Infocus - Vietnam Consumer Trends 15.03.16

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THE GOAT IN REVIEW / THE MONKEY PREVIEWVIETNAM CONSUMER TRENDS 2015 – 2016

Ralf MatthaesManaging DirectorInfocus Mekong Research

http://www.ifmresearch.com/

https://www.linkedin.com/company/infocus-mekong-research-ifm

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7968

5651

8286

0

10

20

30

40

50

60

70

80

90

100

2011 2012 2013 2014 2015 2016

A massive increase in Consumer and Business confidence over last 18 months indicates that Consumer spend and business expansion should be on the rise.

Consumer Confidence Index (%): TNS 2011-2015 & Infocus CCI 2016 | Urban onlyx

2011 - 2016 Confidence Indices

79

48

56

7859

X Business Confidence Index (%): Euro Cham Vietnam










25%

48%

47%

18%

15%

11%

9%

35%

36%

36%

37%

29%

38%

32%

41%

17%

17%

45%

56%

51%

60%

Average %

Value of the Vietnamese dong

The cost of living

Employment

Vietnam's economy

My personal standard of living

Foreign investment

worse same better

Average

Perception of 2016 in terms of key economic indicesKey concerns for 2016 revolve around the value of the VND and the increase in the cost of living, while FDI, personal standard of living and Vietnam’s economic prosperity are big positives….

source: Infocus CCI Base: n = 512










Will you spend More - The Same - Less in 2016 vs 2015?

45%

34%38%

38%40%

44%44%

47%

48%50%

55%56%

47%

55%55%

56%49%

52%38%

47%

44%44%

41%38%

Average %Home appliances

Household utilitiesTransportation

Personal quip. (phones/laptops, etc)communications (tele.email)

Entertainment & dining out

Food & beverages productsPersonal care products

House hold care productsHealth care products/services

Educationmore same less


2016 should see continued growth in consumer spend. Education, Healthcare and Household products should see the positive upswings in spend.

Average










41

54

60

81

84

86

4

11

42

37

58

31

0 10 20 30 40 50 60 70 80 90 100

Smart TV

iPad /Tablet

Desktop

Laptop

Home Wifi Internet

Smart Phone

Urban Digital Ownership 2013

2015

Explosion of Digital & Smartphones

source: Infocus Base: n = 2,800

In a short two years, all that is smart / communications driven has exploded. Consumers are craving connectivity / info / entertainment via personalized gadgets…










Growth of high end / high cost items

111,000

157,000

215,000

290,000

0

50,000

100,000

150,000

200,000

250,000

300,000

2013 2014 2015 2016*

Automobile sales

Auto sales are indicative of Vietnamese joining the developed world & upscaling their lives

source: V.A.M.A

28 5

40

70

13

32

4859

91

0102030405060708090

100

Vehicles Lifeinsurance

Credit |Debit card

Air-con ATM Card

Urban ownership growth (%)

2013 2015

source: Infocus Base: n = 2,800

Huge growth in creature features and security products, highlighting desire for global integration

*estimate










Urban monthly income evolution Rich are getting richer and the poor are getting poorer, while the middle class is shifting into wealthier income classes

6

4

19

10

20

28

17

28

15

16

11

11

7

2

5

1

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2016

2013

3.5 below 3.5 to 11 11 to 16 16 to 22 16-22 22 to 35 35 to 50 50 Plus

23%45% 32%

US $700 below US $700 – 1,000 US $1,000 plus










Percentage of consumer who took out loans in 2015 & why?

36

25

20

5

5

5

0 10 20 30 40

Lower income

Total

Higher income

Yes Yes More than 1

An astonishing 30% of those surveyed took out bank loans in 2015 & 41% of lower income earners, mostly for real estate (35%) & business investments (25%).

