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Ralf MatthaesManaging DirectorTNS Vietnam
AMCHAMAMCHAMOctober 19, 2006
VietnamVietnam’’s Changing s Changing Consumer Consumer
VietnamVietnam’’s Changing Consumers Changing ConsumerAgendaAgenda
oVietnam by the numbero “Things, they are a changin”oOur Fast Moving Consumer Goods Worldo7 trends, twelve wordsoShop till we dropoWho are we nowo The Vietnamese & the U.S.
Data Sources
o TNS VietCycle: Run every 18 months (1998-2006)n N = 2,000n Hanoi / HCMC / Danang / Can Thon Age 15 to 45
o TNS Worldpanel: daily diary collection)
n N = 1,800 panel households n Hanoi / HCMC / Danang / Can Thon 120,000 diaries / year
o Bureau of Statisticso World bank
§ Established in 1996§ 234 + full time staff § 1,200 Plus exclusive
field force§ Interviewed over ½
million Vietnamese
ServicesServices§ Customized Research§ Consumer Panel § Media Monitoring &
TNS Vietnam - Fast Facts 2005
Can Tho
Hanoi
Hai Phong
Da Nang
Hue
DalatNha Trang
Vietnam by theVietnam by thenumbersnumbers
Vietnam Snap-shoto Population: 83 million o 58 ethnic group = less that 1.5
milliono Kinh is major ethic group = 80%+, ethnic Chinese second o Buddhism, Catholicism are main religionso Country divided into 64 provinces
o Main Cities are:n HCMC 5.89 m
actual 6.5n Hanoi 3.14 mn Danang 077 mn Hai Phong 1.79
m
Source:2005 BoS Census
We are quite well educatedSource: VietCycle
1.7 million University entry exams written in 2006
Literacy: Literacy: 94%94% Post-University, 1.3%
College graduate/student, 9.6%
Grad 10-12, 45.4%
No. formal education, 0.3%
University graduate/student, 30.8%
Grade 1-9, 12.6%
General Economy: PopulationSource: U.S. Central Bureau, International Data Base
0 - 4 5 - 9
10 - 1415 - 1920 - 2425 - 2930 - 3435 - 3940 - 4445 - 4950 - 5455 - 5960 - 6465 - 6970 - 7475 - 79
80+ FemaleMale Vietnam 2005
General Economy: PopulationSource: U.S. Central Bureau, International Data Base
0 - 4 5 - 9
10 - 1415 - 1920 - 2425 - 2930 - 3435 - 3940 - 4445 - 4950 - 5455 - 5960 - 6465 - 6970 - 7475 - 79
80+ FemaleMale Vietnam 2005
0 - 4 5 - 9
10 - 1415 - 1920 - 2425 - 2930 - 3435 - 3940 - 4445 - 4950 - 5455 - 5960 - 6465 - 6970 - 7475 - 79
80+
0 - 4 5 - 9
10 - 1415 - 1920 - 2425 - 2930 - 3435 - 3940 - 4445 - 4950 - 5455 - 5960 - 6465 - 6970 - 7475 - 79
80+ FemaleMale Vietnam 2005 FemaleMale Vietnam 2005
58% of Vietnam’s population is under 30 years old
Vietnam’s consumption days are still ahead
A young population
Vietnam’sfuture consumer
base is huge
Population growth of Vietnam in the next 20 years. Unit (million people)Population growth rate = 1.38%; birth rate = 17.1/1000
7684 87
94101 107 110
0
10
20
30
40
50
60
70
80
90
100
110
120
2000 2005 2006 2010 2015 2020 2025
Fast population growth
Over 1 million babies born every year, VN will surpass
2006o Population: 83 million
2016o Under 30: 57%
o Consumers 15 to 69: 60 million
o Urban: 27% – Rural: 73%
o Average household size: 4.8
o 3-generation families: 50%
o Population: 97 million
o Under 30: 50%
o Consumers 15 to 69: 70 million
o Urban: 33% – Rural: 67%
o Average household size: 4.0
o 3-generation families: 30%
Vietnam’s population in 10 years?
