Learn about 2018 Consumer Trends & 2019 Preditions

1. Vietnam Consumer Trends & Growth
Opportunities & 2019 Predictions
Prepared by:
Ralf Matthaes - Managing Director

2. ECONOMICS

3. IFM CONSUMER CONFIDENCE INDEX
79
68
56
51
82
92
86
92 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 2011
N = 2,365 in 2019

4. 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 Consumers
Base: 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%

5. 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

6. BOOM SECTORS

7. TET SPEND 2019 VS 2018
Base: 2,365
2019 Sector 2014 Plus / Minus
1 Education 1 same
2 Healthcare 2 same
3 Personal care 9 + + +
4 Food & beverages 3 same
5 Entertainment / dining out 11 + + +
6 Communications 5 same
7 Home appliances 10 + +
8 Electronic equipment 7 same
9 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

8. DID YOU TAKE OUT A LOAN IN LAST 12 MONTHS?
52
41
29
48
59
71
2018
2017
2015
yes 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.

9. Mega Trends

10. POPULATION

11. 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

12. 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

13. 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

14. INFRASTRUCTURE

15. 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!

16. ASPIRATIONS
28%
19% 19% 16% 11%
5%
32%
26%
17% 14%
5% 3%
House New Car Overseas
vacation
Set up my own
business
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

17. English
International
Overseas
EDUCATION
Trend is towards…

18. from VN to international brands
BRAND SHIFT
Why?
▪ Safety & Hygiene
▪ Value for money

19. 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

20. Urban vs Rural
▪ Return of urbanites to their hometowns.
URBAN VS RURAL

21. 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

22. Where we live
Three quarters live in their own homes, and rent far less than their urban cousins
1 3
12
18
6
73
2 5
13
30
12
55
A vacation
house
A second
apartment for
rent
A second house
for rent
I live in rented
property
I live in my own
apartment
I live in my own
family house
Rural Urban
IFMPANEL : n = 61,137

23. What devices we own
99%
93%
85% 81%
66%
54%
63%
24%
99%
83%
77%
66% 66%
53%
42%
18%
Smartphone Home
Internet
connection
Laptop Internet
phone
connection
Smart TV PC Tablet Smart watch
Urban Rural
Rurals are slightly behind their urban cousins in terms of ownership
IFMPANEL : n = 61,137

24. 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 Visits
0 1 to 2 3 to 4 5 to 6 7 or more
IFMPANEL : n = 61,137
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

25. 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
IFM Rural Reach : n = 649
2-12 MONTHS AGO
2-12 MONTHS AGO
NEVER
NEVER

26. 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
IFM Rural Reach : n = 649

27. VIETNAM RETAIL TRENDS

28. VIETNAM MARKET RETAIL SIZE & GROWTH 2008 – 2018
8.9
4.3
3.9
9.5
7.8
6
6.5
1
2008 2010 2012 2014 2016 2017 2018
EST. RETAIL SPEND
2016
=
US $ 100 Billion
Fastest growing retail market in Asia

29. 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
3.77
2.74
5.2
6.7
2.4
4.86
1.2
1.78
2.36 2.3
-0.12013 2014 2015 2016 2017 2018
Value % Volume %
Note: Jan. 1, 2018 – November 30, 2018, 4 key cities

30. 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.

31. 4%
22%
74%
On-line
Modern
Trade
General
Trade
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

32. 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 3.00
4.32 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

33. 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 Healthcare
products
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

34. MEDIA TRENDS

35. HEADING
Vietnam Media Spend Share & Growth
331
1177 1295
0.6
200
300
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

36. 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

37. The marketing
disconnect of
the decade!!!

38. 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

40. 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 THE
GREY GENRATATION
▪Digital R.o.I. has been historically HARD TO MEASURE

42. 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

43. 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

44. 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
IFM Rural Reach : n = 649

45. 4. Solution: Understand which social media platforms work best
0
10
20
30
40
50
60
Source: Global webindex survey
Key Social Media
Platforms
Key Messenger
Platforms

46. HEADING
5. Solution: Know the changing trends

47. 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 Rural Reach : n = 649
IFM MIAOZHEN ESTABLISHMENT SURVEY (FACE TO FACE) = N = 3,140

48. 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 Rural Reach : n = 649
IFM MIAOZHEN ESTABLISHMENT SURVEY (FACE TO FACE) = N = 3,140
FREE & VISUAL

49. 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…
IFM Rural Reach : n = 649

50. 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

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

52. 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

53. 2019 Predictions
Positives
1
Consumer confidence is still very high, hence driving positive growth in 2019, but
there are signs of slowdown beyond this year
2
Any 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 growth
3 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

54. Ralf Matthaes | Managing Director
Tel: +84-8 2262-7627
Mobile: +84-903-949-531
Website: www.ifmresearch.com
ifmpanel website: www.ifmpanel.com
Email: Ralf.matthaes@infocusmekong.com
4th Floor, 21 Phung Khac Khoan Street, D.1
HCMC, Vietnam
Advanced - Agile - Accurate - Actionable