5%

35%

24%

13%

9%

14%

Purpose of Loan

Automobile

Real Estate

Business

Education

Personal

Others

Take out Loan











FMCG Value & Volume growth % 2013-2015

10.1

4.33.2

4.7

1.6 2

0

2

4

6

8

10

12

2012-2013 2013-2014 2014-2015

Urban Value / Volume Growth %

Value % Volume %

10.511.8

87.4

9.4

6.4

0

2

4

6

8

10

12

14

2012-2013 2013-2014 2014-2015

Rural Value / Volume Growth %

Value % Volume %

Overall FMCG growth is down from last year, partially driven by a reduction of CPI (0.3% YoY end of November), but also largely due to limited increases in salaries, bonuses and a sense that consumers have different spending priorities.

source:










19

11

2

4

15

12

4.23.1

02

46

810

1214

1618

20

2012 2013 2014 2015

FMCG Modern vs General Trade Value Growth (%)Modern General

Modern vs General Trade FMCG Value Growth (%)The past 3 years have seen a huge drop of both Modern & General FMCG value growth in urban Vietnam, indicating either saturation or consumers tightening spend for other trade offs. Modern Trade is showing a positive increase for the 1st time in years, though small.

source:










Media spend by Medium: 2013 – 2015 (US Billion)

1,320

1,537

1,719

98

84

7734

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800

2013

2014

2015

TV Print (all) Digital Radio

Overall Media spend grew by 10% in 2015. TV makes up over 90% of all measured advertising spend, yet the mobile phone is becoming the # 1 source of time being spent in urban Vietnam, yet digital spend is still negligible…. Makes you wonder!!!

source:










Daily activity you do most, when not working?

29%

5% 9%

Using Smart PhoneUsing Laptop / PCWatching TVOthers


2%

26%

25%

18%

29%

0% 10% 20% 30%

1 hour or less / day

1-2 hours / day

2-3 hours / day

3-4 hours / day

4 plus hours / day

Most popular daily activity (%)

Major shift in consumers activities to mobile and on-line. Over half of urban consumers note mobile usage as #1 activity, of which ¼ spend 4 plus hours a day on their mobile. Vietnam has caught up very quickly….

57%

Time spent on your favorite medium(%)










The growth of smartphone opportunity in Vietnam

6857 49

39

32 43 51 61

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 2014 2015 2016 est.

Smart vs Feature phone share growth (%) Feature Phone Smartphones

Smartphone ownership is the single largest consumer growth opportunity in Vietnam, with an average growth rate of over 30% annually.

With urban Vietnam already over 80% penetration, the last conquest is rural Vietnam, changing the face of communication forever…

Are you READY!

source:










2016 Predictions

“The trouble with our

times is that the future is not what it used to be.”

Paul Valery










Vietnam is out of recession, but…2015 KEY GROWTH TRENDS 2016 PREDICTIONS

Positives = Confidence, Growth & Spend

1 Business & Consumer confidence have increased substantially, driving growth

Increase investment and consumer spend should make 2016 best year ever, in terms of overall growth

2 Over 25% growth of Digital & Mobile connectivity

Much more opportunity for digital content, messaging and overall connectivity…

3 Gradual increase in FMCG spend in Modern Trade

Continued growth in modern trade with potential uplift for overall FMCG spend

4 Growth of Banking, Education, Healthcare spend, etc. Accelerations of all, so long at CPI stays in check

Negatives = debt culture aligning with China / US Sub-prime?

1 VN becoming debt reliant / credit culture, borrowing to catch up with the “Nguyens”

Any major global crisis / currency destabilization, could be devastating for Vietnam due to bad debt

2New laws on investment, enterprise, real estate, etc., yet to see impact - Danger!

Fear of mass speculation and skyrocketing inflation as in 2008…










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

Email: [email protected] Dang Huu Pho Street, Thao Dien, An Phu, HCMC, Vietnam

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Infocus - Vietnam Consumer Trends 15.03.16

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Transcript of Infocus - Vietnam Consumer Trends 15.03.16