More people, more households, more income earners = more opportunity
Note: most figures are estimates only
10/23/2006 11Source: TNS VietCycle - Vietnam’s Lifestyle Monitor 1999-2006, Worldpanel
““Things, they are Things, they are a a ChanginChangin””
Bob Dylan
1990 2001 2006expatriates 66 43,000 90,000tourists 3,000 2 mio. 3.9 millad spending 1 mio. 124 mio. 1 Billionad agencies 3 422 450motorcycle penetration 20.0% 65.0% 94% urbanfixed phone lines 1.0% 35.0% 77% urbanmobile phones 1.0% 3.0% 58% urbaninternet N/A 3.0% 15.0%Top 25 Global Brands N/A 12 16
Vietnam – past and present
Note: Some figures are estimates only
Vietnam has grown a lot
Vietnam’s GDP is second fastest growing in Asia& should continue to do so over the next 5 years
Impact of Asian Impact of Asian economic economic recessionrecession
6.0%
9.5%
6.7%8.4
0.0
0.0
0.0
0.1
0.1
0.1
1991 1995 2000 2004
10
8
6
4
2
0
7.7%** estimate* estimate
2006
GDP Growth RateGDP Growth Rate
GDP Per Capital (US$)GDP Per Capital (US$)Source: World Bank
GDP per capita should grow by at least 20% per year
DoiDoi moimoiImpactImpact
103
274
400
0
100
200
300
400
500
1991 1995 2000 2004
61
2006
640* estimate
7
12 14
21
31 3236
55
62
56
50
24
0
20
40
60
80
1999 2001 2004 2006
SEC AB SEC CD SEC EF
The growth of income
In the past 6 years, AB SEC has tripled, while the poorer EF SEC has become the minority in Urban Hanoi & HCMC
SEC ScaleA = US $1,001 +B = US $1,000 - 501C = US $500 - 351D = US $350 - 251E = US $250 - 151F = US $150 below
Source: TNS VietCycle
2003
Technology embracers
1
22
68
1
26 2421
40
49
17
5358
16
74
84
0
20
40
60
80
100
1999 2004 2006
DVD Player Flat screen TV Personal computer Mobile phone Video disk VCD
Technology today is all the rage
Source: TNS VietCycle
How do we $ave?Source: TNS VietCycle
13
75
63
1215
35
8 7
00 0
9
2 2 00
20
40
60
80
2001 2004 2006Keep in a safe place Deposit in a bank Convert into goldBuy insurance Convert into hard currency
Banking & Insurance are gaining acceptance
Surfing the web
28
40
45
53
72
60
55
47
0% 20% 40% 60% 80% 100%
2001
2004
2005
2006
Have used the internet Not yet
Over half of all Hanoians & Saigonese have used the internet, driven by the in-gener@tion, aged 15 – 19 = 82%
Source: TNS VietCycle
TNS Worldpanels – Vietnam’s 4 key urban centres
Our Fast Moving Our Fast Moving Consumer Consumer GoodsGoodsWORLD WORLD
TNS Worldpanel – N= 2,200 households in Urban Vietnam
FMCG Key trends% growth spend per household
7
14
56 6
10
8
18
1
5
89
FMCG Dairy Beverages Groceries PersonalCare
HouseholdCare
04 vs 03 05 vs 04
Dairy = BABIES are driving FMCG growth, as is personal care
18%
8%
231
342
687
144
6738 47 61
292320
120
220
320
420
520
620
20
120
220
320
420
520
620
Avg. Monthly Income Avg. Monthly FMCG Expenditure
< 95 USD 95 to190 USD 190 to 285 USD 285 to 411 USD > 411 USD
INCOME
SPEND
Disparity between income & spend
Source: TNS Worldpanel Vietnam – Total FMCG
The highest income group spends 10 fold compared to the lowest, but only spends 3 times more on FMCG products
Share of Wallet
10
65 3
7
7
8
Dairy Beverages Grocery
Personal Care Household Care Fresh Food
Value share% - 2005 – Total Urban Vietnam
Value share% – Total FMCG + Fresh Food
122,000 VND per month (8 USD)!
Average monthly income of urban household = 3,700,000 VN
Average Monthly Spend = 645,000 VND
Share of Wallet within FMCG represents 7%
Baby Care $$$
801,800
620,400
329,600
169,200
166,100
1,329,000Total NonFood
Beauty
Household
care
Babycare
Femininecare
Oral care
9
8
14
9
19
7
Annual spend per household? % growth compared 2004?
10
12
17
8
14
9
% growth per trip?22% urban population have a kid under 4 at
home
Baby Care expenditure increased by 19%
Why I am in the wrong Business!
Sanitary napkins
TonerFacial cleanser
Liquid bath
Deodorant
Baby diaperFragrances
Body Care
Moisturizer
Hair Conditioner
Feminine wash
Shampoo
Pantyliner
0
10
20
30
40
50
60
70
-5 5 15 25 35 45
Personal care categories are booming
Volume % Growth
The size of the bubble reflects size of category in Total Personal care
Total urban 4 cities – 52 w/e June 05 Vs. 06
Value % Growth
Shopping basket now & in 10 years’ time
Dairy!
Hair colorant
NOW
Sugar
Sauces Noodles
Cooking Oil
Grocery!
