DUNG VIETNAM FLAG

U23 FOOTBALL BALENCIAGA FASHION HOUSE

2018 WORLD CUP MESSI - FOOTBALLER

1. Solution: Understand Vietnamese interests – on-line

TOP YOUTUBE SEARCH QUERIES

Chay Ngay Di – Music Videos Nhanh Nhu Chop – TV Show Bua Yeu – Music Videos

Nguoi La oi - Music Videos Nguoi Am Phu – Music Videos U23 Vietnam - Football

Co gai M52 - Music Videos Giai Dieu Chung Doi – TV show 7 Nu Suoi Xuan – music Video

Source: Google Trends

2. Solution: Understand the facts – Media penetration

11%

27%

40%

70%85%

43%

54%6…

69%73%

15%

36%

55%

2011 2013 2015 2017 2018 Est

Smartphone

Non smartphone Internet

Total ad Spend on Mobile %

Source: Ministry of Information & Technology, Nielsen, Infocus Mekong Research

Usage / Ownership Age 15 Plus

51 Million smartphones, representing 85% of the 15 plus aged population

85%Smartphone penetration

5%7%

14%28%28%30%29%

57%

83%

52%

85%

49%

58%

69%

71%

42%

11%

40%

2%

23%

13%

1%

1%

1%

Watch TV

Tablet

Youtube

PC

Laptop

Search internet

Facebook

Smartphone

Daily time spent on… Over 4 hours Less than 2h do not use

3. Solution: Understand Media time consumption

Smartphone is the King of connectivity in Vietnam


4. Solution: Understand which social media platforms work best

0

10

20

30

40

50

60

Source: Global webindex survey

Key Social MediaPlatforms

Key MessengerPlatforms

HEADING

5. Solution: Know the changing trends

Present entertainment activities & future decline

22%

53%61%

15%

38%48%

15%

69%75%

11%

47%57%

Watch TV cable FTA Watch you Tube Surf the internet…

Urban Now Urban Future Rural Now Rural Future

Many a net citizen is now saturated and noting a decline in their future digital footprint, with all main digital entertainment options showing a decline in growth


IFM MIAOZHEN ESTABLISHMENT SURVEY (FACE TO FACE) = N = 3,140

3.1%8.0%

15.4%10.6%

50%

4%

13%

19% 17%

50%

2.1% 3.1% 3.1%

10.7%

35%

3%7% 6%

14%

39%

What’s app Instagram Viber Face time Smartphone

URBAN Now Urban future Rural now Rural future

Growing Communications forums

Face time, Viber and Instagram are taking root. However, new entrants could make a major impact as well


IFM MIAOZHEN ESTABLISHMENT SURVEY (FACE TO FACE) = N = 3,140

FREE & VISUAL

91%

73%

94%84%

75%

49%

94%

78%

Smartphones Desktop/laptop

Urban 2016 Urban 2018

Rural 2016 Rural 2018

Facebook access by device

Facebook, smartphone access rules and rural has caught up quickly…


6. Solution: Marry audience with category and preferred media channels

IDENTIFY YOUR TARGET AUDIENCE

IDENTIFY PREFERRED MEDIA CHANNELS FOR

YOUR AUDIENCE

IDENTIFY PREFERRED MEDIA CHANNEL FOR

YOUR CATEGORY

Critical to understand how consumer prefer / trust specific media channels for specific products

”The trouble with our times is that the future is not what it used to be.”

Paul Valery

PREDICTIONS

Consumer psychology - 2019

Consumer priorities More about personal growth

than material growth

2019 will see a shift in consumerism from “keeping up with the Nguyen’s” to “self actualization” via new experiences. Spend will be less about Material objects and more about life experiences.

The Basics are mostly achieved

2019 Predictions

Positives

1Consumer confidence is still very high, hence driving positive growth in 2019, but there are signs of slowdown beyond this year

2Any service / product providing entertainment, convenience and pleasure will see growth

3 All things digital continue to grow – convenience driven

Negatives

1 Real estate market will begin to slow down in 2019

2 All basic home care / improvements, utilities & transport should decline in growth3 Private dept will continue to grow & be a major threat if inflation goes rampant

4 Potential erosion of Vietnamese brands due to value for money and quality issues

Ralf Matthaes | Managing DirectorTel: +84-8 2262-7627Mobile: +84-903-949-531Website: www.ifmresearch.comifmpanel website: www.ifmpanel.com

Email: [email protected] Floor, 21 Phung Khac Khoan Street, D.1HCMC, Vietnam

Advanced - Agile - Accurate - Actionable

http://www.ifmresearch.com/

http://www.ifmpanel.com/

mailto:[email protected]

vietnam consumer trends & growth opportunities & 2019...

Documents