Milk
Yogurt
Toothpaste
Non Food!
San. Napkins Low fat dairies
More Dairy!
Fermented milk
Skin care advanced
More Personal Care!
Leave-on HairconDeodorants
Fruit juicesFlavored
Water
Healthybeverages!
Sugar-free/Diet Instant meals
Grocery Sophistication!
Branded Goods
Shampoo
Detergent
FUTUREFUTURE
Family packTrend is towards healthier, pampered lives
wordswords7 trends, twelve 7 trends, twelve
oUpgrading
needs
Upgrading Upgrading needsneeds
oConvenience
ConvenienceConvenience
Indulgence Indulgence (Me, Me, (Me, Me,
Me!!!)Me!!!)
oMen’s care
MenMen’’s cares care
Health & Beauty
Health & BeautyHealth & Beauty
InnovationInnovationInnovation
5,000 new SKU5,000 new SKU’’s annuallys annually
Fun, Fun, Fun
Fun, Fun, FunFun, Fun, Fun
drop!drop!
Source: TNS Worldpanel– 2002 - 2005
Shop till weShop till we
Sales growth per channel (%)
8
7
11
11
14
34Direct sales
Modern trade
Streetshop
All Channels
Market
Specialty
FMCG purchase is entertaining, a shopping experience, however…
Total urban Vietnam – 2004/2005 – FMCG - Value Share%
Modern Trade emergence
10.8
12.4
14.4
66.0
63.0
62.3
16.3
14.8
13.7
6.9
9.8
9.6
2003
2004
2006
Modern Trade Streetshop Market Others
Modern Trade accounts for 14% FMCG sales
Modern Trade & Promotions
Value under promotion % - Total urban Vietnam – 2005 – Modern Trade
Almost 30% of Non-food categories sales are under promotionKey Products; Shampoo, toothpaste, detergent, sanitary napkins,
fabric conditioner, hair conditioner and liquid baths
518
9582
Total Retailer Modern Trade
Yes Promotion
No Promotion
28 27
72 73
Household Care Personal Care
What domodern trade shoppers
look for?
Quality(no fakes!)
Advice“Try before buy” Promo
ComfortFixed pricePresentation
Now?Now?Who are weWho are we……..
The nature of the beastStrong sense of family & Respect for elders Fierce national pride à inner silent strength ResourcefulOptimistic Take life as it comesRevere education Humble (but love recognition)
NATIONAL PRIDE
C’est la vie, while wearing a smile!
The nature of the beast
+Curious, but not adventurous àconforming Fun-loving Determined Resilient, but sensitiveSacrificing Nurturing
-Scheming / broodingStubborn / resolvedAccusing / CriticalAvoid responsibility / passiveFace driven
SAIGONESE___________less image consciousmore down-to-earthmore practical purchasingtrend settersreactive more laid-backless goal-oriented self-contentment
HANOIANS________more image consciousmuch more scrutinizingbuy best-value-for-moneytrend followersreflectiveharder workingmore concentrated ambitious
Though the country has been reunited for over 30 years, great disparities still exist
Difference between North & South
Image Drivers
To measure their success in life,
a Saigonese looks into his pocket - “Me!”
while a Hanoian looks at his neighbor’s face
- “Others”
A Central Vietnamese looks to his family / community happiness
- “My family”
The four cornerstones of life = Family, family, family, family
Our Philosophy on Life?
Living up to other
expectations
Health conscious
Working hard for next
generation
Saving for a rainy day
The four consenter of the future: us / me / us / me
Our Philosophy on Life In the future?
Living to please self
Pampering self
Enjoying the successes of
life
Investing in the future
Ideal occupation
13 13
8
65
19
12
18
4 4
23
1412
54
Businessmanager
Business owner /entrepreneur
Look after thefamily / home
Engineer /technician
Doctor /pharmacist
VC-2001 VC-2004 VC-2006
The entrepreneurial spirit is growing steadily in Vietnam
How we see the future
79 7971
80
6468
48
58
34
18
8578 77
7166
5447 45 43
30
0
20
40
60
80
100
Vietnam
's ec
onomy
Vietnam
's inter
national
imag
e
Foreign in
vestm
ent
Teleco
mmunicatio
n
My per
sonal
stand
ard of
living
Electri
c power
Employmen
t
Water t
reatm
ent
Value o
f the V
ietna
mese d
ong
Enviro
nmental
pollutio
n
1999 2006
Vietnamese feel very optimistic about the economy, while infrastructure is being strained, as is the
environment
My $tandard of living
2
0
5
2
37
40
49
51
6
5
VC-2004
VC-2006
Much lower than today Somewhat lower than todayEqual to today Somewhat higher than todayMuch higher than today
Vietnamese are still very optimistic about their economic outlook
Our main fears in life
Health & Unemployment top the list of Vietnamese fears
36
29
40
38
39
29
34
28
32
20
18
18
17
16
22
5
7
5
4
4
4
4
3
2
6
3
4
1
3
4
2
2
1
3
2
3
3
5
3
3
Total, n=2000
HCMC, n=600
Hanoi, n=600
Danang, n=400
Cantho, n=400
Health of my family Personal health Unemployment Financial stabilityTerrorism / War Natural disaster Crime Others
2/3rds worry about health
By age
A Historical Perspective on the FutureWhat genre of music do you prefer?
12
22
24
5
5
5
7
5
5
3
44
66
49
43
28
40
5
23
47
64
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Total
15-19
20-24
25-34
35-45
Western Asian Vietnamese pop Vietnamese traditional
Vietnamese pop music is enjoying a renaissance, especially amongst the young
The lean years
Post –war Baby Boom
Economicreform
EconomicBoom
Traditions are fading
andandThe VietnameseThe Vietnamese
The U.S.The U.S.
US’s RoleDoes the US tend to play a positive role, a negative role or a
neutral role in the following issues?
Vietnamese see the US as having positive effects on fighting povertyenvironmental protection & the growth of the world economy.
However, the US is viewed as having a negative role in aiding world peace, while receiving mixed reviews on fighting terrorism.
54
76
27
57
58
31
7
52
13
16
9
13
17
21
18
5
4
4
8
8
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
1.The fight againstterrorism
2.Growth of the worldeconomy
3.Peace in the world
4.The fight againstpoverty in the world
5.Protection of theenvironment
Positive Negative Neutral DK/ NA
Total Base n=350
GlobalizationOverall, with regard to globalization, do you think that for ourcountry it is a good thing, a bad thing, or neither good, nor bad
75
76
75
71
79
1
2
1
3
17
19
16
18
17
6
3
9
8
4
0% 20% 40% 60% 80% 100%
Total (n=350)
Male (n=176)
Female (n=174)
HCMC (n=175)
Hanoi (n=175)
A good thing A bad thing Neither good nor bad DK/NA
Three quarters of Vietnamese surveyed believe Globalization is good for Vietnam
Foreign investmentWhat is your view on Foreign investment for Vietnam?
92
94
89
95
89
5
3
7
3
7
3
2
4
2
4
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Total (n=350)
Male (n=176)
Female (n=174)
HCMC (n=175)
Hanoi (n=175)
Foreign investment is necessary and positiveForeign investment is dangerousDK/ NA
An astonishing 92% of Vietnamese see foreign investment as necessary & positive for Vietnam
Benefits from Market GlobalizationIn your opinion, who benefits more from market globalization,
the rich, the poor or both equally?
19
19
18
11
26
9
11
8
13
6
70
71
70
75
65
2
4
1
3
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Total (n=350)
Male (n=176)
Female (n=174)
HCMC (n=175)
Hanoi (n=175)
The rich The poor Both equally DK/ NA
Most Vietnamese see market Globalization benefiting both the rich and poor
Overall Opinion of the CountriesWhat is your opinion of the following countries? Very positive, fairly positive, neutral,
fairly negative, very negative? 39
23
24
31
33
21
21
35
22
33
34
40
41
41
41
46
43
40
16
33
31
23
23
33
27
18
29
9
5
1
2
1
2
3
2
5
3
2
0
1
1
1
1
1
0% 20% 40% 60% 80% 100%
United States
Russia
Canada
France
UK
Italy
Germany
Japan
China
Very positive Fairly positive Neutral Fairly negative Very negative
Base n= 350
Japan, the UK & France have the most positive image, while the US, Russia & China have less positive images
in the eyes of Vietnamese
72% view the US
favorably,12% areNegative
The changing face of consumerismThe changing face of consumerism
As you can see, the face of consumerism has As you can see, the face of consumerism has changed dramatically over the last 10 yearschanged dramatically over the last 10 years
However, please be reminded that not only the However, please be reminded that not only the Vietnamese consumer has changed the last 10 Vietnamese consumer has changed the last 10 yearsyears……..
77 Countries
300 Offices
Over 14000 employees
So has TNS GlobalSo has TNS Global……..
……and so have weand so have we……..
FSA / TNS 1996FSA / TNS 1996 TNS 2006TNS 2006
……and so have Iand so have I……..
Hanoi, Jan. 1994Hanoi, Jan. 1994 HCMC, Oct. 2006HCMC, Oct. 2006
Thank You / Cam On!Thank You / Cam On!